11 March 2010
The Reserve Bank of India’s efforts to activate millions
of dormant no-frills accounts is slowly progressing,
with Andhra Pradesh and Karnataka Governments
agreeing to route all their social security programme
payments through these accounts.
On the sidelines of his presentation, ‘Objectives and Framework
of Monetary Policy in India,’ Mr Deepak Mohanty,
Executive Director, RBI, said there seems to be reluctance
on the part of many State governments to route payments
through banks, but eventually it would happen.
Mr K.R Ananda, Regional Director, RBI, said
with social security programme payments made
through the no-frills accounts, it is estimated that
about Rs 1 lakh crore would come under the
banking system.
To enable banking facilities reach the rural poor,
the central bank had asked public sector banks
to open no-frills accounts that require no balance
to be maintained.
The RBI has set a target to reach
banking facilities to 6,000 villages
with habitants of 2,000 people by
2011 through the ‘business correspondent’
model, using smart cards.
Collateral-free loans up to Rs 50,000 can be
obtained by the no-frills account holder — this
is another incentive held out to make the
accounts active, Mr Mohanty said.
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