RBI for major role by big Indian IT firms in financial inclusion

By Naagesh Naaraayana

MicrofinanceFocus, July 21, 2009: The Reserve Bank of India has urged big IT firms to involve more in the cause of financial inclusion, which is a major challenge before the nation.
Speaking to ET at a seminar on financial inclusion organised by consultancy firm Skoch in Mumbai last week, K. C. Chakrabarty, Deputy governor of RBI, said: “The scale of business in financial inclusion is so big that we need participation from big IT companies.” Mr Chakrabarty also said that the RBI will come out with more guidelines for the sector in a month’s time.
Stressing the need for involvement of big IT companies to bring down the transaction cost, he cited Fino, Integra, Little World and Eko which are active in the microfinance sector as facilitators for banks by providing biometric cards to unbanked people and help them open new bank accounts.
Nearly 60% of India’s population does not have access to formal banking service and only 5.2% of villages have bank branches.
Even C. Rangarajan, former governor of RBI who is heading a committee on financial inclusion, echoed similar remarks. “What is required now is not creating new institutions for extending their outreach, but finding ways and means to effect improvements within the existing formal credit delivery mechanism and evolve new models for extending the outreach,” he said.
Self-help groups (SHGs) do not require interest rate subsidy, since many banks provide loans at reasonable rates. What they require is technology support and marketing facilities to achieve sustainable living standards, he added.

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