Jaipur: Stressing that "financial inclusion is no longer an option, but a compulsion", Prime Minister's Economic Advisory Council (PMEAC) chairman C Rangarajan today said growth of the bank-SHG (Self Help Group) linkage programme would give a boost to the micro finance sector, reports PTI.
Delivering the key note address at a seminar here on microfinance and financial inclusion, Rangarajan said that expansion of the business correspondents programme would also contribute to growth of the sector.
"Bank-SHG linkage programme and expansion of business correspondents model will constitute the main pillars of the future development of bank-related micro finance, even as other forms of micro finance institution will continue to grow," Mr Rangarajan said.
"The bank-SHG linkage scheme has proved to be an effective way of providing credit to very small borrowers and this needs to be further strengthened. This has worked well and has contributed significantly to financial inclusion, as the financial inclusion attained through SHGs is sustainable and scalable on account of its various positive features," he said.
"One of the distinctive features of the programme has been the high recovery rate. However, the spread of SHGs is very uneven and is more concentrated in southern states. This regional imbalance needs to be corrected," the former RBI governor said.
He said that in order to increase the outreach of the banking sector, the Reserve Bank of India (RBI) has permitted banks to use the service of specified institutions as intermediaries for providing banking services.
However, Mr Rangarajan said it is regrettable that the scheme has not taken off in a big way.
"The business facilitator and correspondent model needs to be effectively implemented, as the model has high potential. Banks must take the initiative to remove the obstacles that come in the way of an extended use of facilitators and correspondents," Mr Rangarajan said.
"The recent announcement of the RBI to allow the corporates with a wide network of retail outlets to become business correspondents is a welcome step," he said.
"However, one critical issue in the effective use of this model revolves around as to who should bear the additional transaction costs resulting from the employment of facilitators and correspondents. This, of course, depends upon the level of use.
"When large transactions, such as those involved in the Mahatma Gandhi Rural Employment Guarantee Act (MGNREGA), are entrusted to the banks with compensation, the scheme can take off," he said.
He also suggested ways to strengthening the banking sector in rural areas.
Mr Rangarajan said that rural branches must go beyond merely providing credit and suggested that in districts where the population per branch is much higher that the national average, commercial banks should be encouraged to open branches.
He said that a simplified document for the grant of small loans must also be evolved.
He also focused on issues related to the average size of loans, low cost institutions having a rural bias, local feel and pro-poor focus and the role of technology.
"In the task of making service available to everyone, technology has an important role to play. The required outreach into interiors with low operational cost is only possible with the use of appropriate technology," he said.
"Technology has to be leveraged to create channels beyond branch networks to reach the unbanked and to extend to them banking services similar to those dispensed from branches," he said.
Hyderabad: The Central Bureau of Investigation (CBI) today questioned Satyam founder and former chairman B Ramalinga Raju to further probe the multi-crore accounting scam in the IT firm, reports PTI.
Mr Raju, the prime accused in the Satyam fraud case, reached the CBI office at around 1000 hours and is likely to be questioned till afternoon, a senior CBI official told PTI.
The investigating agency had yesterday served a notice to Mr Raju, summoning him for further questioning into the 2008 scam where he is the prime accused.
According to sources, the questions will revolve around the alleged fund diversion from Satyam Computers to some foreign countries to which the CBI has sent Letters Rogatory (LR) and is waiting for the reply.
Mr Raju was discharged from the NIMS hospital here last week where he was undergoing treatment for Hepatitis-C and heart problems since September.
Dubai: Indian companies are among the contenders for a multi-billion dollar project for expansion of the Prince Muhammad bin Abdulaziz International Airport in Madinah, which has seen active interest from as many as eight multinational consortiums, reports PTI.
The companies bidding for the contract include multinationals from the US, Canada, France, Spain, Malaysia, India, Korea and Turkey, in addition to Arab companies from the UAE and Lebanon, a newspaper report said.
The expansion project will increase the airport's capacity to 25 million passengers annually.
According to the Arab News report, the General Authority of Civil Aviation (GACA) has organised a meeting with the eight consortiums that have been prequalified to submit competitive bids to develop, finance and operate the airport under a long-term public-private sector partnership.
Without naming the companies involved, Ala Samman, the supervisor of the project, said the meeting was organised to answer the queries of companies bidding for the contract before they present their financial and technical offers.
GACA has appointed the International Finance Corporation of the World Bank as the project's financial consultant.
Khaled Al-Khaibari, the spokesman of the authority, said the Prince Muhammad bin Abdulaziz Airport will be the first international airport in the Kingdom to be owned by the private sector.