Public sector banks which have run up crores of “no-frill” accounts as part of a financial inclusion policy to bring the unbanked into the banking system are facing a headache that might bleed them — about 40 per cent of these customers are yet to acquire the habit of parking their funds in banks.
Bankers say these accounts cost them money with no matching returns, though there are no clear estimates on the amounts involved.
Government officials say these accounts are meant to draw people into the habit of saving money.
State-owned banks have opened 3.3 crore no-frill accounts for which there are no minimum deposits are required. About 30 to 35 per cent of them are lying dormant with no operations, said a senior government official who did not want to be identified.
“This is becoming a cause for concern for the government, which is pushing for financial inclusion,” said a public sector bank executive on condition of anonymity.
JM Garg, chairman and managing director (CMD), Corporation Bank said that his bank alone has about 4.5 lakh no-frill accounts, adding his bank had correspondents where there were no branches to draw people into the banking net.
SK Goel, CMD, Uco Bank told Hindustan Times that several of these entry-level depositors are novices in banking.
“Most of the account holders are daily wagers and they still are not used to banking,” Goel said.