Monday, January 20, 2014

23 January 2014: Comprehensive Financial Services for Small Businesses and Low Income Households

Nachiket Mor

Abstract:
The RBI Committee on Comprehensive Financial Services for Small Businesses and Low Income Households was chaired by Dr. Nachiket Mor. At its core, the Committee makes the case for an approach that moves away from an exclusive focus on any one model linked to existing banks to one where new entrants are permitted and multiple models and partnerships are allowed to emerge, particularly between national full-service banks, regional banks of various types, non-bank finance companies, and financial markets. It recommends that every resident should be issued an Electronic Bank Account almost automatically at the time of receiving their Aadhaar number so that at least on this front it becomes possible to aspire for near universality over the next two years as the Aadhaar process completes its task.

The Committee recommends that the RBI more rapidly license, with lowered entry barriers but otherwise equivalent treatment, more functionally focussed banks such as Payments Banks, Wholesale Consumer Banks, and Wholesale Investment Banks. These new bank types are the next logical steps in the transformation of existing PPIs (such as Airtel Money) and NBFCs, respectively. The Committee also recommends that the existing Priority Sector Lending (PSL) norms be applied in a such a what that they allow and incentivise providers to specialise in one or more sectors of the economy and regions of the country, rather than requiring each and every bank to enter all the segments, while ensuring that the banking system a whole delivers on the full PSL requirements. On customer protection, the Committee proposes a shift in the current approach to one that places greater onus on the financial services provider to provide suitable products and services.

Date: January 23, 2014
Time: 04:00 P.M.

Venue:
Conference Hall, Ground Floor (R&T Building)
National Institute of Public Finance and Policy,
18/2 Satsang Vihar Marg, Special Institutional Area,
New Delhi-110067(INDIA)

Location:

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