Press Information Bureau

Government of India

Ministry of Finance

13-March-2012 19:01 IST

Government Adopts Multi-Pronged Strategy to Extend Banking Facilities to Unserved Areas

The Government has adopted a multi-pronged strategy to extend banking facilities to hitherto unserved areas. Reserve Bank of India (RBI) in their Branch Authorization Policy for opening of Branches in unbanked rural centres, has advised all Scheduled Commercial Banks (SCBs) that while preparing their Annual Branch Expansion Plan, they should allocate at least 25 per cent of the total number of branches proposed to be opened during a year in unbanked Rural (Tier 5 and Tier 6) centres. Further, based on the announcement in budget 2010-11, over 73.000 villages having population above 2000, have been identified for extending banking services by March, 2012. These habitations were allocated to Public Sector Banks, Regional Rural Banks, Private Sector Banks and Cooperative Banks for extending banking services by March, 2012. By January, 2012, over 62,000 villages have been covered by bank branches or business correspondents.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Rajya Sabha today.

DSM/Hb

Branch expansion requirement compels banks to target unbanked rural centres, extending services via branches and business correspondents. Regulatory Guidance requires Scheduled Commercial Banks to allocate a substantial share of proposed annual branch openings to unbanked Rural (Tier 5 and Tier 6) centres; the 2010-11 budget identified a large set of habitations above the population threshold for targeted extension of banking services, which were allocated among Public Sector Banks, Regional Rural Banks, Private Sector Banks and Cooperative Banks and to be served via branches or business correspondents.