Private banks urged to focus on financial inclusion schemes

Mumbai, Sept 17

Private sector banks should focus on financial inclusion schemes of the government as they can get access to low-cost deposits and boost non-interest income, said Department of Financial Services Secretary Sanjay Malhotra.

‘Private banks contribution low’

While private sector banks’ share in total credit is more than 40 per cent, their contribution in some of the government’s financial inclusion schemes is low.

He noted that private sector banks’ contribution to the Pradhan Mantri Jan Dhan Yojana accounts was only 3 per cent, Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana (only 4 per cent), Atal Pension Yojana (only 7 per cent) and Kisan Credit Card (only 7 per cent).

Malhotra observed that while most of the private sector banks have presence in urban areas, they should realise that rural economy is also growing.

“Public Sector Banks, Regional Rural Banks and co-operative banks who played major role in financial inclusion have gained from it. The average balance in a Jan Dhan account is ₹4,000.

“So, it helps banks get access to cheap CASA deposits. And, similarly, in other schemes banks can earn fees to increase their non-interest income,” he said at the 75th AGM of IBA.

Malhotra said all banks need to pay adequate attention to consumer service.

The finance ministry is planning to do a consumer service rating of all the public and private sector banks.

Published on

September 17, 2022

Leave a Reply

Your email address will not be published. Required fields are marked *