Modi’s Financial Inclusion Plan

Who pays Who benefits?

 

One of prime minister Narendra Modi’s ambitious plans is the massive financial inclusion drive which envisages a bank account for 150 million Indians by August 2018. The idea of financial inclusion is not new—it has been the buzzword at the Reserve Bank of India (RBI) since 2005, but without much success. In fact, several thousand new bank accounts, opened under pressure from RBI, remained dormant or did not have a single transaction. Why will it be different this time? Well, Mr Modi reportedly proposes an overdraft facility of Rs5,000 for each account, besides a RuPay debit card with inbuilt accident insurance cover of Rs1 lakh. The overdraft will be backstopped by a Credit Guarantee Fund.


Had something like this been announced by the Congress government, it would have been immediately dubbed a loan mela or another subsidy scheme. But Mr Modi’s spectacular election campaign and the 12-year Gujarat development record have ensured that doubts and misgivings remain muted.


Financial inclusion and empowering the poor is a necessity. There is no doubt at all that the poor are forced to borrow at significantly higher rates, are badly exploited by moneylenders and also forced to pay more for all goods and services. When financial inclusion was attempted though micro-finance, it led to exploitation by rapacious micro financiers, insurers and others.


Will Modi sarkar succeed in getting the same government officials to deliver where others have failed? Will moneylenders not exploit the Rs5,000 overdraft facility for repayment of old borrowings? What will the Modi government do to prevent poor, unbanked, rural folk from blowing up the overdraft, as they usually do, on marriages and religious ceremonies and on liquor?


It is significant that KR Kamath, chairman of the Indian Banks Association, while talking about how bankers were working overtime on this project said, “More than being commercially viable, it is important to link every household with the banking system.” But what happens when the overdraft has been spent and there is a default in the books of our nationalised banks? It will not only be a cost to the exchequer, but all the householders, who were recently included, will be excluded from the system again. We will watch for answers, when the prime minister unveils his grand plan for financial inclusion from the Red Fort on Independence Day.


The second phase of the financial inclusion plan talks about a pension scheme for the lower income and unorganised sector and micro-insurance through the nationalised insurance companies. Premium for insurance products will come from schemes like the Rashtriya Swasthya Bima Yogana.


A catchy name, terrific tag line, nice logo and a marketing blitzkrieg is all very well, but we would much rather hear a discussion on how the Modi government has studied and fixed all the leakages and malpractices that prevented government-directed financial inclusion and insurance schemes from working.


Instead, all we are hearing from officials and bureaucrats, desperate to please a powerful prime minister, is about the spending and hiring spree (20,000 ATMs, 50,000 banking correspondents and 7,000 branches) planned to meet the ambitious targets.

Like this story? Get our top stories by email.

User

COMMENTS

Rajgopal

5 years ago

The ideas are good. With good intentions the likely problems can be overcome.

REPLY

Nagesh Kini

In Reply to Rajgopal 5 years ago

Sorry Rajgopal, you are wrong.It is yet another bad populist idea plain and simple.
You might not have seen to what happened to the various bank advances under the Indira-Janardhan Poojary's post emergency Loan Melas where the Congress Party got the banks to liberally dish our loans to all and sundry and when the banks went on to recover they were rebuffed - "You came to give us the money when we didn't want it and a substantial portion has been taken away by the Party goons. At the most we may repay whatever came our way." This is exactly what will happen to the "Inclusion Overdrafts" which may best be written off ab initio!

RBI manages its ‘Financial Inclusion’

Educational loan for staff hiked to Rs20 lakh @ 5%

 

While RBI is gearing up to play a key role in the grand plan to bring 150 million households into the formal financial system, RBI employees have obtained a nice fat ‘financial inclusion’ of their own.

Reserve Bank officials already enjoy the most generous perks among government employees, covering every conceivable personal expense including books, computers, gadgets, petrol expenses, in addition to generous travel allowances with few questions asked.
 
