Rs 2,000 cr fund to push financial inclusion: RBI

Mumbai: RBI today announced merger of two funds to create a new Financial Inclusion Fund with a corpus of Rs 2,000 crore to support ‘developmental and promotional activities’ for expanding reach of banking services.[caption id=“attachment_2448694” align=“alignleft” width=“380”]  The RBI logo. Reuters[/caption] After completion of initial five years, RBI said it has now been decided to merge both the Financial Inclusion Fund and Financial Inclusion Technology Fund into a single Fund – Financial Inclusion Fund (FIF). “The overall corpus of the new FIF will be Rs 2,000 crore. Contribution to FIF would be from the ‘interest differential’ in excess of 0.5 per cent on RIDF and STCRC deposits on account of shortfall in priority sector lending kept with NABARD by banks,” it said while issuing revised guidleines of the new FIF. RIDF stands for Rural Infrastructure Development Fund and STCRC for Short-Term Cooperative Rural Credit. Keeping in view the various developments over the years, government has merged the FIF and FITF to form a single FIF and the RBI has finalised the new scope of activities and guidelines for utilisation of the new FIF. The new FIF will be administered by the reconstituted Advisory Board constituted by government and will be maintained by NABARD. “The objectives of the FIF shall be to support ‘developmental and promotional activities’ including creating of FI infrastructure across the country, capacity building of stakeholders, creation of awareness to address demand side issues….with a view to securing greater financial inclusion,” the guidelines said. Enhanced investment in Green Information and Communication Technology (ICT) solution is one of the another major objective of the fund. The fund shall not be utilized for normal business or banking activities, it added. FIF will provide support for funding the setting up and operational cost for running Financial Inclusion and Literacy Centers. Institutions eligible for the fund are banks and NABARD. Banks can work for seeking support from the FIF with NGOs SHGs, and farmer’s clubs, among others. PTI