As India celebrates 60 years of independence, Usha Thorat, Deputy Governor, Reserve Bank of India (RBI) revealed that 40% of Indians do not have a bank account. Mr Thorat was speaking at the Financial Inclusion Conference 2007 in London, UK in June 2007.
The RBI, which is India’s central bank, collated nationwide data which showed that just 59% of adults have a bank account, assuming that every person has only one account. In fact the number could be far lower as the likelihood is that some individuals have multiple accounts. In his speech, Mr Thorat claimed that the figure is even lower in rural areas at 39%, which compares to 60% in towns and cities. Most of the unbanked live in the North-East or the Eastern regions.
The extent of exclusion from credit markets is even greater, as the number of loan accounts constituted for only 14% of the adult population. In rural areas, the coverage decreases to 9.5%. Regional differences are significant with the credit coverage hitting 25% for the Southern Region but only 7%, 8% and 9% respectively in the North Eastern, Eastern and Central Regions.
Effectively this means that 51.4% of farm households have no access to formal or informal sources of credit while 73% have no access to formal sources of credit.
Amy Rennison, Microcapital writer
Additional resources:
Economic Times: http://economictimes.indiatimes.com/articleshow/2274857.cms
Mr. Thorat’s speech: http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=342
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