If this were not enough, their children were entitled to a hefty education loan of Rs10 lakh at a concessional rate of 5% to 8%.  The central bank has recently doubled the limit for this concessional loan to Rs20 lakh at the same low interest. It is no surprise then that so many children of central bankers can afford a foreign education.

What is certainly a surprise is that so many of these children then end up working for Indian and foreign banks under RBI’s regulation. Is it any wonder that RBI has only recently begun to work on a consumer charter and it supervision remains rather ineffective?

Like this story? Get our top stories by email.

User

COMMENTS

Amiit Gupta

5 years ago

This is really shows a wrong style of working by Dear Central bank..What message they want to given to Middle class indian society? Now every indian must say that RBI also need a REGULATOR now to control their monopoly.
ITS not acceptable DEAR RBI.Please work for aam indian family & person , not only for your own employee & their family who are already a HIGH Class RICH Family.
Think good from this Teachers Day & work for better society only without difference with your power.

Ramesh B Mhadlekar

5 years ago

RBI has exploited its Labour the Class IV &Class III employees who fall in the category of workmen by denying them the Central bank allowances which are paid only to the officer of RBI. Is it not exploitation or discriminative policy towards the labour class? Are the workmen of RBI not Central bank employees?
The Ex-regional directors of Mumbai’s claim of overtime continuously for 5 months as per the RTI, admits that the private driver was continuously used or exploited without giving him a break for one day every week for 5 months continuously, which is gross violation of Human Rights and the labour laws. Is this act of the EX-Regional director Mumbai not exploitation of Labour?
For such gross violations of Labour law and Human Rights, he has been rewarded by being appointed as Administrator of Coop bank at Nasik.

Madhur Aggarwal

5 years ago

We are number obsessed country .
I wonder Why
Numbers of Gross violation
- Unfair MP/ MLA/ Bureacracy Salary hikes do not create Hue n cry in Country like
price of tomato- Rs 100 kg .
Rise in Electricity bills.
There is something seriously wrong with the numbers in India.
They seem to be more inclined in favour of Ruling Class (Public servants ) than Citizens.

S.S.A.Zaidi

5 years ago

i could nt access Sucheta Dalal comment

vijay s

5 years ago

Ms. sucheta dalal is known for her anti RBI views as she failed to get in to RBI's communication deppt. Rather than concentrating on much bigger issues she is criticizing education loan , i.e.loan AND REPAYABLE. also it is one of the organizations where unlike Central/ state Govt you do not have to pay to get your work done. nor there is exploitation of any kind of labour or other facility.Also DGs are not in strict sense RBI employees.Politicians and IASs are jealous of RBI as they can not interfere with RBI as much as they would love too. Journalists are also unhappy as there are not many controversies about rbi FOR THEM TO GET 'breaking news.
Vijay Sangu

REPLY

Ramesh B Mhadlekar

In Reply to vijay s 5 years ago

RBI has exploited its Labour the Class IV &Class III employees who fall in the category of workmen by denying them the Central bank allowances which are paid only to the officer of RBI. Is it not exploitation or discriminative policy towards the labour class? Are the workmen of RBI not Central bank employees?
The Ex-regional directors of Mumbai’s claim of overtime continuously for 5 months as per the RTI, admits that the private driver was continuously used or exploited without giving him a break for one day every week for 5 months continuously, which is gross violation of Human Rights and the labour laws. Is this act of the EX-Regional director Mumbai not exploitation of Labour?
For such gross violations of Labour law and Human Rights, he has been rewarded by being appointed as Administrator of Coop bank at Nasik.

