Ernakulam has been declared as the first district in the country to achieve ‘meaningful financial inclusion’. The project was launched in the district by the Reserve Bank of India as envisioned by its Governor D. Subbarao, along with the Union Bank of India, the district lead bank under the lead bank scheme of RBI, other banks and district authorities.

Making the announcement at a function here on Thursday, Mr. Subbarao said the initiative began with a suggestion made by him at Vengoor (west) village in Ernakulam district in March 2011. The Governor had visited the village as part of the apex bank’s outreach programme, meant for spreading financial literacy. “We go to at least two villages every year,” he said.

At Vengoor, he wanted to know how many people among the audience had bank accounts. As about 90 per cent owned accounts, he wanted to expand the banking facility to the entire population in the district. Though there were other communities elsewhere in the country having high rate of bank account holders, the enthusiasm and awareness on banking services at the village in Kerala was remarkably different, Mr.Subbarao said. The district, with 32 lakh population and 6 lakh households, have 37 lakh accounts now. Many people have multiple accounts.

Mr. Subbarao said Ernakulam enjoyed many firsts. Earlier, it had achieved 100 per cent coverage under family planning and cent per cent literacy. While the average population for setting up a bank branch in the country was 13,000, it was 7,000 in the case of Kerala. In the case of Ernakulam district, the population factor got further reduced to 4,400.

The feat of meaningful financial inclusion was achieved under a target-driven programme, he said. The idea is that people must utilise it to save money, to get credit, micro insurance and other products. The State had already been listed as having achieved total banking coverage in September 2011, which indicated the widespread presence of branches or alternative facilities such as services of business correspondents. The district has about 850 branches of 43 banks and about 1,000 ATMs .

Meaningful financial inclusion project incorporates operative bank accounts with micro-credit facility, remittance facility and micro insurance. As part of the project, a baseline survey was conducted in the district by Kudumbashree and various banks to assess gaps in the availability of banking services. Apart from Kochi Corporation, 11 municipalities and 84 panchayats were involved in the survey. The survey had revealed that 5 per cent of households had no bank accounts. While 1.18 lakh adults were desirous of having accounts, 1.22 lakh adults intended to avail of loans.

Financial literacy programmes are part of the meaningful financial inclusion initiatives. Banks such as Union Bank of India operates financial literacy centres.

Operation of Aadhaar-enabled bank accounts is another component of the programme. It is envisaged that pension payments, labour welfare payments, kerosene and LPG subsidy as well as public distribution system subsidy will be routed through the accounts.

Financial inclusion does not mean the end of the road, as Mr. Subbarao himself pointed out. Financial literacy and getting the Aadhaar incorporation are among important challenges ahead. The Hindu had brought to light the non-inclusion in certain areas and the absence of branches in potential areas. The bank personnel involved in the campaign had acknowledged the gaps and made it a point to intensify efforts for better inclusion.

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