Recommendations on Medium-term Path on Financial Inclusion

By | December 30, 2015

RBI releases Deepak Mohanty Panel’s report on Financial Inclusion

The Reserve Bank of India has placed the report of the Committee on Medium-term Path on Financial Inclusion (Chairman:  Deepak Mohanty).


The Committee was constituted with the objective of working out a medium-term (five year) measurable action plan for financial inclusion.

About the Committee:

The committee, chaired by Mohanty, consists of officials from public and private banks, officials from payment networks, a representative from the World Bank, a representative from the Bill and Melinda Gates Foundation and central bankers.

  • The committee has recommended that a unique biometric identifier such as the Aadhaar identity number should be linked to each individual credit account and the information shared with credit information companies.
  • The committee has recommended the use of application-based mobile phones as points of sale for creating necessary infrastructure to support the large number of new accounts and cards issued under PMJDY.
  • The committee has warned against taking the competence of business correspondents (BCs) for granted.
  • The committee has recommended a graded system of certification of BCs, from basic to advanced training.
  • The report also suggested to further step up financing of the MSE Sector a framework for movable collateral registry may be introduced.


  • The average number of branches per 100,000 population in India has jumped to 9.7 by June 2015, as compared with 7.2 in 2010.
  • The compound annual growth rate (CAGR) in the number of savings bank accounts between 2006 and 2015 in rural and semi-urban areas has been 15.6% and 15.9%, respectively.
  • The committee has noted that there has been a significant jump in financial inclusion-related activities in India after the introduction of the Prime Minister’s Jan Dhan Yojana (PMJDY) in August 2014.

KEY Recommendations of Deepak Mohanty Committee on Medium-term Path on Financial Inclusion:

  • Augment the government social cash transfer in order to increase the personal disposable income of the poor. It would put the economy on a medium-term sustainable inclusion path.
  • Sukanya Shiksha Scheme: Banks should make special efforts to step up account opening for females belonging to lower income group under this scheme for social cash transfer as a welfare measure.
  • Aadhaar linked credit account: Aadhaar should be linked to each individual credit account as a unique biometric identifier which can be shared with Credit information bureau to enhance the stability of the credit system and improve access.
  • Mobile Technology: Bank’s traditional business model should be changed with greater reliance on mobile technology to improve ‘last mile’ service delivery.
  • Digitisation of land records: It should be implemented in order to increase formal credit supply to all agrarian segments through Aadhaar-linked mechanism for Credit Eligibility Certificates (CEC).
  • Nurturing self-help groups (SHGs): Corporates should be encouraged to nurture SHGs as part of Corporate Social Responsibility (CSR) initiative.
  • Subsidies: Government should replace current agricultural input subsidies on fertilizers, irrigation and power by a direct income transfer scheme as a part of second generation reforms.
  • Agricultural interest subvention Scheme: It should be phased out.
  • Crop Insurance: Government should introduce universal crop insurance scheme covering all crops starting with small and marginal farmers with monetary ceiling of Rs. 2 lakhs.
  • Multiple Guarantee Agencies: Should be encouraged to provide credit guarantees in niche areas for micro and small enterprises (MSEs). It would also explore possibilities for counter guarantee and re-insurance.
  • Unique identification of MSME: It should be introduced for all MSME borrowers and information from it should be shared with credit bureaus.


Thus, the Reserve Bank of India (RBI) has released the Report on Medium-term Path on Financial Inclusion submitted by 14-member committee headed by RBI Executive Director Deepak Mohanty. RBI had constituted the committee in July 2015 to examine the existing policy regarding financial inclusion and the form a five-year (medium term) action plan. It was tasked to suggest plan on several components with regard to payments, deposits, credit, social security transfers, pension and insurance.

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