While this is a laudable effort.. it takes out the need for the banks to innovate! I remember listening to CK Prahlad once… and he quoted a case study with Citibank in India where they were challenged to help the rural masses create bank accounts with the ATM facilities having a balance of just Rs 1000 ($25)!! And still make it profitable! They found out a way to link the ATM bank branches thru satellite dishes… and make it work!
And yes.. the profit margin was well over 20%!
The Reserve Bank of India has instructed banks to introduce zero-balance account to enable the masses to avail banking facilities.
“To improve the performance of banks, the zero-balance account will be introduced as a new concept,” RBI Governor Y V Reddy said after a day-long meeting with bankers and government officials.
Under this scheme, customers can open an account by just filling a form without depositing any money. They can also avail a credit advantage starting with Rs 100 which can be enhanced on repayments.
The new system, to be introduced throughout the country, would envisage better bank-customer relationship and develop a customer base, Reddy said.
On the northeast scenario, the RBI Governor said the poor economic activities reflected on the dismal credit-deposit ratio for the banks. “We had an intensive dialogue on this matter and instructed to give a thrust to ease constraints for development in these special category states of the region.”
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