Since every unbanked individual likely consumes low volumes of financial services to begin with, the provider should automate transactions as far as possible to reduce costs, and use employees that are local and are commensurately paid. Furthermore, any regulatory burden should be minimal.
With these objectives in mind, the RBI has started the process of licensing small local banks, and is re-examining KYC norms with a view to simplifying them. Last month, we removed a major hurdle in the way of migrant workers and people living in makeshift structures obtaining a bank account, that of providing proof of current address. New and inexperienced customers will require Protection.