From Our Special Correspondent
Daijiworld Media Network - Bangalore

Bangalore, Mar 28: Banking sector in the state is legging behind in the implementation of Reserve Bank of India’s (RBI) ambitious programme of financial inclusion covering all villages with a population of 2,000 and above with banking services.

Though the state is far ahead in terms of the banking network, the banks in Karnataka have barely achieved 50 % of the target by end of February 2011.

According to Basanth Seth, Chairman of State Level Bankers’ Committee (SLBC), banks in Karnataka have been able to cover barely 1,121 villages with a population of 2000 and above as against the target of covering 2,253 vilalges by March 2011.

The shortfall in target relates mostly to regional rural banks (RRBs), which are presently in the midst of migration to core banking solution (CBS), he said.

Delivering a keynote address at the 116th meeting of SLBC, he urged RRBs to take suitable steps and speed up the process so as to cover maximum number of villages.

“Issues like connectivity, inadequacy of training and manpower at field level, delay in issue and activation of smart cards among others were the main reasons for the slow progress in achieving financial inclusion,” Seth said adding that they required urgent attention.

Seth, who is also Chairman and Managing Director of Syndicate Bank, said products like savings bank accounts, remittances, entrepreneurial credit, micro insurance should be made available to each account holder under financial inclusion programme.

The RBI has identified 3,395 unbanked villages in Karnataka to be brought under business correspondent (BC) model to achieve financial inclusion.

As of now, villages in Kolar and Chikkaballapur districts have been fully covered under the BC model.

RBI Governor D Subbarao, who was in Bangalore recently to review the progress of financial inclusion by banks in Karnataka, had directed all the banks to submit a concept paper on ‘meaningful financial inclusion’.

All bankers need to deliberate on this crucial aspect and come out with their suggestions, Seth said.

While reviewing the performance of banks in the state as on December 2010, the SLBC Chairman informed that the aggregate deposits stood at Rs 3,04,413 crore while aggregate advances were Rs 2,37,977 crore with a credit deposit ratio of 78.12 %.

The advances to priority sector stood at Rs 1,03,302 crore, constituting 46.83 % of credit disbursement, surpassing RBI stipulation of achieving 40 %.

Similarly, the advances to agriculture sector were Rs 45,843 crore comprising 19.26 % of the total credit, which is above the stipulated level of 18 %. Advances to MSME sector stood at Rs 37,545 crore as at December 2010.

Vijay Bhaskar, RBI Regional Director, said the regulator has identified nine villages in Karnataka for adoption as model villages for financial inclusion and they will be showcased across the country to promote the novel concept.

He also urged the banks in the state to spread more awareness about the financial literacy.

A Kannada version of the book on “Inclusive growth through Business Correspondent,” brought out by Indian Institute of Banking and Finance, southern zonal office, was released by S V Ranganath, Chief Secretary, Government of Karnataka.

M N Krishnamurthy, Vice President, Indian Banks Association, briefed the house on “Swabhimaan”, the national level awareness campaign on financial inclusion.