NER banks can add 50 new households per branch: Thorat Committee

Mumbai, Aug 21 (UNI) Commercial banks in the North East region (NER) can draw up plans to provide at least 50 new households per branch each month for the next four years with a deposit account with option to the household of opening such account as a ''no frills'' one.

This is one of the 13 major recommendations of the Thorat Committee report, which is now placed in the Reserve Bank of India's website, a RBI release today said.

Accordingly, the bank may offer small over drafts or general credit cards against such accounts and other products in terms of the extant of RBI guidelines, so that banking habit is actively promoted in the region, while taking into account the balances maintained in such accounts over a period. For this, a massive awareness campaign and sensitisation of the staff and clientele along with adequate groundwork may be done in the region.

Keeping in view the local conditions, extensive recourse may be taken to bank and self help group (SHG) linkage programme, business facilitator model, as also widespread use of information technology based solutions for increasing outreach. Local community-based organisations approved by the district consultation committees may be used as business facilitators. Besides, post offices could also be used as business correspondents.

Given the improving mobile connectivity in the region, IT-based solutions, including smart cards based and mobile payments, may be adopted for carrying out banking transactions from non-branch locations with a view to increasing outreach. The Institute for Development and Research in Banking Technology may prepare a pilot project for testing in a select area in the NER by December this year and based on experience, this project may be rolled out in other places.

Recognising that community ownership and non-transferable rights on land lead to problems in offering land as collateral, simplified alternatives like land possession certificate or certificate from the local tribal bodies regarding the borrowers' right to cultivate land may be accepted for sanctioning loans.

For large loans to industries and services sector, parameters like established track record, projected cash flows, credit enhancement through partial risk sharing instrument and conditional guarantees by State Governments may be considered.

Revision of the existing ad hoc incentive package for bank officers, including introduction of a performance based cash incentive component. Revamping of Regional Rural Banks (RRBs), including strengthening of staff and market recruitment of CEOs have been recommended.

Alternative legislation on lines of Mutually Aided Co-operative Societies (MACS) may be introduced so that grass root level associations have the option to form cooperatives under the MACS.

The Vaidyanathan Committee may revisit the position for the NER to explore the possibility of State Governments channeling the resources available under the revival package to alternative local community-based organisations in those States, where the primary cooperatives are not assessed as having the potential to deliver credit services.

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