XIM-B event focuses on financial inclusion debate

It is a debate that addressed issues pertinent to society and the management discipline. The event was held on September 3. The Chief Guest on occasion was Mr G. Jagan Mohan Rao, the regional director of Reserve Bank of India (RBI). He was joined on the panel by Dr. Amar Kjr Nayak and Dr. C. Shambu Prasad, both professors at XIM-B.

The issue chosen for the evening was Financial Inclusion: The Why and How in the Indian context. Says XIMB, The relevance of the topic cannot be understated in todays context where the banking industry despite making significant improvements in all the areas relating to financial viability, profitability and competitiveness has exuded concerns that it has not been able to include vast segment of the population, especially the underprivileged sections of our society, into the fold of basic banking services.

The event had an interesting format. Two student teams participated in the discussion; team Check and Mate represented the RBI while the second team Spartacus put forth the perspectives of the banks that are responsible for implementing Financial Inclusion (FI). The debate brought out concerns of the banks regarding profitability with no frills accounts and the simplified KYC (Know Your Customer) norms. They also expressed the inadequacy of the infrastructure in the country to take significant measures in the implementation of FI.

From the RBIs perspective, several creative yet low cost models were suggested to these banks. For example, banks could provide financial services like loans, accounts etc to Self Help Groups to minimize the risk of default. Partnering with microfinance institutions in order to offload risk is another model the banks can follow. Use of IT to reduce transaction costs and their increase profit margins was also suggested. However it was emphasized that banks need to see FI as an opportunity to expand their customer base and not as a liability. The discussion also took into account the doubts regarding the viability of these models.

The Check and Mate team won the debate.
Mr Jagan Mohan Rao subsequently addressed the audience and talked about the importance of financial inclusion. He said, In a nation where economic growth has to be inclusive and with a human face, financial inclusion cannot be neglected. He also informed students about recent directives of the RBI to reduce the paperwork involved in KYC norms. He emphasized on the need to make people aware of the benefits of FI and pointed out measures RBI has taken in this regard -- like daily live shows on FI being telecast on Doordarshan. He also urged the student community to help facilitate the spread of FI awareness.