Continuing from an earlier post, this post highlights the CCFS recommendations around various bank and non-bank channels that will serve to deliver a ubiquitous payments network and universal access to savings.

The recently released volume on urbanisation titled “Urbanisation in India” edited by Dr. Isher Ahluwalia, Dr. Ravi Kanbur and Dr. P. K. Mohanty, contains a chapter authored by Vikram Kapur, Commissioner of Chennai, and me, dealing with the practice of Public Private Partnerships (PPPs) in urban infrastructure in India.

The Committee on Comprehensive Financial Services for Small Businesses and Low Income Households (CCFS) envisions the following: By January 1, 2016 each Indian resident, above the age of 18 years, would have an individual, full-service, safe, and secure electronic bank account.

In a three-part interview series Vishnu Prasad of IFMR Finance Foundation speaks with Dr. Shlomo (Solly) Angel, adjunct professor at NYU and senior research scholar at the NYU Stern Urbanization Project, about India’s urban housing crisis, urban governance challenges in India, the enduring legacy of the Oregon experiment, Making Room Paradigm and his personal experiences with participatory planning in Bangkok.

The CCFS recommendations pertaining to national full-service banks and regional banks have been covered in our previous post. Unlike these deposit-taking institutions, the third category of institutions, namely, RBI-regulated Non-Banking Financial Companies are not involved in taking public retail deposits and are primarily focussed on credit delivery and therefore supplement the bank-led channels for credit delivery. 

The RBI Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households (CCFS) lays out several recommendations to strengthen the supply side with respect to credit outreach through the banking and non-banking infrastructure that is already in place.

The CCFS Report has laid out a vision for Sufficient Access to Affordable Formal Credit that places a goal of achieving a Credit to GDP ratio for each district of atleast 10% by January 1, 2016, and to cross 50% by January 1, 2020.

Financial inclusion is a priority area in the minds of policy makers in India. The larger focus of this debate has been on access to credit and insurance.

One of the more debated aspects of the Mor Committee’s report on “Comprehensive Financial Services for Small Businesses and Low Income Households” is the proposal for the new class of banks, in particular the “Payments Banks”.

India faces a major financial exclusion challenge. According to the 2011 World Bank Global Findex Survey, only 35% of Indian adults have access to a formal bank account and 8% borrowed formally in the last 12 months.