Bangalore : Pranab asks Banks to Reach out to Ignored Segments of People
From Our Special Correspondent
Daijiworld Media Network
Bangalore, Mar 23: Union Finance Minister Pranab Kumar Mukherjee has called upon Bankers, policy-makers and other stake-holders for financial inclusion to adopt a change in their mindset to reach out to the ignored and uncovered sections of the people as part of the strategy of following new approaches to ensure financial inclusion.
Inaugurating a workshop of financial literacy in the city on Monday, he said the un-reached and under-reached segments of the population need to be covered if the thrust on financial inclusion, growth and sustainable prosperity was to be successful, which was possible only with a change in mindset.
Expanding branch network, setting up newer institutions like the Regional Rural Banks (RRBs) and setting priority sector targets for extending credit facilities to broad categories of the financially excluded alone was not enough, though it had made a tangible impact and altered many a life. The outcome of these efforts have been mixed due to the sheer enormity of the challenge, he said.
The two-day workshop has been hosted by the Reserve Bank of India (RBI) and the Organisation for Economic Cooperation and Development (OECD).
Mukherjee said financial literacy had also been linked to saving behaviour and portfolio choice, often connecting financial knowledge to one specific type of transaction. He mentioned that it was lamentable that as many as 5.7 lakh villages all over the country still lacked bank branches, which were very crucial if the objective of financial inclusion was to be achieved.
However, for the financially less literate a different approach was necessary as they tend to be less likely to plan for retirement, to accumulate wealth and to make wise investment decisions. The recent global financial crisis has raised the question of whether the lack of financial knowledge on the part of average citizens had led them to takeout adjustable rate mortgages (ARMs) or incur credit card debt they could not afford.
Defining financial education and literacy as the capacity to have familiarity with and understanding of financial market products, especially rewards and risks to make informed choices, the Finance Minister said financial literacy primarily related to personal financial education to enable individuals take effective actions to improve their well-being and avoid distress in financial matters.
In this context, he said the initiative taken by RBI with the help of state government to impart financial education in Karnataka by including financial literacy in the school curriculum.
Earlier, RBI Governor Dr D Subbarao said the most enduring part of the platinum jubilee of the Reserve Bank celebrations has been the outreach programme which involved the top management of the Bank fanning out across the country visiting unbanked village.
The objectives of the outreach programme were to understand the needs and aspiration of emerging India living in the villages and to demystify the Reserve Bank and explain to people at large its role.
The financial literacy important for the reason that there is no country whose economy has developed and matured without a corresponding deepening of the financial sector, which was possible only when individuals and households are financially literate and able to make informed choices about how they save, borrow and invest, he said.
"Nearly half of our population lacks access to banking and other financial services. If we can provide the left behind population access to the banking services, we could raise household and overall domestic savings even further, which will fulfill one of the necessary conditions to achieve the double digit growth that we aspire for, “he said.
Dr Subbarao said the lead bank in each district has been asked to draw a roadmap by the end of this month for ensuring that all villages with a population of over 2,000 will have access to financial services through a banking outlet, not necessarily a bank branch, by March 2012.
Ambassador Richard A Boucher, Deputy Secretary General of OECD said financial education was a major and effective tool for empowering the poorest people to look after their families and development the nation.
"The OECD is keen to promote financial education worldwide through its international network on financial education and close partnership with key countries like India,’’ he said complimenting India and the RBI for their unique efforts to improve financial inclusion.
Interacting with the media, RBI Deputy Governor Dr K C Chakrabarty said inflation has probably peaked at present. The inflation will depend on oil and monsoon. If they are reasonably well placed.
"Inflation will come down in the next 2 to 3 months. The rise in inflation was the reason why the RBI raised interest rates. We cannot predict the future. We have to wait till April,” he said pointing out that asset bubbles were there in all economies whether known or unknown.
Prizes were awarded to winners of quiz contests for school and college students at the taluk and district level to mark the platinum jubilee celebrations of RBI.