Right incentives are needed to encourage financial inclusion rather than just providing banks with account-opening targets which could result in large number of dormant accounts, CCI chief Ashok Chawla said today. 

Chawla, who had earlier served as Finance Secretary, said there are challenges in implementation of financial inclusion even though the Pradhan Mantri Jan Dhan Yojana provides a holistic framework beyond opening of 'no-frills' accounts. 

Competition Commission of India (CCI) Chairman Ashok Chawla said here that Direct Benefit Transfer (DBT) offers a "silver bullet" solution to the problems related to social welfare programmes. 

Public provision of goods and services in India has been highly inefficient with limited delivery of the subsidy to the intended beneficiaries, he added. 

"As we have seen in the past, providing banks with account opening targets is likely to result in large numbers of dormant accounts. 

"Paying banks commissions on payments made would, on the other hand, rather create the right incentives for not just opening accounts but keeping them active," Chawla noted. 

Referring to Jan Dhan Yojana, Chawla said challenges still remain in view of the already strained balance sheets of the government-run banks. 

"While there is no doubt that the goals of comprehensive financial access are important, they need to be pursued in a manner that does not end up eroding the competitiveness of the financial institutions," he noted. 

Prime Minister Narendra Modi launched the financial inclusion scheme -- Jan Dhan Yojana -- on August 28, 2014. The initial target was to open 7.5 crore 'no-frills' accounts, but the later it was revised upwards to 10 crore to be completed by January 26, 2015. However, this target has already been achieved. (Business Standard)