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Financial inclusion is big biz opportunity: IBA

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Technology can help cut transaction costs in rural areas

NOT JUST SOCIAL RESPONSIBILITY: The Andhra Bank CMD, Mr K. Ramakrishnan (left) and the Chief Executive, IBA, Mr H. N. Sinor, at a media conference in Hyderabad on Thursday. - Mohammed_Yousuf

Hyderabad , Nov. 2

The Indian Banks' Association (IBA) finds a major business opportunity in inclusive growth, the latest priority on the economic development agenda, and does not consider it a mere social responsibility, according to the IBA Chief Executive, Mr H.N. Sinor.

Addressing a press conference on the eve of Bancon-2006, the annual bankers conclave being held here during November 3-4, he said the nationalisation of banks embarked upon earlier could largely achieve the objective of reaching out to rural masses but "more needs to be achieved in a vast country like ours. There is a growing need to take the benefits of economic reforms to the rural population, which is still largely not having access to banking system."

According to Mr K. Ramakrishnan, Chairman and Managing Director of Andhra Bank the host of Bancon-2006, almost 52 per cent of the rural population still has no access to formal banking.

Stating that inclusive growth as a development strategy was quite successful in East Asia, he said a similar strategy was being contemplated in India to ensure that economic development benefits the poor.

Mr Sinor said the brick and mortar bank branches in rural areas in the past proved unviable but leveraging technology, banks can now bring down their cost of transactions in rural areas.

"What starts of as social responsibility would also translate into a major business opportunity for bankers. In fact, the rural India is now very interesting and appears highly profitable for bankers."

Refusing to subscribe to the view that disintermediation is compelling the Indian bankers to reach out to rural India in the guise of financial inclusion, he said, "disintermediation is happening mostly in the urban areas, where the public expects high returns." According to Mr Sinor, the conclave is expected to provide a major direction to the Indian banking on inclusive growth and strategies to capitalise on the emerging opportunities and meet the associated challenges.

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