Amid repeated push of the government for financial inclusion, RBI Governor Raghuram Rajan sounded a cautious note and has said that financial inclusion should not be pressed beyond a point because beneficiaries may not have the capacity to make use of funds being made available to them.
Rajan who was speaking on the sidelines of IMF-World Bank meetings, said that pushing financial inclusion beyond a point can have negative impact because people at the bottom of pyramid do not have capacity to absorb credit. He said “In my sense, beyond a certain point... (financial inclusion) becomes actually negative,” he said, adding that everyone should not be pushed to borrow.
RBI governor also emphasized that technology and e-model could be used for improving businesses at remote centres and made a strong case for developing capacities to deal with the misuse of technology by criminal elements.
Recently, sticking to its theme of financial inclusion and making credit available for small borrowers, the Reserve Bank of India granted in-principle licences to set up small finance banks to 10 applicants, all microfinance companies.
