The panel set up under former executive at ICICI Bank Nachiket Mor has given a series of recommendations to further financial inclusion that includes separate licences to existing banks or new banks to function as Payments Banks'. These banks may have a minimum entry capital of R50 crore against R500 crore required by a full-service bank as the exposure would be risk free.
Further, the panel suggested setting up of wholesale banks to provide credit and deposit products to other banks and financial institutions that lend to such small businesses and low income customers. The recommendations come at a time when RBI is gearing up to issue new bank licences to the suitable applicants from the corporate sector.
The panel say that by January 2016, all customers should have a universal electronic bank account and access to formal credit within reasonable costs.
The bank account can be opened immediately after the customer has got the Aadhaar card from UIDAI, the panel said. It also recommended setting up of a Unified redressal agency under the finance ministry to deal with customer complaints.
The central bank had launched a three-year financial inclusion programme in April 2010 which prompted banks top open outlets in 200,000 villages. RBI had also asked banks to draw up a financial inclusion plan for 2013-2016 to deepen access.
The Mor committee was formed after governor Raghuram Rajan made a case for furthering financial inclusion in September. For farmers, the panel suggests banks must be allowed to charge freely on loans and any subsidy must be given by the government directly to the farmer instead of through a blanket interest subvention scheme.
This would boost banks' stability by reducing defaults as well as ensure good credit payment culture.