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Banks increase presence in rural areas

Banks increase presence in rural areas
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Data from Reserve Bank of India (RBI) shows that as of December 2012 211,000 villages in the country have bank connectivity compared to about 67,000 villages in March 2010.

It may be noted that there are about 600,000 villages in the country. Bank connectivity is said to have risen mainly through business correspondents (BCs) and other alternative channels rather than through the branch model.

In order to promote financial inclusion, the central bank is expected to issue new banking licences in 2013-14. The licencees would be asked to open 25 per cent of their branches in hitherto unbanked rural areas.

Between April 2011 and December 2012, banks opened only 4,323 branches in unbanked villages. They didnÂ’t open a single branch in unbanked villages in 2010-11. But during the year, banks appointed 46,628 BCs.

Between March 2010 and December 2012, the number of BCs expanded almost three times, from about 34,500 to 152,000.

One of the enabler of the direct benefit transfer (DBT) mechanism for disbursing government subsidies is financial inclusion.

Experts call for the innovative business models and efficient delivery mechanism to make banking activities in villages viable.

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