Mumbai: Commercial banks should approach financial inclusion, or the process of spreading banking services to unbanked areas, as a viable business, said K.C. Chakrabarty, Reserve Bank of India (RBI) deputy governor.
“Banks must not approach financial inclusion as a charity but a viable business model,” Chakrabarty said.
“Our regulations are one of the most flexible to support financial inclusion,” Chakrabarty said at the Mint conference, Architecture of Financial Inclusion: The Indian Model, in Mumbai on Wednesday.
The implementation of the unique identity programme and linking the Aadhaar number to a bank account will solve issues related to know-your-customer norms, Chakrabarty said.
More than half of India’s adult population does not have access to formal banking services.
Without the proper use of technology, it is not possible to achieve financial inclusion, Chakrabarty said.
Under current norms, Indian banks need to give 40% of their loans to weaker sections of the society and farmers among others, aiding financial inclusion.
RBI has been pushing commercial banks to promote financial inclusion through various models, including the use of business correspondents and opening zero balance accounts.