The Hindu Business Line : RBI move to outsource rural banking flayed

THE National Confederation of Bank Employees (NCBE) has come down heavily on the move by the Reserve Bank of India to allow banks to outsource activities such as mobilising deposits and disbursing small-value credits in rural areas.

Mr P.K. Patnaik, General Secretary of NCBE, said here that the decision to engage the services of non-governmental organisations, outside agencies and non-banking finance companies for these activities "is most shocking".

Apart from accepting deposits and disbursal of credits, the decision also covers recovery of loans and sale of mutual funds in rural areas.

Mr Patnaik said that the move would lead to large-scale outsourcing of bank jobs in rural areas and affect the interests of the "innocent rural masses".

He pointed out than one of the main objectives of bank nationalisation was to provide facilities in rural areas.

At a time when the new-generation private banks/foreign banks are averse to opening rural branches and lending to small and marginal farmers, the RBI decision would prove to be a big disincentive to public sector and old private banks to keep operating their rural branches.

This, in turn, would adversely hit thousands of employees working at these branches, Mr Patnaik said.

The confederation has urged the Centre and the RBI to desist from such moves in the interests of the rural public and the banks.

If not, the confederation had no other go but to resort to direct organisational actions, Mr Patnaik warned.