RBI announces Rs2,000-cr financial inclusion fund
15 Oct 2015
Reserve bank of India (RBI) today announced the merger of the Financial Inclusion Fund and the Financial Inclusion Technology Fund into a single fund – the Financial Inclusion Fund (FIF) – with a corpus of Rs2,000 crore.
The merged FIF will support 'developmental and promotional activities' for expanding reach of banking services, RBI said.
The Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF) were constituted in 2007-08 for a period of five years with a corpus of Rs500 crore each to be contributed by Government of India (GOI), RBI and NABARD in the ratio of 40:40:20. The guidelines for these two funds were framed by the government.
In April 2012, RBI decided to fund FIF by transferring the interest differential in excess of 0.5 per cent on RIDF and STCRC deposits on account of shortfall in priority sector lending.
RIDF stands for Rural Infrastructure Development Fund and STCRC for Short-Term Cooperative Rural Credit.
''Keeping in view the various developments over the years, the government has merged the FIF and FITF to form a single Financial Inclusion Fund. The Reserve Bank of India has finalised the new scope of activities and guidelines for utilisation of the new FIF in consultation with the government,'' RBI stated in its release.
RBI said the new FIF will be administered by the reconstituted advisory board constituted by government and will be maintained by NABARD.
"The objectives of the FIF shall be to support 'developmental and promotional activities' including creating of FI infrastructure across the country, capacity building of stakeholders, creation of awareness to address demand side issues....with a view to securing greater financial inclusion," the guidelines said.
Enhanced investment in Green Information and Communication Technology (ICT) solution is one of the other major objectives of the fund. The fund shall not be utilised for normal business or banking activities, it added.
FIF will provide support for funding the setting up and operational cost for running Financial Inclusion and Literacy Centers. Institutions eligible for the fund are banks and NABARD.
Banks can work for seeking support from the FIF with NGOs SHGs, and farmer's clubs, among others.