The Hindu Business Line : Nabard chief moots `three pillars plan'

Dr Y.S.P. Thorat, Chairman, National Bank for Agriculture & Rural Development (Nabard), and Member-Secretary of the recently formed committee on financial inclusion, has mooted a `three pillars plan' for integrating efforts of the State, the financial system and community-based organisations.

True financial inclusion will be achieved if the so-called three pillars work together, is the argument being put forward. While the State will have to play a key role in creating the right framework, the financial system will have to help reduce poverty by unleashing savings facilities and payment systems, as well as by offering livelihood opportunities and economic infrastructure.

Different strategies

Community-based organisations for their part will be required to catalyse local participation, leading to the rounding off of the plan, Dr Thorat suggested. He was addressing a meeting organised by Ficci on Monday. It may be mentioned here that Dr C. Rangarajan, Chairman of Prime Minister's Economic Advisory Council and former RBI Governor, chairs the committee on financial inclusion.

On another front, Nabard is addressing key issues stemming from financial inclusion. Markets, it has pointed out, generally exclude sections of people, often contrary to popular ideological belief. This makes economic stratification inevitable.

"The important question is, how can the stance of economic policy be designed so as to ensure greater inclusion," Dr Thorat said, indicating that the FI is aware that there are a huge number of small credit outlets in the country, which are no more than re-financing windows.

Focused approach

In this context, it has observed that rural households are very often not financially included in any manner whatsoever.

In many cases, households are not even catered to by moneylenders. Small and marginal farmers have little access to credit from the organised-sector lenders.

Indian banks have lately introduced a system of no-frills account and at least one of them has started a pilot project for 100 per cent financial inclusion in Pondicherry.

Financial inclusion of some of the eastern states — Bihar and Jharkhand — is important, the he said, adding that the North-East needs special attention too.

Micro-finance institutions and self-help groups are expected to play a vital role on the inclusion front in future.

"The role of the state in providing a framework and the role of the financial system in reducing poverty through savings facilities and livelihood opportunities become very significant," Dr Thorat observed.

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