No Frill Accounts Essay

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NO FRILLS ACCOUNT- a burden at the time of crisis Off late, we have been talking a lot about whether the banks in India will be able to survive the phase of instability prevailing in the global financial markets or not. Falling margins, loss in investor’s confidence, emphasis on cost cutting in operations are some consequences of the recession in 2008. Foreign banks are still struggling to overcome the post-recession crisis while the public banks in India are working hard to give returns to their customers as well as helping the government in fulfilling their dream of providing financial access to the unbanked India free-of-cost. Seven years ago, a phrase named “Financial Inclusion” was coined by the former Reserve Bank of India (RBI) governor Y V Reddy. At the time of inception of the phrase there was a huge challenge in front of Indian government and RBI of providing financial access to 85% of unbanked population of India in a cost-effective, transparent and fair manner. These measures were taken all around the world as studies had shown that financial access and high income levels go hand-in-hand. In the process the government of India brought out the idea of providing ‘no-frills’ account to the unbanked population of rural India. So, what is a ‘no-frills’ account? Going back in 2005, RBI directed all banks to offer at all branches the facility of ‘no-frills’ account to any person desirous of opening such an account. The concept of ‘no-frills’ is to provide only the essential features and sacking the extra-valued features so as to reduce the price of service and also to bring the sense of transparency in the system by removing the hidden costs associated with account opening. These accounts have nil or low minimum balances and charges, and have limited facilities. However, there are certain restrictions. The total credit at any point of time in your account

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