Nachiket Mor Committee

08 Jan

Recommendations of Nachiket Mor committee recommendation on comprehensive financial services for small businesses and low-income households:-

1)   Each low-income household and small business should be provided with convenient access to formally regulated lenders who have the ability to assess and meet their credit needs and offer a full-range of suitable credit products at an affordable price.

2)   The committee has set January 1, 2016, as the deadline for achieving this. By that date, each district and every significant sector (and sub-sector) of the economy would have a credit to GDP ratio of at least 10 per cent.

3)   The committee was hopeful that by January 1, 2016, each district would have a total deposits and investments to GDP ratio of at least 15 per cent.

4)   By that date, each district should have a total term life insurance sum assured to GDP ratio of at least 30 per cent. This ratio should increase every year by 12.5 per cent with the goal of reaching 80 per cent by January 1, 2020.

5)   To reach the target, every resident should be issued a Universal Electronic Bank Account (UEBA) automatically at the time of receiving his/her Aadhaar number. (UEBA) should attract no account opening fee, it said. The bank, however, would be free to charge for all transactions.

6)   The committee recommended that the RBI issue a circular indicating that no bank could refuse to open an account for a customer, who had adequately fulfilled KYC (know your customer) requirements.

7)   On priority sector, the committee recommended adjusted priority sector lending target of 50 per cent against the current requirement of 40 per cent with sectoral and regional weight age based on the level of difficulty in lending.

8)   Committee advocated regulatory convergence between banks and NBFCs based on the principle of neutrality with regard to classification of non-performing assets and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 eligibility.

9)   The committee also suggested the creation of a state finance regulatory commission (SFRC).


Posted by on January 8, 2014 in Economics



3 responses to “Nachiket Mor Committee

  1. Harish

    January 8, 2014 at 3:31 pm

    Such committees are not really relevant. They are talking about increasing access to the investment for low income households. I don’t think there is much issue of access, making investments or opening a bank account is not really expensive, you can even find zero balance accounts in many banks. There are many companies running behind people with numerous investment products.
    The real problem is the availability of surplus money with the households to invest or even deposit them in bank.
    The ever increasing inflation rates is not doing any help for the issue.
    Controlling inflation rate and increasing income opportunities should be the major concern, investments will take care of themselves.

  2. Ravi Jain

    January 9, 2014 at 5:12 am

    @Harish: These committees are not relevant but their recommendations could come handy while answering questions in mains. Also, I would like to submit my response to the points regarding the recommendations of Mor committee as follows:-

    1) India still lags way behind other country in providing access to its population majority of which still resides in villages. Bringing these downtrodden under banking services remains an important goal for Indian government.

    2) Banks and NBFC do run behind people with myriad range of products but those people are not from the villages. They are well off people who are having substantial amount of savings in their account. Mor committee recommendations are for bringing these people in the banking loop so that they could be saved from the clutches of private moneylenders and could use baking services to better their life.

  3. Harish

    January 9, 2014 at 8:54 am

    @ravi, even in villages the main problem is lack of income
    lack of income in villages —–> lack of surplus income/savings—–> less profitability for banks opening branches in villages ——> overall lack of banking services in villages.
    only opening branches and providing services will never be enough unless the problem of income is not solved.
    the best way is to continue and further strengthen the programs like MNEREGA, national rural livelihood missions etc. with focusing on education and health.
    Improvement in health, education and income opportunities will not only solve the problem this committee is focusing on but also most the issues the country is facing.


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