Ramesh B Mhadlekar

In Reply to vijay s 5 years ago

The RBI is an Autonomous body, but it has dishonestly affixed stickers of Government of India on its official vehicles, to dishonestly avail the benefits of parking their vehicle in the Parking Slot meant for Government vehicles at Railway Station, Airport, etc., to avoid tolls at certain toll naka, to get a salute from a road traffic constable, allow the vehicle to be parked in places where the ordinary citizens would not be allowed to park the vehicle or would have to pay Penalty, avoid checking’s of the car during Naka bandhi etc. It is for the readers to decide about the honesty in such acts and the said cars are being used by the top executives and their family members proudly.

Dhoot Usha

In Reply to vijay s 5 years ago

I do not agree with the comments of Vijay Sangu. In order to gag the voice of my husband who had invoked RTI for his purloined financial bill, I got a threatening letter from officials of RBI outraging my modesty and cautioning me of the dire consequences, that my husband (an employee of RBI) would have to face if he will continue to invoke RTI Act, 2005 for his legitimate right. The functioning and thinking of the officials will not change. I wrote to Governor Shri Raghu Ram Rajan, but till date no reply for my complaint from his office. Further, the officials of RBI had claimed that it was my presumption that the letter was sent by RBI officials, but could not produce any documentary evidence for their conclusion of presumption.
No action has been initiated by the Governor against the guilty officials who had breached the secrecy clause of the RTI Act by revealing the name of my husband to other officials who had purloined the financial bill of my husband. This also shows the respect towards the law passed by the supreme Parliament by RBI Officials. The officials need not have to pay from their pocket to fight litigations since they have battery of lawyers behind them (and with tax payer’s money) so that they can make mockery of the Laws of the Land.
Further, when I lodged a complaint against one of the officials for handling my complaint in a shoddy manner I was surprised that instead of investigating my charges on the said official, the complaint has been handled by the said officer against whom I had lodged a complaint. How one can expect justice?
This is how the RBI functions? There is no transparency and hence no controversy comes out from the Ivory Tower. It is easy to criticise the Central, State Government and journalists.
What you have to say on this?????

Amiit Gupta

In Reply to Dhoot Usha 5 years ago

Please fight till you get result..
FIGHT if you are RIGHT..
We are with you.

Sucheta Dalal

In Reply to vijay s 5 years ago

This comment is a sad and pathetic lie. 


Since you are clearly from the RBI, do show me evidence that I had ever sought or applied for any post at the RBI, leave alone the communications department. Or, for that matter, any other PR or image management company ever. 

Your comment shows that neither you nor your kind begin to understand what drives some of us journalists. 
I personally believe that I have been amply rewarded and recognised for my effort, without having lobbied for it. Had I, as you claim, hankered for an RBI communications job, I doubt it would have merited a Padma Shri. That is a richer recognition than money or perks, don’t you think?

Do try to think a little before spewing venom, because it does no credit to the Reserve Bank of India. It is interesting that you mention the Communications Department and NO OTHER, since this department has remained nasty and hostile to me ever since 1992 after I broke the Harshad Mehta scam. 
Is it possible that former journalists have issues being on the other side of the fence and are NOT satisfied by the fat perks they draw and the power that they abuse by playing a game of exclusion and vilification?
I have been bad-mouthed to every Deputy Governor and Executive Director since 1992. It is 22 long years of putting up with this. And my source of information is people at the highest level at RBI who have informed me about these vituperative allegations. But we still continue to make our efforts at advocacy and financial literacy with what little support we get from some fair minded individuals at the RBI.
Isnt it also uncanny how so many retired RBI officers seem to read, like and contribute to Moneylife? Clearly we are doing something right!
Thank you for raising this and giving me an opportunity to put some facts in the public domain!

Amiit Gupta

In Reply to Sucheta Dalal 5 years ago

Nice Reply Sucheta ji..

Madhur Aggarwal

5 years ago

I can understand loan at concessional rates bcoz education is essential for human development.
What I don't like at all is
placing these kids in RBI or related Govt. services post education completion .
What a life these kids have
No hunting for Food !!
Correction course
- Education loan should be between 3- 5 % for every child in India .
- No compromise screening procedure in RBI and Govt. services to remove Daddy's Clout on the system .
These kids sometimes know things before job interviews and test which a normal candidate don;t have access to .

