Banks to get Rs 140 for every 'no frills' account

The government will give Rs 140 to the banks for every 'no-frills' account opened by them as part of its initiative to expand the reach of banking services in the country, Finance Minister Pranab Mukherjee today proposed in Budget.

In total, the government will grant Rs 50 crore to banks in the next fiscal 2011-12 for this exercise.

"Financial support to the banks for opening 'no frills' accounts under Swabhiman Scheme as part of Financial Inclusion Plan Rs 50 crore (Budget estimate for 2011-12)," Mukherjee said.

No-frills accounts allow customers to have zero balance, and also offer limited facilities. They are aimed to cater to the first-time customers whose banking needs are not much.

According to an estimate, between November 2005 to March 2010, about 50 million no-frills accounts were opened.

The move is the part of financial inclusion plan which will encourage the rural population to open an account and avail banking facilities.

In his Budget speech, Mukherjee said that the banks have identified about 73,000 habitations for providing banking facilities. During this year, banks will cover 20,000 villages and remaining will be covered during 2011-12.

Besides, he also said that a multi-media campaign, 'Swabhimaan', has been launched to inform, educate and motivate people to open bank accounts.

While last year, Mukherjee had outlined that all the 60,000 unbanked villages having a population of over 2,000 will be covered by March 2012.

Source: Business Standard