With several new players getting ready to enter the banking scene, the sector is set to witness changes in the days ahead. Eleven entities, including India Post, have secured new licences for payment banks. But the question looming large over the banking arena is whether the ordinary borrower will benefit from the initiative.
RBI had announced its intention to sanction new banks in the small banks and payment banks categories as part of its financial inclusion programme. The small banks will be permitted to accept deposits and extend loans to small businesses, small farmers, and micro-industries. Individuals, professionals, NBFCs and microfinance institutions are among eligible entities.
The Kerala-based Muthoot group was an applicant, but failed to get payment bank licence. The non-banking financial company had already opened ‘white label’ ATMs at several locations.
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Payment banks are expected to provide small savings accounts. NBFCs, Corporate Business Correspondents, mobile telephone companies, and supermarket chains were allowed to apply for licences. The payment banks will be allowed to accept current and savings accounts, up to Rs.1 lakh per customer.
Modern post offices
Post offices in Kerala have undergone modernisation as part of its preparedness to enter banking. Major post offices are being brought under the core banking solution. Over 50 ATMS are being set up as part of the drive, according to India Post officials. Select post offices are already offering products such as insurance, money remittance and mutual funds. While the government is going ahead with the financial inclusion scheme, bank employees consider the new move as against the common man. AIBEA leader C.D. Josson claims the government move is part of efforts to hand over banking sector to private agencies. According to figures released by the bank employees’ organisations, bad loans in banking sector had been going up. The bad loans had risen to Rs.250,000 crore as on March 31, 2014 from Rs.39,030 crore as on March 31, 2008. Bad loans written off in 13 years till 2014 amounted to Rs.2,04,000 crore, according to AIBEA.
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The government has opened Mahila Bank and Mudra (micro-units development and refinance agency) Bank to cater to the credit needs of women as well as micro and small businesses.