The RBI would issue guidelines for small finance banks in a few weeks as it pushed for financial inclusion backed by technology.
“In the next few weeks, we will put out guidelines inviting applications for what we call small finance banks. These are banks that will cater to smaller customers across the country. The detailed guidelines will also be put out,” RBI Governor Raghuram Rajan said on Wednesday.
He was speaking at the 10th IDRBT Banking Technology Excellence Awards here.Referring to payment banks, he said they should tie-up with regular commercial banks to offer different services. “My hope is that by licencing payment banks, we would also further cause of bank payments, bank alliances.”
Highlighting that technology has an important role to play in financial inclusion, he said certain ‘Ps’, including Products, Price and Protection summarise the aspects which need to be pondered over by bankers.In this context, he said Products that are shaped to the needs of individuals, without taxing their understanding are needed.
The RBI has put out a consumer code which puts the onus on banks to determine what is suitable for individuals, Rajan said.“Of course, that’s a harder task than just selling the product to the individual. We have to find out what the individual understands, what the needs are, etc.”
Technology may help in understanding customer profiles better and to inform the customer better, the Governor said.Meanwhile, Raghuram Rajan has been conferred with the Best Central Bank Governor award for 2014 by Euromoney magazine.Euromoney said Raghuram Rajan’s tough monetary medicine combatted the storm ravaging the deficit-ridden economy in the recent emerging market crisis.
“Now, he is battling vested interests to arouse a sleepy financial system for over one billion people...Remarkably, the internationally-renowned economist, who earned acclaim for his warnings in 2005 of an upcoming global crisis of sorts, has, for the past year been true to his word,” Euromoney said.
Rajan received Euromoney’s Central Bank Governor of the Year Award 2014 in Washington on October 10, the RBI said in a release today.