The Reserve Bank of India (RBI) today admitted that inflation in the country is still high despite the WPI (wholesale price index) based inflation falling to a three-year low of 7.18 per cent in December 2012.
"For the past few years, inflation has been growing and high prices have especially impacted the poor. In the last two years, we have been able to contain inflation but it is still high. We are making best efforts to curb it," RBI Governor D Subbarao said at a public meeting here, some 100 km from Bhubaneswar.
The slowdown in headline inflation was led by a moderation in the prices of fuel and manufactured goods. However, it is much above the comfort level of RBI. The central bank's technical assessment suggests that the threshold inflation rate in the country is in the range of 4-6 per cent.
Spurred by falling inflation, RBI had cut its repo rate (or the rate at which it lends to commercial banks) and cash reserve ratio by 25 basis points (or 0.25 per cent) in its last policy review on January 29.
The other problem RBI needs to overcome, Subbarao said, is the one posed by counterfeit notes.
"People should be aware of counterfeit notes and be able to identify genuine bank notes," he asserted.
On financial inclusion, he said, "Our country has 0.6 million villages but there are no bank branches in 90 per cent of these villages. Having bank accounts will help the beneficiaries as pension payments and MGNREGA (Mahatma Gandhi National Employment Guarantee Act) wages will be directly credited to their accounts."
Acknowledging the role of UCO Bank that has adopted Jalanga village under financial inclusion programme, Subbarao said, "After my first outreach programme here (in December 2009), UCO Bank has opened a branch which is catering to the banking needs of the entire population of Geltua gram panchayat. I'm informed that 84 SHGs have been formed at this gram panchayat. While UCO Bank's Jalanga branch has tried all out to provide loans to the people, some are yet to avail credit."
Earlier, Subbarao inaugurated the maiden ATM of UCO Bank here and also held an interactive session with a few SHGs (self-help groups). V Ramchandra Rao, regional director-RBI (Bhubaneswar) said, "UCO Bank opened a branch at Jalanga on January 6, 2010. The branch has extended advances of Rs 2.5 crore to 567 people. Total deposits of the bank have touched Rs 4.61 crore and 540 ATMs have been issued."
UCO Bank has so far opened 3359 no-frills accounts at Jalanga and its neighbouring villages, covering 624 households. Of its total advances of Rs 2.5 crore, agriculture credit has almost 50 per cent share at Rs 1.2 crore