RBI asks banks to use technology for rural push
By TNN |
Highlights
MUMBAI: The Reserve Bank of India has urged banks to expand technology to rural areas in order to meet the 10% economic growth as stipulated in the Eleventh Five-Year plan.
Indicating this, RBI executive director RB Barman said banks should support an all-round growth and should not be selective about sectors. Data released by RBI showed that while 70-80% of the banks��� business is based on core banking solutions (CBS), a large number of branches, primarily located in rural India, are still not under CBS.
Mr Barman indicated that power shortages in rural areas were one of the hindering factors in the introduction of CBS. He said that Indian banks should take a leaf out of non-government organisations��� (NGO) book on lending to rural areas. The default rate, added Mr Barman, was lower for NGOs despite their charging higher interest rates of 20-23%, while banks, which have been charging less, have been straddled with higher defaults.
Mr Barman was speaking at a CII seminar held in Mumbai on Tuesday. Later, on the sidelines, Mr Burman said that the recovery by NGOs was as high as 90% compared to 60-70% by Indian banks in rural areas. He said that in order to improve recoveries banks would need to know more about their customers and ensure a proper follow-up of loans.
At the seminar, Mr Barman said that even as the payment system in India is going on well, there is a long way to go. He indicated that credit and debit transactions have to be electronic based.
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