The Reserve Bank of India is asking more rural financial institutions to issue credit cards tied to no-frills banking accounts, a spokesperson for the country’s central bank tells PaymentsSource.
Many regional and public rural banks already offer no-frills accounts, which typically come only with a passbook and check-withdrawal capabilities and have minimum charges associated with them.
“We have asked banks to offer at least four facilities along with the no-frills accounts,” the spokesperson says. “The products include a savings product, an overdraft facility and a credit facility.”
The central bank is asking rural banks to give a credit card to every deserving holder of a no-frills account, he explains, noting the criteria for receiving a card would include income, banking behavior and performance on any past loans. The credit limits offered on such cards would be relatively low compared with cards issued in more-prosperous urban regions.
Some 600,000 villages in India lack banking services, Reserve Bank of India data show. The central bank has ordered commercial and regional banks to bring financial services to at least 400,000 of those by 2015.
“Banks operating in these areas have to submit their new financial-inclusion plans by the end of this month, where we are asking for the roadmap they are going prepare for such a launch,” the spokesperson adds.