The RBI appointed Deepak Mohanty Committee (Committee on Medium-term Path on Financial Inclusion) to work out a medium-term (five year) measurable action plan for financial inclusion has submitted its report by suggesting a broadened agenda and action plan for financial inclusion.
Recognizing the substantial progress achieved on the front, especially with the launch of the JDY, the Committee observed that still there are huge gap to be filled to realise the best outcome.
According to the committee, “there were significant gaps in terms of usage, inadequate ‘last mile’ service delivery, and exclusion of women as well as small and marginal farmers and very low formal link for micro and small enterprises.”
Because of this unfilled areas under financial inclusion targets, the Committee in its report sets a wider vision of financial inclusion.
According to this wider version, financial inclusion implies “convenient’ access to a basket of basic formal financial products and services.” The basket should include various financial products and services including savings, remittance, credit, government-supported insurance and pension products to small and marginal farmers and low-income households at reasonable cost with adequate protection progressively supplemented by social cash transfers.
The committee also included services to small and marginal enterprises under financial inclusion. Providing formal finance to small and marginal enterprises to formal finance with a greater reliance on technology to cut costs and improve service delivery is an essential part of financial inclusion.
When financial inclusion is broadened in these directions, all sections that are outside the financial inclusion drive till now will be served by 2021. According to the committee, “over 90 per cent of the hitherto underserved sections of society become active stakeholders in economic progress empowered by formal finance.”
Some of the recommendations of the committee are:
· Promotion of Female account opening: Special efforts by banks to step up account opening for female.
· Government may consider a deposit scheme for the girl child – Sukanya Shiksha – as a welfare measure.
· Sharing of individual account holder information with credit information companies by using an Aadhaar like platform
· Maximum utilisstion of mobile banking technology to promote Government to People payments. It will improve ‘last mile’ service delivery and to translate financial access into enhanced convenience and usage
· Digitalisation of land records to promote agricultural lending In order to increase formal credit supply to all agrarian segments, digitisation of land records is the way forward. This should be backed by an Aadhaar-linked mechanism for Credit Eligibility Certificates to facilitate credit flow to actual cultivators.
· Phase out the agricultural interest subvention scheme and introduce universal crop insurance scheme: An affordable technology aided universal crop insurance scheme can be relied for marginal and small farmers for all crops with a monetary ceiling of Rs.200,000 at a nominal premium to end agrarian distress.
· Scheme of Gold KCC: A scheme of ‘Gold KCC’ (kisan credit card) with higher flexibility for borrowers with good repayment records could be launched.
· Schemes for MSMEs: a unique identification for MSMEs and sharing of such information with credit bureaus will help the sector to avail more funds.
· To enhance the financing for MSME Sector a movable collateral registry may be introduced.
· Multilingual mobile app: The National Payments Corporation of India (NPCI) can develop a multi-lingual mobile application for customers who use non-smart phones.
Several such small suggestions were made by the committee to enhance financial products and services to all groups and by better utilizing technology and existing infrastructure.