Banks across Karnataka to extend insurance and open “no-frills” accounts

Commercial banks across Karnataka are planning to extend insurance and other banking services to all villages with a population of over 2,000 under financial inclusion plan (FIPs). Under this the targeted beneficiaries to all villages will be provided banking facilities by way of a regular brick and mortar branch or using information and communication technology through banking correspondent (BC) model.

“These services will be provided using appropriate technology back up. In this regard, all banks have submitted their board approved FIPs as directed by Reserve Bank of India (RBI). The banks will meet the target of March 2012 set by the government of India for providing banking facilities to all villages with 2,000 and above population,” Basant Seth, chairman and managing director, Syndicate Bank and convener, State Level Bankers’ Committee, said.

He said, in Karnataka there are about 4,858 villages with a population of over 2,000 and of this, there are no banking facilities in 3,367 villages.

On May 14, 2009 a meeting was held between the Governor of RBI and the senior officials of the state government and banks in which it was decided that all house holds across all villages in Karnataka, which have been issued photo identity cards by the state government, will be covered under the financial inclusion program by opening “no frills” accounts.

Bank branches have been supplied the data obtained from department of food and civil supplies was mapped village wise as per service area of branches and printed templates along with control sheets through lead district managers for verification of the existing accounts. Seth informed, by May 31, 2010, the process of opening of “no frills” accounts under renewed drive will be completed.

Regarding the credit flow to Micro and Small Enterprises sector, Seth said that banks have been instructed not to ask for collateral security for loans up to Rs 10 lakh, earlier the limit was up to Rs 5 lakh. He further added, RBI has advised the commercial banks to achieve a 20 per cent year-on-year growth, in credit to micro and small enterprise in order to increase the credit flow.

The website of SLBC was also inaugurated on this occasion by the state chief secretary S V Ranganath.