Mundra downplays money deposit issue on zero-balance accounts

Mumbai: Terming instances of banks depositing money to reduce the number of accounts with zero balances as not a criminal act, Reserve Bank Deputy Governor S S Mundra on Monday said such stray incidents should not distract from the larger cause of financial inclusion.

"It's not a criminal act. What kind of inquiry?" Mundra told reporters on the sidelines of a BRICS workshop on financial inclusion, when asked specifically about the steps the RBI is taking after the allegations cropped up.

"It is for individual banks to look whether it is consuming their disproportionate time which may not be economically beneficial to them," Mundra added.

He further said there may be "stray incidents" and hinted that details on such activities are not available.

"I think this kind of fringe issue should not take away the main point (of financial inclusion). The fact remains a lot of work is happening here, some people might have done some individual activities. I don't think that becomes the guiding principle," he said.

The Finance Ministry had last week had said that four state-run banks are investigating if money in some Jan Dhan Accounts were deposited by account holders or by business correspondents, following reports of such money being deposited to suppress the number of accounts with zero balances.

The lenders include Punjab and Sind Bank, Punjab National Bank, Bank of Baroda and Bank of India.

"In case of a few accounts, this issue has arisen and there are names of four banks. We have asked them. The banks are investigating from their branches whether account holders have put in money or business correspondents have done it. After that the banks will give their report to the Department of Financial Services," Finance Minister Arun Jaitley had said.

Stating that there are 24 crore Jan Dhan accounts with deposits of Rs 42,000 crore, he said such deposit mobilisation is not possible by adding Re 1 in every account.

Meanwhile, Mundra today said there is a need to increase the transactions in the accounts under the financial inclusion plan.

He said even though there have been 827 million transactions in basic saving bank accounts, it is very low given the size of the country.

Mundra said the banks have made progress with the deepening of networks in the unbanked areas which is the supply side of the financial inclusion, but now there is a need to focus on the demand side as well.

The demand side focus should include financial literacy efforts and vocational training measures, he said.

The Deputy Governor warned that if the demand-side measures do not complement the supply side ones, efforts on financial inclusion will be a "wild goose chase".