Open new branches, govt tells banks to improve SDG score

The government has asked banks to consider opening new outlets in order to improve the density of branches, which is an indicator of “decent work and economic growth,” one of the sustainable development goals (SDGs).

Karnataka’s score on the number of functional branches of commercial banks per one lakh population has decreased for two years in a row, according to the SDG India Index.

In 2019-20, the state had 19.67 banking outlets for one lakh people. This dropped to 16.69 last year.

A study commissioned by the government to understand the ground situation revealed that the density of bank branches in the state was 17.21 per lakh population, still lower than the SDG target of 31.26.

“Commercial banks have been asked to pull up their socks and maintain their percentage in terms of providing banking services,” finance Secretary (fiscal reforms) Manju Prasannan Pillai told DH.

“Karnataka has done well to make sure there’s no area in the state that is unbanked,” Pillai said, a feat the state achieved early this year by covering all 30,000 villages with banking facilities.

She said the state’s coverage of business correspondents (there are 8,916 of them) and brick-and-mortar branches was good.

“However, due to the amalgamation of bank branches, the 5-km radius of a village within which banking services have to be provided has been exceeded in a few cases. Banks have been told to rectify this within a month,” Pillai added.

Goa has the highest number of bank branches per lakh population at 45.78, followed by Chandigarh (39.40).

In the south, Karnataka trails Kerala (19.6), but is better than Tamil Nadu (16.07), Telangana (15.08) and Andhra Pradesh (14.40), according to the SDG India Index 2020-21.

Recently, 18 bank branches in rural areas were closed due to merger or amalgamation.

“The government has made it clear that no rural bank branch should be closed without the permission of the State Level Bankers’ Committee (SLBC),” Pillai said.

According to the district-wise comparative study done by the SLBC, Udupi has the highest number of commercial bank branches per lakh population at 31.85. This is followed by Dakshina Kannada (28.19) and Kodagu (28.13).

Bengaluru Urban, the most populous district, has 26.73 bank branches for every one lakh people.