Let the Reserve Bank Do What it Must

..........But it is possible for the RBI to grant more people access to formal credit. It has to abandon the belief that financial inclusion can be achieved only through physical expansion of branch networks and, instead, permit innovative forms of banking and use of technology on a large scale to expand access at low cost. The RBI should shun conservatism in new bank licences. There is no reason why, say, mobile phone companies or their joint ventures with established banks should not be given licences. The ability of these companies to make money from low-value transactions should be leveraged to achieve financial inclusion. This is fully within the RBI’s control.

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