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Naxal attacks could hit growth of financial inclusion

Increased Naxal attacks in the hinterland could well derail the government’s ambitious plans of expanding financial inclusion in the country.

business Updated: Apr 18, 2010 20:42 IST
Mahua Venkatesh

Increased Naxal attacks in the hinterland could well derail the government’s ambitious plans of expanding financial inclusion in the country.

State owned banks that have got the mandate to increase banking penetration and bring more people under their ambit may now be forced to rethink their strategy.

A senior public sector official told Hindustan Times on the condition of anonymity that executives are not comfortable working in semi-urban areas — especially in Naxal-infested states like Chattisgarh, West Bengal and Bihar. “The top managements of banks would have to think of the safety of their existing employees and those who may have to man new branches as they come up in the unbanked areas,” the official said.

The finance ministry has underlined the need to provide banking facilities to villages with a population of 2,000. Public sector banks have been strategising on this requirement.

The banks are expected to complete the project by 2012, but “with the recent attacks, there could be some thinking on the issue,” the official said.

State-owned banks would be required to cover 60,000 habitations either through banking correspondents — authorised agents who can carry out banking activities on behalf of a bank in villages that do not have branches. Alternatively, they would need to set up branches, finance minister Pranab Mukherjee had said in his budget speech earlier this year.

Bank chiefs, however, are putting up a brave front. “We need to augment banking network and this would require opening many more brick and mortar branches. We would go ahead with our plans,” T.M. Bhasin, chairman and managing director, Indian Bank said.

The chairman of another bank said those associated with Maoist activities are not opposed to social development. “No Naxalite has ever attacked a bank,” he said.

The Indian Banks’ Association (IBA) has also been working out a strategy to facilitate branchless banking in the villages with the help of micro automatic teller machines (ATM) to facilitate banking transactions.