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NACHIKET MOR, Member of the Central Board of the Reserve Bank of India Central Board and Chairman of the RBI Committee on Financial Inclusion which submitted its report last week, spoke to GEORGE MATHEW on the panel’s proposals. Excerpts:
Do you think bank accounts for all by 2016 are feasible? There is a view that this timeframe is too short?
We expect to benefit from the very good work being done by UIDAI and National Population Register to give people Aadhaar numbers by December 2015. The numbers have already reached 54.37 crore individuals with about 3 crore new ones being generated every month. About 24 crore of these have asked for new bank accounts to be opened. So if they banks are willing (SBI, Axis, and Bank of Baroda have indicated that they are) then simply opening an electronic bank account for all Aadhaar holders should not be a challenge.
Are bank accounts alone enough? The RBI earlier introduced no-frills accounts which never really took off? How far you are optimistic this time?
Clearly, just having a bank account will not be very helpful. And, it is possible that even with what we are proposing despite having opened them there will be several that will be dormant for a while. There are, however, a few thoughts we have on this issue.
Since the KYC costs relating to opening the account will effectively be borne by UIDAI and the banks will merely have to host the database entry, until the account is activated this will not be a very expensive proposition for the banks.
In the current scenario the entire cost has to be borne by the bank even if there is no activity. Since the banks, as per our recommendation, will be permitted to charge for each and every transaction (including balance enquiry), even with very low balances the accounts can become profitable. This is currently not the case.
What’s the overarching objective of the panel’s proposals? A school of thought has it that proposals look good on paper but difficult to implement.
Given the limited amount of time we had to prepare the report to the best of our ability we have tried to recommend only ideas that are incremental in nature and build on the current momentum that is already in progress. We feel that there is strong underlying momentum in many dimensions (such as Direct Benefits Transfer, UIDAI, pre-paid e-wallets, corporate