RBI panel recommended setting up of specialized banks to cater to low income households

A panel of Reserve Bank of India led by Nachiket Mor has suggested to set-up specialized banks to cater to the low income households. These banks will ensure that every citizen have a bank account by 2016. The panel has also suggested that facility for withdrawal, payment and deposit to be set up within a 15 minute walking-distance across the country.

The panel was set up by Governor of India, Raghuram Rajan on the same day when he took the charge as the Governor of RBI. He constituted the panel to suggest steps for promoting financial inclusion.

The panel has advocated setting up the Payments Banks to provide payment services and deposit products to low income households and small businesses. It has limited the maximum balance for an individual customer to 50000 rupees. In its suggestion it has mentioned that these banks can be set up with minimum capital requirement of 50 crore rupees, which is one-tenth of 500 crore rupees that is required for a full-service bank. It has also suggested that an Aadhaar card should be used automatically to open a bank account. These recommendations have made a provision of sweeping changes in the Banking structure.

The panel that was headed by ex-ICICI Bank Executive Director Nachiket Mor in its recommendation for financial inclusion has said that the bank for small businesses that is called as the payments banks will focus primarily to provide services to people.

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