Skip to main content

Regulators team up for financial inclusion


Banks, insurance companies, mutual funds and pension funds will now chip in to createacommon strategy to further the government´s financial inclusion agenda inatargeted manner and based onacustomer´s need.
A national strategy for financial inclusion is almost ready and soon all financial entities would be directed to coordinate with each other to introduce products step by step.
They might even have to customise offerings based on the financial inclusion journey of a customer, Reserve Bank of India Deputy Governor SS Mundra told Business Standard in an interview.
But before that, the financial institutions would put their heads together to educate customers about the importance of various products.
A national strategy for financial education is also getting formulated asacorollary to the inclusion strategy.
An interregulatory coordination group, plus an outside group of experts (the financial inclusion advisory committee) is busy creating the plan.
The first draft is ready and was discussed atarecent interregulatory meeting.
It would be finetuned further, Mundra said.
All the financial regulators —Reserve Bank of India (RBI) for banking, the Securities Exchange Board of India (Sebi) for markets, the Insurance Regulatory and 
Development Authority of India (Irdai) for insurance, the Pension Fund Regulatory and Development Authority (PFRDA) —have products to bring the excluded population into the fold. But there is no common strategy.
The idea is to present a package toaperson by understanding the stage of the inclusion journey he is in. “Someone opens an account with no job at hand and you try to sell an insurance or pension product to that person …then it´s meaningless,” Mundra said, adding opening an account is just the start of the inclusion journey.
“Once an account is opened, there should be some transaction.
Then the person should be given some productive credit.
Once credit is given and she can generate surplus, that surplus should be used to buy some microinsurance, and save some money forarainy day or for old age. In those stages, pensions and investment products would be introduced.” There is no need to develop new products, but the credit scoring model will have to change and the products customised.
The strategy here would be determining what kind of credit should be given once an account is opened, and then what kind of products should be offered.
There would be changes in how the information technology would be used, and how a customer can be tracked.
“It is important to create a different scoring model for these customers.
How various people or groups be given suitable products, which would be useful for the customer, depending on his or her journey, rather than peddling off the shelf products, which is exactly opposite of what you need but is something want to sell,” Mundra said.
Here, the national strategy on financial education comes into place.
Education would ensure there is already demand for the products.
“The regulators have done alot in terms of supply.
Now, if customers are not aware of these products, all these supplies have no meaning,” he said, adding demonetisation had increased the supply of these products and demand was also increasing, but more needed to be done.
The Business standard, New Delhi, 27th July 2017

Comments

Popular posts from this blog

Budget: Startup sector gets new Fund of Funds, FM to allocate Rs 10K cr

  The Indian startup sector received a boost with Finance Minister Nirmala Sitharaman announcing the establishment of a new fund of funds (FoF) in the Budget 2025. The minister unveiled a fresh FoF with an expanded scope, allocating Rs 10,000 crore. The initial fund of funds announced by the government with an investment of Rs 10,000 crore successfully catalysed commitments worth Rs 91,000 crore, the minister said.   “The renewal of the Rs 10,000 crore commitment to the Fund of Funds for alternative investment funds (AIFs) is a significant step forward for the Indian startup and investment ecosystem. The initial Rs 10,000 crore commitment catalysed Rs 91,000 crore in investments, and I fully expect this fresh infusion to attract an additional Rs 1 lakh to Rs 1.5 lakh crore in capital,” said Anirudh Damani, managing partner, Artha Venture Funds.   Damani further added that this initiative will provide much-needed growth capital to early-stage startups, further strengthenin...

After RBI rate cut, check latest home loan interest rates of top banks for loans above Rs 75 lakh

  The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points from 6.50% to 6.25% in its monetary policy review as announced on February 7, 2025. After the RBI repo rate cut, banks such as SBI, Canara Bank, PNB, and Union Bank among others have cut their repo linked lending rates. Most other banks are also expected to cut their lending rates in line with the RBI rate cut. After banks cut their lending rates, their home loan borrowers will have to pay less interest. Normally, when a lender cuts the lending rate, borrowers get two options: Either to go for a reduction in EMIs or reduce the tenure of the loan. The second option will help the borrowers clear their home loan outstanding faster. In case, the borrower goes for reduction in EMI then the lower lending rate of the lender would mean lower Equated Monthly Installment (EMI) for borrowers.   EMI is the amount you will pay on a specific date each month till the loan is repaid in full.A repo rate-linked home ...

GST collections rise 9.9% to exceed Rs 1.96 trillion in March 2025

  Gross GST collection in March grew 9.9 per cent to over Rs 1.96 lakh crore, government data showed on Tuesday. GST revenue from domestic transactions rose 8.8 per cent to Rs 1.49 lakh crore, while revenue from imported goods was higher 13.56 per cent to Rs 46,919 crore. Total refunds during March rose 41 per cent to Rs 19,615 crore. After adjusting refunds, net GST revenue stood at over Rs 1.76 lakh crore in March 2025, a 7.3 per cent growth over the year-ago period.       - Business Standard 02 th March, 2025