Banks must go for "mass banking": RBI Governor

Hyderabad, Nov 4 (UNI) RBI Governor Y V Reddy today exhorted banks in the country to go for "mass banking"and include all sections of the people into its financial ambit.

Delivering address at the 'Conclave of Indian Banks' here, he said each bank had to evolve a model to achieve complete financial inclusion.

"The RBI's directive to achieve 100 per cent financial inclusion in one district in each state was only to kickstart interest among banks to reach out to un-banked people.

Banks must go by the spirit of the directive. Do not force those who have no money to open an account," Mr Reddy said.

Urging the state governments and local bodies to take more interest in achieving financial inclusion, he said it could be achieved only with the commitment from the state governments and local bodies.

The banks should strengthen the Regional Rural Banks to reach out to the small and marginal farmers. Banks should also concentrate on providing loans to small scale industries.

Mr Reddy said the penetration of banks in Bihar and North Eastern states were not upto the mark.

Major public sector banks were now in a position to meet the Basel-II norms, he said and added that the banking industry had come a long way since the reforms process had started.

"Now we have a developed financial market. There is an increase in competition among public, private and foreign sector banks.

However in a diverse country like ours there is a place for every type of bank," he said.

Referring to the regulatory regime evolved by the RBI, he said the process was completed in a non-disruptive manner.

He said there was no heavy fiscal support from the government.

The government's faith in Public Sector Banks had been justified as the people who had invested in these banks were happy now, he added.

UNI SM/JRK AJ 1956