REPLY

Ramesh B Mhadlekar

In Reply to Madhur Aggarwal 5 years ago

Concessional loan for education for whom who draw 6 figure salary and above the six figure get perquisites in the form of lunch coupons, double LFC for husband and wife working in RBI every alternate year,which is never available in any Government organisation only one of them can claim LFC or LTC once in two years and many other perquisites,which if put on the website could shock wave to the citizens of this country,the petrol to the lowest staff of RBI which even Commercial bank do not provide to their officials,the person staying in the premises also gets petrol allowances upto 300 liters per month depending upon the post held on mere declaration of having used the vehicle for reaching office,that is they drive their vehicle in the lift to reach office and for official work either taxi fare or tourist vehicle is booked for such officials etc.etc. etc. etc. never ending list.It is high time that the country decides whether such subsidies are to be given to employees who are financially well off?What crime poor farmers have done, whose subsides are being reduced or have to commit suicide?It is high time that the people of this country have to decide whether subsidized loans and interest free loans have to be stopped or not?

S.S.A.Zaidi

5 years ago

Ms Sucheta Dalal is a straiught forward and no nonsense journalist.I dont know her personally but as i have guaged from her writings she will not deviate from the right path to score some brownie points or to curry favour.so pls dont brand her as Anti RBI-If she feels some RBI policies are not in the interest of Public she will voice her opinion.I hope i will not be categorised as a psychophant

REPLY

Ramesh B Mhadlekar

In Reply to S.S.A.Zaidi 5 years ago

Writing truth against RBI requires guts and those who have guts to write truth would be branded as anti RBI.

S.S.A.Zaidi

In Reply to Ramesh B Mhadlekar 5 years ago

And she has guts.

Ramesh B Mhadlekar

5 years ago

If CAG audits the Reserve Bank,it will open can of worms.Especially the foreign tours and many other such issues.The RBI as per RTI has not put the details of foreign tours on its website.Can it explain why?The DOPT has issued circular in the said matter which has not been implemented by the Reserve Bank of India.

Gopalakrishnan T V

5 years ago

The RBI was a very conservative employer and the old timers had suffered without any of the perquisites and privilges.Old timers particularly those who retired prior to 2007 are suffering even today for want of adequate pension and their demand for an updated pension on par with Central government employees has not yet been acceded to though there is an agreement to pay pension on par with Government employees. What ever is stated may be of recent trend and perhaps these perks and privileges may be the reason behind RBI for being free from corruption Charges. When Children get good education naturally they get well employed and all employments of Children of RBI Executives in Indian Banks and Foreign banks cannot be attributed to RBI's regulatory Control on these banks.There may be exceptions.

REPLY

Ramesh B Mhadlekar

In Reply to Gopalakrishnan T V 5 years ago

Can you justify the claim by Ex-Regional Director Mumbai claiming overtime for his driver for all 5 months continuously as per RTI, or negatively having exploited his driver for 150 days continuously without giving a break for a day which is mandatory as per Labour law and Human Right even during his absence from headquarters,which is 8th wonder of the world and having been appointed in a lucrative job for his dishonest acts as a administrator in a coop bank at Nashik. What would you say about such bogus claims of the said executive,will you term this as honest executive or a corrupt executive?

