I had just pointed a while ago that Charlie King, Bank of England’s Deputy Governor is going around UK to explain quantitative easing and BoE role in the crisis.
I came across this Business Standard news story which says RBI top bosses (including Governor and 4 deputy Govs) are on a financial outreach tour across India:
RBI calls it a “financial outreach” programme, under which it will take stock of the financial condition of 200-odd villages in about eight months — a first-of-its-kind initiative from the central bank.
So far, the governor and his four deputies have visited eight villages (from Minicoy — the outermost island of Lakshadweep — to Khonoma, a picturesque village 20 km west of Kohima in Nagaland) and will visit 12 more.
The regional directors of RBI, however, will visit all the 200.
The article is about a village in Orissa, Jalanga where there are no bank branches and one has to walk 20 km to conduct a banking transaction. As people are very poor and cannot afford any transportation, walk is all they can do.
Jalanga or its neighbouring villages do not have a single bank branch. The nearest bank branch, that of UCO Bank, where Das has an account, is located at Bhadrak, around 20 km from the village. Even State Bank of India (SBI), the country’s largest networked bank and Kalinga Gramya Bank, which has 50 no-frills accounts at Jalanga, have their branches only at Bhadrak. “The villagers cannot afford to hire auto rickshaw to travel so far. So we have to depend on our legs,” Das says. UCO’s Bhadrak branch is yet to provide ATM cards to the account holders of the village even though the bank claims to have opened over 400 no-frills accounts at Jalanga. “The branch has only two people dealing with loans, which means we have to wait for months together to get our loans sanctioned, says Pratibha Jena, a member of the self-help group. Besides, for the residents of Jalanga, banking services are only restricted to maintaining accounts or, at best, getting loans for agriculture or the SHGs.
Other financial services like remittances or overdrafts are unheard of. The absence of the remittance facility at the nearest bank branch has been a handicap for migrants from Jalanga who are now engaged in the textile mills in Surat. These migrants send money to their kin either through money order or courier. The RBI governor heard out the villagers patiently and called for stepping up awareness on the whole gamut of financial services which banks offer. People need to be educated on the various financial services and they should start demanding these services from banks, he asserted.
Though the RBI move has both for and against voices:
Though Jalanga may see better days, there are many who feel RBI’s financial outreach programme is just a gimmick. RBI insiders say doing a reality check in just 200 out of 600,000 villages in the country will serve no purpose. “Of the 36,000 automated teller machines in the country, just about 2,000 are in the villages. A district may claim 80 per cent financial inclusion, but if we ask 25 families it is more likely that less than 24 families will have a bank account,” an RBI official said.
Others say it’s impractical to expect the RBI top brass to visit all villages. At least the experience in these 200 villages may reflect in the central bank’s policy-making, they say.
The idea is to make 200 model villages and then ask the banks to develop such models around the model village. “In this process, if at least 100 villages can be developed around the model villages, we will have 20,000 model villages,” another RBI official who is involved with the outreach programme said.The RBI regional offices have been asked to monitor the progress of the village on a regular basis and report the progress on a monthly basis. The central bank plans to cover all the 200 villages by March 2010.
Hmmm. There is little doubt that financial inclusion isn’t just about opening bank accounts. RBI released a report saying districts that claimed 100% financial inclusion (FI) were anything but 100% financial inclusive.
I believe the program is useful as it gives RBI top brass some ideas on the immense problems we face as far as FI is concerned. It also educates the general public on the role of RBI and tells them that the central bank is very committed to FI. RBI also shows it is an organisation and makes policies for the Indian public which is the one of goals of the central bank as well. It isn’t just one technical organisation.
I was also just comparing the different challenges RBI faces vis-a-vis BoE (and other central banks). In this crisis, BoE has taken exceptional measures and does a tour to explain these actions to the public. Even RBI has taken exceptional measures but RBI’s tour is for completely different reasons. Just look at the challenges each central bank faces. Quantitative easing is such a complex issue which needs to be addressed and Financial inclusion is such a basic issue which also needs to be addressed.
I just hope RBI publishes a report of the villages covered, broad findings etc.