ATM Network: Key to financial inclusion 3

ATM Network should be viewed as  the basic infrastructure that Financial sector needs. Model of Bank owned and operated ATMs was sought to be supplemented by white ATMs. Policy changes announced by RBI had created high expectations two years ago.  However the growth of third party white ATMs is slow.

 

Big banks have the resources to create their own network and they have also established it in urban areas.  In fact in my locality in New Delhi there are more than 10 ATMs of different banks. Looks like wastage of precious resources. In many small towns you find no ATM.

 

Medium sized banks have limited network.  Cooperative Banking sector does not have financial resources to create a good network. Second key difficulty they face is poor competency in Information Technology.

 

I propose that the task of creating ATM Network should be taken up by RBI. A wholly owned company can be formed to establish and run the ATM Network. Let us call it Indian ATM Network Company (IANC).

 

IANC will act as backbone of Banking Sector and facilitate its development much in the same manner as a Highway Network would facilitate growth of economy. 

Advantages of IANC will be

 

1. High quality network
2. Currency notes come from RBI. And go in the hands of people directly.  Banks do not handle that much currency. 
3. RBI can implement many changes in payment systems directly.
4. Old currency notes collected by Currency Chests maintained by different banks also come into the network. RBI gets a checkpoint to detect the forged currency closer to the ground.
5. Cooperative Banking Sector will very quickly transform into modern age banking.
6. ATMs are created at locations where the economic viability may be long term. 
7. Duplication of ATMs is avoided.

 

After the sector has matured,  this company may be made free standing from government control by selling its equity to Banks and subsequently to public.

Financial Distress Rehabilitating families

We read and hear about families getting into Financial Distress and some of them taking extreme step of ending their lives.  Suicide by farmers happen in thousands every year.  There are many examples in urban India as well. 

What can we do to help such persons and families?

1. Introduce personal bankruptcy legislation.  

In many countries,  there is provision that an individual can also be  declared as bankrupt.  This provision should be brought in India also.  Many will argue that this will lead to financial profligacy.

Local trains to have a first class train

Many person have to travel in local trains in Mumbai. For senior citizens it is tiring to keep standing for an hour or so.

7 suggest that atter every 4 trains run one train which is completely seating train.

The reservation ticket should be provided on the self service kiosks on the platform nitself.

Railways need reorganisation

Railways need to be divided into following corporations

Railway Authority of India.  On the lines of Airport Authority of india. It owns the tracks and railway station

Railway Goods Services Corporation. They own goods trains
Railway Passenger Service Corporation. 

Bullet Train services
Railway Loco maintenance services

Regulator of Railway tarriff

Private Sector should be allowed to run passenger and goods trains

Upkeep of Railway stations and platform can be given to private concessionaires.

Separate account to be maintained

Activity Based Costing to be followed.

Manufacturing Competitiveness

It is clear that in manufacturing, we are not competitive compared to China. Critical factors are cost and quality.  Though quality is not a big problem. High quality at lower cost is the challenge.

The greatest challenge in front of Indian economy is to make it lower cost.

We should do everything in our power to bring down the costs. First let us look at labour costs.  While minimum wages cannot be lowered,  we need to provide a higher standard of living to our workers.  This can be done by taking the work to their town. A person getting 10 thousands per month in Delhi is far poorer to another one getting 6 thousands in his own home town. One of the major element of costs in city is the real estate cost.

Housing for poor in villages

Once again a horrific crime in Badayun brought shame to the country. It was reported that the girls' family is landless and they went out for nature's call. 

Many politicians are going to that village.  Lots of money is being spent on these visits. Can't we think of using the money for creating permanent dwellings and toilets for the poor people in villages?

What  is the cost involved?

Let us assume we provide about 600 sqft to one family. The cost of construction is about Rs 800 per sqft. So the cost will be Rs 5 lakh approximately.  If the family is  of five people, cost is Rs 1 lakh per person.

If there are 25 crore people who need to be provided housing the total budget required is Rs 25 lakh crores.

If we make a five year plan we need Rs 5 lakh crores every year.  Can we provide this sum?

SAARC

How to improve relationship with our neighbours?

Most important element is economic ties. We should develop trade with our neighbours.  Even if the trade is in their favour, it does not matter. We should be their biggest trading partners. We can invest in the industries in their countries.

They should get better access to our country. Our educational institutions,  our hospitals and our job markets.

Vision for Milk

India is the largest milk producing nation in the world. In 2013-14, our milk production was 132.4 million tonnes.

Do we produce enough milk for our people? 

In 2011-12, the availability of milk was 290 gm per person per day. (Data taken from NDDB website.)

This means not even one glass of milk for the individual. (Capacity of a steel tumbler is about 400 cc.)

We need to provide about 900 gm of milk per person per day.

If we keep the target of achieving this level in 10 years, we require growth rate of about 15 % year on year in quantitative terms.

Are we prepared for this?

Increasing milk production is not easy. Following actions are required:

1. Increase the number of milch cattles. (It has a lead time. It can't happen overnight.)

2. Increase milk yield from each milch cattle. (Requires better animal feed. Different breed of cattle.)

3. Avoid wastages.