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RBI panel recommends bank accounts for all Indians above 18 years by January 2016

The Mor committee, a Reserve Bank of India (RBI) panel, has suggested that specialized banks should be established to provide an ‘individual, full-service, safe, and secure electronic bank account’ to all Indians above 18 years of age by January 2016.

In its report on Comprehensive Financial Services for Small Businesses and Low-Income Households, the Mor committee recommended that withdrawal, payment and deposit facility should be established within a 15-minutes walking distance across the country.

Led by ex-ICICI Bank executive director Nachiket Mor, the committee was formed by RBI governor Raghuram Rajan, to suggest steps for promoting financial inclusion in the country.

Highlighting the need to enhance the banking services, the report said, "Close to 90 per cent of small businesses have no links with formal financial institutions and 60 per cent of the rural and urban population do not even have a functional bank account."

Furthermore, the panel also recommended for the establishment of ‘Payments Banks’ with a minimum capital requirement of INR500m ($8.05m).

The new banks will offer payment services and deposit products to small businesses and low-income households with a maximum balance of INR50,000 ($805) per customer.

While increasing the priority-sector lending target from 40% of net bank credit to 50%, the panel has advocated abolishing farm-loan subsidies and said that the government should directly transfer benefits to farmers.

The panel has set 1 January 2016 as the deadline to achieve the targets such as access to formal credit as well as investment and risk management products at reasonable prices.