Public sector banks to open 316 branches in financial inclusion drive

Public sector banks (PSBs) are targeting to open around 363 brick and mortar branches by December 2022 to scale up Prime Minister Narendra Modi’s financial inclusion drive by covering villages with a population over 3,000 and within 5 km radius.

These branches would cover villages in 21 states, and would be opened by banks in location allocated to them by State Level Banking Committee (SLBC). SLBC is an institutional forum for coordinating and implementing banking policies in states, and has representation from banks, Reserve Bank of India (RBI), National Bank for Agriculture and Rural Development (NABARD), heads of government departments.

Additionally, about 47 branches would be opened by private banks in villages with a population of over 3,000. The progress made by government-owned banks in opening of branches was reviewed in the performance assessment of PSBs by the Ministry of Finance on August 30.

Most branches would be opened in Rajasthan with 80 branches being opened by PSBs and 15 by other banks. This is followed by Madhya Pradesh and Gujarat where 54 and 38 branches would be opened respectively.

ALSO READ: Ministry of Finance reviews performance of PSBs, pushes for credit growth

Bank of Baroda would open about 76 branches in 10 states, the most by any bank, followed by State Bank of India that will open 60 branches in 14 states, and Punjab National Bank opening 41 branches in 10 states.

As per the RBI’s lead bank scheme, banks have been asked to focus on opening brick and mortar branches in village with population above 5,000 without a bank branch of a scheduled commercial bank during the ongoing financial year. Lead Bank Scheme was introduced by the RBI in 1969, and aims at coordinating the activities of banks and other developmental agencies to achieve the objective of enhancing the flow of bank finance to the priority sector and other sectors and to promote banks’ role in the overall development of the rural sector.

However, the centre’s drive would cover villages with a population of over 3,000 with physical branches within 5 kms. This would then leave about 143 unbanked villages in 17 states that would not have physical branches within a 5 km radius.

Last year, the RBI launched a composite Financial Inclusion Index’ (FI-Index) to capture the extent of financial inclusion across the country and also to serve as a tool for calibrating future policy interventions for greater financial inclusion. The index–that captures ease of access, availability and usage of services, and quality of services, quality aspect of financial inclusion–improved to 56.4 as on March 31, 2022 from 53.9 last year.

As per the RBI’s National Strategy for Financial Inclusion (NSFI): 2019-24–that lays down milestones and action plans to be implemented for enhancing financial inclusion during the period–the key achievement under NSFI during FY22 was to ensure the availability of a banking outlet within a 5 km radius of every village/hamlet of 500 households in hilly areas, in 99.94 per cent of the identified villages.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor