Centre working out regulation for micro finance institutions
The Central Government has taken various initiatives to extend the reach of financial services to the rural population. Nationalised banks are making efforts towards financial inclusion by adopting information technology and recruiting business correspondents, according to R. Gopalan, Secretary, Department of Financial Services, Union Ministry of Finance.
Mr. Gopalan said the progress made by banks based in the South was satisfactory. He was here to discuss the progress of implementation of financial inclusion plans by banks, including Indian Bank, Andhra Bank, Corporation Bank, Canara Bank, Indian Overseas Bank, Syndicate Bank, Vijaya Bank, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad. “We want the progress to be accelerated seamlessly without difficulty,” he said. The Department of Financial Services had already monitored the progress made in the East and West zones and a review would be taken up in the North zone by next week, he said.
In all, financial inclusion will be extended to 73,000 habitations having a population of more than 2,000 as per the 2001 census. Already, five crore no-frill accounts have been opened.
Mr. Gopalan said the requirement of human resources was huge to implement financial inclusion and banks should reorient themselves to the present situation. Banks were making progress on back office operations, business process re-engineering and implementation of information technology.
There were areas like risk management, treasury management and forex management where banks really have to increase the number of people trained.
At present, the services included deposit, withdrawal and remittance and other facilities.
The next plan was to role out loan products, he said. Mr. Gopalan referred to the launch of financial inclusion card, a special micro finance product launched by Oriental Bank of Commerce, targeted at small vendors, persons running saloons and others.
Replying to questions on micro finance institutions extending credit at high interest rates, Mr. Gopalan said they were taking money from a number of banks for on-lending to their borrowers resulting in high interest rates. “There is no question of interest rate sub-vention. In a de-regulated interest rate regime, there was no ceiling on interest rate fixed by the Government. The Government is in the process of working out a regulation for micro finance institutions. The regulation is not on interest rates”, he said.