Banking services will be extended to about 72,000 villages, with population of over 2,000, across the country by March 2012, said Usha Thorat, Deputy Governor, Reserve Bank of India.

Banks could extend financial services either by opening branches or through the business correspondent model.

The response of the banks to the special initiative has been positive, she told reporters on the sidelines of an RBI village outreach programme in Paluvanchi village near here on Friday.

Tamil Nadu, she said, was “highly banked.” About 4,600 villages, with population of over 2,000, in the State would also be covered under the RBI programme.

The RBI was giving special incentives to banks for the financial inclusion programme in the north-eastern States by providing satellite links and subsidy.

Later, speaking at the outreach programme at Paluvanchi, which has been adopted by the RBI for being developed as a model for financial inclusion and literacy, Ms. Thorat said of the six lakh villages in the country, about 1 lakh had population above 2,000. Of these, 72,000 villages did not have any banking service. The RBI had launched a programme to extend banking services to every unbanked villages and Paluvanchi was one of them.

S.A. Bhat, Chairman and Managing Director, Indian Overseas Bank, said the bank has established financial literacy and credit counselling centres, christened SNEHA, in three places in Tamil Nadu and planned to open nine more in the State. IOB was engaged in monitoring the RBI financial inclusion programme in 4,656 identified villages in the State and so far 273 villages have been covered. The bank had planned to extend banking services to villages with population below 2,000 too.

R. Narayan, Chief General Manager, National Bank for Agriculture and Rural Development, said the bank has adopted 80 villages for achieving financial inclusion. NABARD was willing to join the RBI village adoption programme to achieve synergy.

Jatindranath Swain, Registrar of Cooperative Societies, said farmers, who promptly repaid loans, would be charged no interest under a zero interest scheme introduced by the State government. The interest on such loans would be paid as subsidy by the government, which had earmarked Rs.140 crore for the purpose.

The government had also allotted Rs.100 crore for being extended as credit for micro irrigation and if necessary more funds would be allotted to clear all applications. All cooperative societies in the State would be computerised within the next six to 12 months, he said.

C. Chinnasamy, MLA; K.R. Ananda, Regional Director, RBI, Tamil Nadu and Puducherry; M.M. Majhi, General Manager, RBI; S. Selvaraj, Deputy General Manager, RBI; R. Gunalan, Assistant General Manager, RBI, and others spoke.