Media Reports

Banking Correspondents' in offing

4th September 2009

Future banking in India holds good for ‘financial inclusion’. After the success of micro financing institution (MFIs), it would be the concept of ‘banking correspondents’ (BCs) in very remote villages where there might not be any branch as a physical entity, but will give all the facilities for the common man to bank upon. With the technology upgradation, the BCs will be conducting all the transactions with small computerized machines connected to the central server at the regional hubs.

Saying that the future of Indian banking scenario is bright and the PSU banks have achieved a lot compared to private banks on the technology front, State Bank of India Chief General Manager Shiv Kumar today predicted SMS banking might become the order of the day.

However, with technology, risks are increasing day by day; he said adding apart from operational risks involving computerization, fraud and manpower shortage, norms like know-your-customer (KYC) has come to play a big role with ‘hawala’ and terrorist transactions and internet frauds.

Speaking at the inaugural session of banking conclave on ‘Emerging trends in banking sector: Challenges and responses’, organized by city based Institute of Management and Information Science (IMIS) here, Kumar said credit risks involving money laundering, interest risks with long term lending and exchange risks with foreign investments have led to new hurdles for the new-age bankers.

Calling for ‘big banks’ on the national scene so that they can lend more money for big companies or projects, he said SBI had also played a role in investment banking.

Axis Bank vice-president Himanshu Shekhar said with right kind of control RBI has indeed brought transparency into the Indian banking system and with ‘codes of conduct’ customers are getting ‘fair treatment’.

Also admitting issues like KYC and human resource crunch, he said with changing social structure and less social interactions ‘market feedback on asset front is becoming limited’ as people are not interacting with each other much as neighbours or friends.

SIDBI General Manager Kripal Singh said with institutions like Credit Guarantee Trust, SME Rating Agency of India, SME Technology Bank and SIDBI Risk Funding, more enterprises can take advantage of banking to enrich their market holding.

Institute director Prof. K.C. Padhy, director-general H.K. Patnaik, advisor K.K. Beuria and Prof. S.K. Panda spoke in the first session.