Role of Co-Operative Banks in Financial Inclusion



Role of Co-Operative Banks in Financial Inclusion

As per the Committee on Financial Inclusion (Dr. Rangarajan Committee), the short term cooperative credit structure has nearly 1.25 lakh outlets spread throughout the length and breadth of the country. Located in rural areas, these units have a better knowledge of their existing and potential clients. Further, Know of Your Customer (KYC), guidelines will be easier to comply with.

As per the recommendations of Rangarajan Committee report, Reserve Bank of India has issued instructions that Primary Agricultural Credit Societies (PACS) can be appointed as Business Correspondents by banks for promoting financial inclusion. Besides, Cooperatives can adopt group approach for financing excluded groups in which community based organisations such as joint liability groups will provide some degree of mutual guarantee to enable its members to access credit. National Bank for Agriculture and Rural Development (NABARD) has already circulated the guidelines on Self Help Groups to the Cooperatives.

Based on the recommendations of the report of the Committee on Financial Inclusion, Government of India created the Financial Inclusion Fund and Financial Inclusion Technology Fund in NABARD. The Cooperative Banks have been advised that they are eligible institutions to access these funds for financial inclusion.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question raised in Rajya Sabha today.

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