Irrespective of the party in power, ushering in greater financial inclusion will remain on top of its priorities. This is also exemplified by the recent in-principle approval to grant bank licenses to IDFC and Bandhan Financial Services. Both have been strong and credible players in the field. IDFC with its strong management and leadership practices and pipeline can ensure a replication of its successes in area of infrastructure development to a much larger canvas. While Bandhan has earned a good reputation of delivering financial inclusion at the bottom of the pyramid, through its activities of microfinance in the cash-starved Eastern and North Eastern parts of the country, it will require to shore up its management best practices and scale to other parts of the country and serve larger sections of the unbanked.
The Nachiket Mor Committee on Financial Inclusion has addressed peripheral issues of financial inclusion. Since 2004, everybody has pretended that financial inclusion is a problem of access to bank account and not availability of credit. He has not only further reinforced this impression but suggested ways to do away with PSL altogether. He has also proposed a highly convoluted adjusted PSL (APSL Scheme), roughly tailored around incentive schemes in corporations and even there, such schemes having so many objectives, permutations and combinations tend to fail. What comes out clearly is Committee’s complete ignorance of realities of rural India and poor India.
On the other hand, the lonely voice arguing for availability of credit as bedrock of financial inclusion has been Dr K C Chakrabarty who is leaving RBI and making the RBI Board that much the poorer. There are very few eligible candidates to match Dr Chakrabarty, either in zeal or understanding of financial inclusion. He also managed to cover quite a bit of ground on the supply side.
Key to financial inclusion is to ensure that the supply side initiatives are ably supported by the demand side. Availability of timely and cheaper credit coupled with capacity building with the help of Self Help Groups is the way to go.