Why isn’t the Reserve Bank of India excited about Modi’s financial inclusion scheme?
Tuesday, September 23, 2014
The central bank warned last week that a faulty rollout could create more problems than it could fix.
Of the few major schemes that Prime Minister Narendra Modi has launched since taking office, the Jan Dhan Yojana for financial inclusion has seemed like them most promising, at least from the headlines. Up to four crore accounts have been opened under the programme, according to the finance ministry, and more than Rs 3,700 crore have been mobilised by banks so far.
But not everybody is as optimistic about the programme. In the last week alone, two officials from the Reserve Bank of India have listed concerns that the government needs to attend to if it aims to ensure that the scheme doesn’t cause more trouble than it will fix.
Why exactly is India’s central bank so concerned about the potential rollout of a programme that could bring so many more people into the banking net?