Reserve Bank of India Moves to Open Up Access to Financial Services
| Date Published | 1/17/2014 |
| Author | Marja Hoek-Smit |
| Theme | Retail Housing Finance, Funding Housing Finance, Housing Finance Policy |
| Country | India |
Reserve
Bank of India Moves to Open Up Access to Financial Services
January
17, 2014
The
Committee on Comprehensive Financial Services for Small Businesses and Low
Income Households, set up by the Reserve Bank of India (RBI) in September 2013,
under the leadership of Nachiket Mor, published its final report on 12-31-2013.
The committee was tasked to outline plans to promote financial inclusion in
India, where only one third of adults have access to a bank account. The
Committee outlined six vision statements for full financial inclusion
and financial deepening in India and made detailed recommendations based on
four design principles of Stability, Transparency, Neutrality, and
Responsibility.
The
committee set out a list of for-reaching recommendations including the
following selected issues: 1) all mobile phone companies be mandated to provide
USSD connectivity as priority SMS services with reasonable rates and to be made
available to the banking system – (this may be the most transformative recommendation);
2) consider licensing, with lowered entry barriers but otherwise equivalent
treatment, more functionally focused banks such as Payments Banks (entities
that would focus on ensuring rapid out-reach with respect to payments and
deposit services), Wholesale Consumer Banks, and Wholesale Investment Banks; 3)
universal reporting to credit bureaus be mandated for all loans including
individual and SME loans; 3) restoring the tax-free status of securitization
SPVs as pass-through vehicles for tax treatment; 4) partial convergence of
Non-Bank Financial Companies’ and Bank regulations; 5) measures to improve
universal access to investment and risk management products; 6) measures
related to customer protection.