More gramin banks likely in unbanked areas

Finance Minister Pranab Mukherjee is likely to meet gramin bank chiefs on July 23 to review the status of financial inclusion programme, especially in unbanked areas, reports Mahua Venkatesh.

Finance Minister Pranab Mukherjee is likely to meet gramin bank chiefs on July 23 to review the status of financial inclusion programme, especially in unbanked areas. The government may also look at absorbing losses for a period of five years of new gramin bank branches in the north-east and other terrorism-prone areas.

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Gramin banks were earlier called regional rural banks (RRBs).

Around 750 new branches are slated to be opened this year, a source familiar with the developments said.

“The scheduled commercial banks are able to manage losses incurred at branches in non-profitable areas due to their sheer size and volume of business from other proditable areas. However, for regional rural banks, this kind of cross subsidisation is not possible and therefore it is important to absorb the losses for at least five years,” Dilip Kumar Mukherjee, secretary-general, All India Regional Rural Bank Employees Association told HT.

The Reserve Bank of India is also likely to look into the issue.

The issue of disbursement of agriculture and priority sector credit would also be discussed in the meeting, said a government source.

A report submitted to RBI on Upgradation of Technology had suggested that core banking solutions (CBS) should be implemented in these banks by 2011. CBS aids customers through anywhere and anytime banking. The technology has been implemented by commercial banks to improve efficiency.