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No more bank clones
Author(s) Smita Aggarwal Publication(s) CAFRAL Blog Published Date 06 Feb 2014
br / RBI has for the last several years persistently pursued financial inclusion as a core agenda. However, it continues to remain one of the biggest challenges. The traditional banking models in India have failed to penetrate the low-income and self- employed segment due to reasons such as non- accessibility, lack of well defined revenue streams, informal nature of market, lack of documentation, lack of history of credit behavior and formal savings, high existing cost structure of full service banks and high risks associated with this segment.br / br / The recent report of the Nachiket Mor Committee has made several recommendations that could make it more viable for banks to pursue the financial inclusion agenda. Some of these are, first, banks may be permitted to create a subsidiary dedicated to this segment. This would allow banks to have the desired focus with a customised business model and differentiated cost structure suitable to cater to this segment. Second, it is proposed tha
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  • The Viability of these new type of banks depends on the outreach for the unbanked who are far away from banking. Most of the Urban people are already banked so we need to ensure that these type of banks are opened more in rural places than in urban. We already have other type of payment services from the payment banks which has got licenses, such as airtelmoney from airtel, mpesa from vodafone so the technology & the availability of these banks ensures the unb
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