Soon no-frills accountholders will also be able to own credit cards as the Reserve Bank of India (RBI), will be instructing banks to extend a special credit card facility to all ‘deserving’ no-frills account holders as by the end of this month lenders will be submitting their new financial inclusion plans.
KC Chakrabarty, deputy governor of RBI said, charges will also be levied on non-maintenance of no-frills accounts. He told, “We have asked banks to offer at least four facilities along with the no-frills accounts. The products include a savings product, an overdraft facility and a credit facility.”
Chakrabarty informed that banks will be instructed to offer credit card to every deserving account holder with no-frills account. Speaking on sidelines of a banking summit organized by Skoch Consultancy in Mumbai he told Financial Chronicle, “For those who do not deserve, banks have been asked to educate them and make people deserving to use a credit card.”
During financial crises most of the banks started shrinking their credit card segments because of rising non-performing assets, whereas during 2006-08 many banks had expanded their credit card segment.
Moreover there will be minimum demand for credit cards as the no-frills account holder income is low. Therefore, a credit card to a no-frills account holder is a bold step from the regulator.
M Narendra, executive director of Bank of India, said, “The credit limit on such cards will be low compared with other cards.”
According to banking regulator most probably scheduled commercial banks will be covering 4 lakh out of the 6 lakh unbanked villages over the next five years. He added, “Regional rural banks will reach out to around one lakh villages.”
S Sridhar, CMD of Central Bank of, said, “The financial inclusion program for banks will be viable only after the fourth year”.
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