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.