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All existing, as well as new branches, would have automated teller
machines (ATMs) by the end of the next financial year. Currently, Uttar
Pradesh has about 13,000 bank branches. Chidambaram called upon
banks to reach out to un-served regions more aggressively. He added if
banks could achieve the target of opening 3,000 branches in the state
by March 2014, they could also open 12,000 branches in other regions
of the country. “In the last couple of years, banks have been opening
6,000 branches every year across India — about 18 branches a day,” he
said, adding banks were important for financial inclusion, an increase
in the credit-deposit ratio, deposit mobilisation and credit growth. He
said, “Banks have done remarkably well. Today, we have over 1,00,000
bank branches in the country and about 1,06,000 ATMs” (Reported in
all Financial Dailies of next day.
For Instance, see
Business Standard,
March 30, 2013)
The presence of bank branches in rural areas helps to build forward
and backward linkages between the rural economy and the credit system, as
the past experience has shown. There is case for expanding branch network on
a nuanced scale which can be achieved by operating a rural branch licensing
policy with a system of incentives and disincentives for the banks as in the
past. It is heartening to see that the RBI and the government have has at last
recognised its need. Only such a branch expansion policy will also make it
possible for the growth of SHG bank’s linkage programme. It is hoped that
the SCBs will accept this as a business opportunity and expand their branch
network and outreach.
Pivotal Role Assigned to Business Correspondents (BCs)
As explained above, the authorities have placed immense faith in the
system of agency banking involving non-banking grassroots level institutions
serving as BFs and BCs
,
the scope of which has been considerably expanded.
But, for it to succeed with the permitted distance between a BC and the base
branch, the numbers of base bank branches have to be considerably expanded.
There is also the question of due diligence to be exercised by banks, which
calls for large staff and organisational support.
Ambitious Programmes of Villages to be covered by Banking Services and
Financial Inclusion
The most ambitious programme that the Reserve Bank of India (and the
Government) have set out concerns the coverage of all villages with population
above 2,000 with access to financial services by March 2012 (about 73,113
