ENS Economic Bureau : Mumbai, Wed Jan 08 2014, 01:49 hrs
A panel set up by the RBI to promote financial inclusion has proposed universal electronic bank accounts to all Indian citizens above the age of 18 by January 2016.
While laying down its vision statement for financial inclusion and deepening, the panel headed by Nachiket Mor, who is also a director on the central board of the RBI, said, "every resident should be issued a universal electronic bank account automatically at the time of receiving their Aadhaar number by a high quality, national, full-service bank."
An instruction to open the bank account should be initiated by the Unique Identification Authority of India after the issue of an Aadhaar number to an individual over the age of 18, it said.
The committee has recommended that the RBI should issue a circular indicating that no bank can refuse to open an account for a customer who has adequate KYC proof which specifically includes Aadhaar.
According to the panel, by January 1, 2016, each low-income household and small-business would have "convenient" access to providers that have the ability to offer them "suitable" investment and deposit products, and pay "reasonable" charges for their services. By 2016, the number and distribution of electronic payment access points would be such that every single resident would be within a 15-minute walking distance from such a point anywhere in the country.
It said each such point would allow residents to deposit and withdraw cash to and from their bank accounts and transfer balances from one bank account to another, in a secure environment, for both very small and very large amounts, and pay "reasonable" charges for all of these services. "At least one of the deposit products accessible to every resident through the payment access points would offer a positive real rate of return over the consumer price index," it said.
However, opposing loan waivers and interest subsidies, it said the permission to price farm loans below the base rate should be withdrawn.
Committee's recommendations
* Bank's can't turn down a customer if he has KYC including Aadhaar. No documentary proof of current address to be required.
* SLR should be eliminated
* Cap on all inclusive interest rates (base rate plus 8%) charged by originating entity from borrowers should be removed
* Banks should freely price farm loans based on their risk model and the subventions and waivers by the government should be directly transferred
* Mandatory reporting to credit bureaus by all banks for loans (individual and SME)
* Banks must be required to disclose their concentration to each segment in their financial statements.
* Banks should be permitted to purchase portfolio level protection (including derivatives) against all forms of price risks
* Risk-based approach to be followed for qualification for NPA and for defining sub-standard account.
