FINANCIAL INCLUSION IN INDIA

National Bank for Agriculture and Rural Development

AND

(NABARD)

Presentation by Shri U.C. Sarangi, Chairman, NABARD & Shri S.K.Mitra, Executive Director, NABARD

History of strategies for Inclusive Growth/ Livelihood improvement/ Financial Inclusion in India

Phase I (1960 1980)

Social control of Banks (1960) Nationalisation of Banks (1969) Setting up of Regional Rural Banks (1975) Priority sector lending stipulation by RBI - (1972) Lead Bank scheme (1969)

History of strategies for Inclusive Growth/ Livelihood improvement/ Financial Inclusion in India

Phase II (1980 2005) Integrated Rural Development programme/ SGSY promoted by Govt. Of India Microfinance programme SHG Bank linkage facilitated by NABARD

Phase III (2005 onwards) Development of MFIs Financial Inclusion in a MISSION mode

Formal Bank Network In India

Reserve Bank of India NABARD Public Sector Banks (28)
Rural Semi-urban Urban Metro Total RRBs (96) LABs (4)

Government of India

Private Banks (24)

987 2,077 2,102 1,901 7,067

Credit Cooperatives

18,197 11,736 10,247 9,726 49,906

11,444 / 5 2,481 / 14 522 / 11 59 / 0 14,506 / 30

SCB 31 DCCB 367 PACS 108779 SCARDB 20 PCARDB - 727

13,104 NBFCs registered with RBI. 1853 Urban Co-operative banks with 7217 branches. Foreign Banks Urban 43, Semi Urban 2, Metro 227. (Total 272)

NSSO 2003 Findings of Survey

51% lack access to Financial Services from formal system Exclusion predominant amongst: -- Poor and weaker sections -- Resource poor regions

SHG - Photo

Largest Financial Inclusion programme in the World

58 million poor households provided access to banks through 3.48 million SHGs. Savings of SHGs with banks $ 703 million. Bank loans availed by SHGs $ 2473 million NABARD Refinance support $1412 million NABARD Promotional support $5.5 million

SHG- Bank Linkage programme in India facilitated by NABARD, implemented by Banks, NGOs, Government agencies
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Financial Inclusion - Definition

The process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.

Financial Inclusion eventually to include the following services

Savings/ Thrift Loans/ Credit Remittance / Transfer of Funds Micro Insurance Services (Life and Non- Life) Mutual Funds/ Annuity Products Pension Products

Creation of Funds with NABARD in 2007 08

Financial Inclusion Fund (FIF) Rs 5000 million Financial Inclusion Technology Fund (FITF) Rs 5000 million Govt. of India : RBI : NABARD (40:40:20)

Objectives of FIF
The objectives of the FIF shall be to support developmental and promotional activities with a view to securing greater financial inclusion, particularly among weaker sections, low income groups and in backward regions / hitherto unbanked areas.

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Objectives of FITF
The objectives of the FITF shall be to enhance investment in Information Communication Technology (ICT) aimed at promoting financial inclusion, stimulate the transfer of research and technology in financial inclusion, increase the technological absorption capacity of financial service providers / users and encourage an environment of innovation and cooperation among stakeholders.
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Technology Solutions being tried in India

Smart card, hand held terminal, central CPU Low cost ATMs Mobile Phone Banking SMS Banking Public Call Office (PCO) Connectivity.

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Way Forward

Targets fixed for each Branch of Commercial Bank/Regional Rural Bank to : Open 250 accounts every year Issue 100 Farmers Credit Card Issue 100 General Credit Card Distribute 100 micro insurance policies

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Way Forward (contd/-)

Micro Finance Sector (Development and Regulation) Bill, 2007 under consideration. Setting up of Rural Credit Information Bureau. Ensuring effectiveness of Business Facilitator(BF) /Business Correspondent(BC).

Micro finance Development and Equity Fund Micro finance Ombudsman Regulatory and developmental power to NABARD

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THANK YOU
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