Private Banks have led the way in last decade (1997 onwards) and brought reforms in banking sector riding on technology. Government banks followed and the happiest stakeholder is customer.
Having said that, the ball has begun rolling and financial inclusion is the buzz word. Government, Regulator and Finance Minister have agreed on target to be achieved by 2012. I recall Prime Minister Dr. Manmohan Singh started talking about financial inclusion in 2004-2005 and now the idea has taken good shape.
The government facilitated the same by implementing UID project because completing KYC norms is one of the major hurdles for financial inclusion. Also, it is not advisable to dilute KYC norms in the name of financial inclusion.
Till now, Indian banks implemented technology with language English and served urban customers. If financial inclusion has to be successful and economically feasible, banks would need to delve deeper into Technology and multi-layered integration will play a major role.
There will be need for multilingual technology platforms, need for many kinds of authentication mechanisms, devising mobile applications which may work on GPRS or 3G, establishing multiple kiosk operated through solar energy, ATM operable through solar energy etc etc.
While it is possible to use technology to deliver banking services to last man in the society, the role of banking regulator and self regulation of banks will play a major role in its successful and satisfying implementation. The information may not get updated on a real time basis which may pose its own risk. Documentation and other details will take time to reach head quarter or nearest branch and there may be dilution in rules for providing credit or accepting deposit. Central bank would do good to appoint a local regulator or reviewer who may send periodic reports to them and also educate people about banking services and various charges from bankers.
We have seen how various programs of Central Government fail in implementation at the last mile. I hope central bank is smarter and will ensure financial inclusion doesn't remain lip service and a facility on paper.
Next decade (2011-2020) will see rural and semi urban population income growth and of middle-class. Remember, poor doesn't require cheap credit but he requires prompt credit. The prompt credit facility is set to change lives of many Indians.
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