Sanjaya M

5 years ago

M/s Sucheta dalal's anti-RBI Views are well known. But this is after all a loan and repayable from salary of the employee. RBI employee children do not enjoy any State Governments subsidiesed education plans and have to pay full- the educations cost have increased all over. State and Central Govt Officers and emloyees also enjoy much better perks. It would be appreciated if RBI AND GOVT POLICIES are focused for criticisam rather than the employee perks - after all they form insignificant part of expenditure.
Sanjay

REPLY

Ramesh B Mhadlekar

In Reply to Sanjaya M 5 years ago

RTI reveals RBI pays ex DG of RBI Rs 67000 for self&Rs.38000 for wife reading glasses &there is no limit for such claims as per RTI.
Also RTI reveals that a car was purchased for a DG few days or a month before quitting RBI for Rs.18,69,547/- and sold the same for 8,67,712/-at a discounted value of approx 10 lacs, whether these facilities are given to the Central Government employees or State government employees?
The wage revision of Government employees are once in 10 years and the wage revision of RBI employees is every 5 years if you want to compare the benefits of central Government or state government employees prepare a chart of perquisites and publish the same and let the readers decide who gets more perquisites?.

S BHASKARA NARAYANA

In Reply to Ramesh B Mhadlekar 5 years ago

Only 10% depreciation is allowed on cars each Financial year. Hence, even his retirement crosses March, it comes to Rs.1,86,954/- only, but not Rs.10 lacs. Central Vigilance Commission clearly says, it is dishonest act.

Rakesh Goyal

In Reply to Sanjaya M 5 years ago

Mr. Sanjaya M - Disagree with your views.

Ramesh B Mhadlekar

In Reply to Sanjaya M 5 years ago

Can RBI publish the perks it gives to its officials which would shock the nation.The perks and benefits are such which even the IAS officers would not be getting.Why are they shying from putting all the perks on the website which is mandatory to be published on the website as per The RTI Act 2005.
Can you justify the official luxurious and air conditioned banks car being used unlimited by family members including earning spouses and children @1Re per Kilometer,which is also not deposited by them.What is it honesty or dishonesty?

S.S.A.Zaidi

5 years ago

I wonder ; Is it really ""FINANCIAL INCLUSION ""???
Charity begins at home-

REPLY

Nagesh Kini

In Reply to S.S.A.Zaidi 5 years ago

Yes this in deed is a classic case of "Charity begins at home", why not enhance it for all education loans extended by commercial banks too?

Ramesh B Mhadlekar

5 years ago

Why for children the executives have formulated policies whereby their family members can enjoy the luxurious Air conditioned official car of RBI at the @Re 1 per kilometer,the cheapest travel in the world,even a footpath dweller or a beggar pays more for his travel.

One of their executive's as per information procured under the RTI act reveals that the Ex-Regional Director of Mumbai was claiming overtime for his private driver even during his absence from headquarters which was nothing but a dishonest claim and has been rewarded after retirement of being appointed as a Administrator of a cooperative bank in Nashik.

Red Bull agrees to pay $13 million to customers for false advertising

The energy drink company has agreed to offer a $10 cash reimbursement or $15 in Red Bull products to any consumer in the US who bought a Red Bull product since 1 January 2002

 

Red Bull has consented to cough up some $13 million in customer refunds to settle a class-action lawsuit over false advertising.


The energy drink company has agreed to offer a $10 cash reimbursement or $15 in Red Bull products to any consumer in the US who bought a Red Bull product since 1 January 2002. While denying all wrongdoing, Red Bull will also potentially have to pay nearly $5 million in plaintiff attorney fees. And that’s in addition to the $13 million.


The complaint centered around the allegation “that the functional benefits of consuming Red Bull are not superior to the benefits from ingesting an equivalent amount of alternate sources of caffeine, and that consumers have been misled by Red Bull advertising to believe the drink is a superior source of energy beyond caffeine,” the settlement states.


To receive a cash refund or $15 in free products, a consumer will need to submit a valid claim form. No receipts necessary.


For more of our coverage on energy drinks, click here.

Courtesy: TruthInAdvertising.org

Like this story? Get our top stories by email.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

online financial advisory
Pathbreakers
Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
online financia advisory
The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
financial magazines online
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
financial magazines in india
MAS: Complete Online Financial Advisory
(Includes Moneylife Online Magazine)