Financial inclusion but not at the cost of rising NPAs: RBI

PALWAL: The Reserve Bank on Monday said it would strike a balance between expanding banking reach and stability of banks, even as it tries hard to improve the dismal state of financial inclusion in the country.

"We have to try and ensure that this (financial inclusion) does not result in a disproportionate increase in riskiness of banks' balance sheet," RBI Deputy Governor Subir Gokarn told reporters at Gudhrana village in Pawal.

The central bank officials along with top management of Oriental Bank of Commerce (OBC) were today present at the village to reach out to the unbanked villagers. This was RBI's 10th outreach programme in the current fiscal.

"As we go along, we need to try and make sure that this expansion is not resulting in undue risk. We need to ensure that banks are protected ... apart from the welfare objective," Gokarn said adding they are on a learning curve currently.

However, with almost half of the Indian population (45 per cent to 50 per cent) not having bank accounts, he said financial inclusion is a priority for the central bank as it improves the lives and livelihoods of the people.

He said the money kept out of banks by the unbanked population loses value due to inflation and is unsafe.

The country has set a target of having a bank branch in every village with over 2,000 population by 2011, he said. Rest of the villages would be connected to banking facilities through banking correspondents and technology.