Governor Raghuram Rajan on Monday said the Reserve Bank of India is working towards making it attractive for institutions to extend banking services to everyone, and not just the large borrower, which is the practice right now. “After all, should we not give everyone access to the [banking] services all of us in this room enjoy?” Rajan said, according to The Financial Express.
The outgoing chief of the central bank said the Aadhaar Enabled Payment System will help make financial services more inclusive, and in turn, increase output, growth and economic progress of the country. “In the foreseeable future, we will bring formal financial services to every Indian who wants them. Financial inclusion will be an important element in ensuring access and equity -the necessary building blocks for sustainable growth of our country,” the 53-year-old economist said.
Among other things, Rajan said the RBI was close to solving the last-mile problem in the sector through the Postal Payment Bank, which will be launched soon, and the Unified Payment Interface, which allows transfers between bank account via mobile phones.
He listed information, incentives, and transaction costs as the main impediments for inclusion of the underserved in the banking sector. “If the time and cost involved in filling up a form and documentation for a client, for instance, is the same for a loan of say Rs 10,000 and Rs 10 lakh, a banker who is conscious of the bottomline would naturally focus on the large client,” he said.
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