Just three weeks into his third term as finance minister, P Chidambaram is set to give a big boost to UPA government’s financial inclusion agenda. In a review meeting held with CEOs of public sector banks (PSBs) and various FIs last week, the finance minister had asked government-owned banks to open branches in areas with population of 5,000 or more in underbanked districts and 10,000 or more population in other districts by September.
Chidambaram also wants to ensure that union territories of Andaman and Nicobar Islands, Chhattisgarh, Daman & Diu and Pondicherry have access to banking service.
He has directed the CEOs to provide banking facilities in areas with populations of 1,000-2,000 in union territories. PSBs have also been asked to set up banking facilities in areas of Northeastern and hilly states with population of 1,000-1,599 by March 2013.
According to reports from the Convener Banks of State Level Bankers Committees, of the 4,007 branches to be opened, 1,237 have been opened by June 30 this year. Banks have also been advised to open Ultra Small Branches with one full time bank officer in such villages.
Regional rural banks (RRBs) have been directed to increase the number of branches in the current fiscal by 10%. They had opened 914 branches during 2011-12 and plan to open 1,845 in2012-13 fiscal.
“Banks have been advised to launch a campaign to ensure that each family living in the service area of a branch having rural villages attached to it has an account with the branch,” a bank official who was part of the meeting told Express. This is part of government’s One Bank Account Per Family initiative.
A strong votary of the electronic mode of transactions, Chidambaram also urged chiefs of PSBs to promote online transaction. Currently, only 20% of the total transactions are done electronically.