'Inclusive finance can bring upon an inclusive growth'

RBI ex-governor speaks on Karnataka Bank Founders' Day programme

Inclusive growth of the country cannot be achieved without inclusive finance, said Reserve Bank of India former Governor D Subbarao.

He was delivering the Founders’ Day Lecture of Karnataka Bank at the head office of the Bank at Kankanady in Mangaluru on Thursday.

Stating that the Reserve Bank of India is in the forefront in driving financial inclusion, the RBI former governor said that the financially weak want not subsidies but opportunities to improve their livelihoods and the only way to make this possible is to include them in the formal financial sector.

Subbarao further said that only 40 per cent of the population has bank accounts. “And even if they have bank accounts, they cannot not use it effectively. Hence, in order to make financial inclusion possible, banks have to provide a complete package of remittance facility, credit and micro insurance. The facility of saving bank accounts alone does not serve the purpose – the common people would not go to banks only for savings bank accounts,” he explained.

Subbarao said that banks can make financial inclusion possible by connecting to people through correspondences and other means. 

“Those who move first in this direction will have a great advantage in 10 years from now – however, they have to face the challenge of a target-driven performance,” he advised.

Recalling his days as the governor of the Reserve Bank of India, he said that when he took over in 2008 – after his service of four decades as a bureaucrat – the market was not familiar to him. “In the western countries, the financial condition was in chaos and this had its impact on India as well. In order to fight global crisis, there was a need for the RBI to cut interest rates. Also, there was a big problem of inflation to cope up with, as it affects the lives of common people in large. During the period, although the young generation batted for the cutting of interest rates for economic development, the elders always wanted an increase in the interest rates,” Subbarao reminisced.

Speaking about the challenges faced by the RBI, he said that one of the major challenges before the RBI is to meet the expectations of the people as an institution framing policies which affect the day-to-day lives of the people. Stating that inflation largely affects the lives of the common people, he said that the RBI also has a challenge of responding to the fluctuation of the rupee value.

Karnataka Bank Managing Director and CEO P Jayaram Bhat said that the Bank has made a total business of Rs 82,592 crore - with Rs 49,664 crore deposits and Rs 32,928 crore advances. The operating profit of the Bank is Rs 600.10 crore and the net profit is Rs 308.50 crore. The Bank, as on December 31, has 701 branches, 1,170 ATMs located in 21 states and two union territories, he listed out.

Bank Chairman Anantakrishna and Chief General Manager Mahabaleshwar Bhat M S were present. A Carnatic flute recital was presented by K V Raman and troupe.