14-member committee headed by RBI Executive Director Deepak Mohanty has submitted the report on Medium-term Path on Financial Inclusion, which has been recently released by RBI.
- The committee was constituted in July 2015 by RBI with the objective of working out a medium-term (5 years) measurable action plan for financial inclusion.
The Committee has made several key recommendations to improve the governance system, strengthen the credit infrastructure and increase the personal disposable income of the poor which would put the economy on a medium-term sustainable inclusion path.
Key recommendations of Deepak Mohanty Committee
Sukanya Shiksha Scheme: Banks have to make special efforts to step up account opening for females, and the Government may consider a deposit scheme for the girl child – Sukanya Shiksha – as a welfare measure.
Aadhaar linked credit account: It recommended linking credit accounts with Aadhaar number and share information with credit information companies to enhance stability of the credit system and improve access.
Mobile Technology: Bank’s traditional business model should be changed with greater reliance on mobile technology to improve ‘last mile’ service delivery.
Digitisation of land records: In order to increase formal credit supply to all agrarian segments backed by an Aadhaar-linked mechanism for Credit Eligibility Certificates.
Promoting self-help groups: Corporates should be encouraged to nurture SHGs as part of their Corporate Social Responsibility (CSR) initiatives.
Subsidies: Panel has recommended replacing current agricultural input subsidies on fertilizers, irrigation and power by a direct income transfer scheme as a part of second generation reforms.
Crop Insurance: A mandatory crop insurance scheme covering all crops should be introduced starting with small and marginal farmers with a monetary ceiling of Rs 2 lakh.
Agricultural loan interest subvention scheme: The government can phase out the agricultural loan interest subvention scheme and plough back that allocation into the crop insurance subsidy
Multiple guarantee agencies: Encouraged to provide credit guarantees in niche areas for micro and small enterprises (MSEs).
Gold KCC (Kisan credit card): Higher flexibility for borrowers with prompt repayment records can be dovetailed with a government-sponsored personal insurance, and digitisation of KCC to track expenditure pattern.
State Level Bankers Committees (SLBCs): SLBCs are advised to focus more on inter-institutional issues, livelihood models, social cash transfer, gender inclusion, Aadhaar seeding, universal account opening, and less on credit deposit ratio which is a by-product.
Unique identification of MSME: It should be introduced for all MSME borrowers and information from it should be shared with credit bureaus.