Professional Documents
Culture Documents
Promoting Promoting-Financial-InclusionFinancial Inclusion
Promoting Promoting-Financial-InclusionFinancial Inclusion
Definitions
Financial inclusion means extending basic banking services at affordable prices to the low income and disadvantaged groups. Purpose: to connect the excluded with the formal banking system in order to help them obtain an understanding of the financial services available and equipping them with the confidence to make informed financial decisions. Basic services include deposits / withdrawals, credit, remittance, investment, insurance etc. No frills account: An account with zero or minimum balance with maximum balance of Rs 50,000/- at any given point in time and total credit in a year not exceeding Rs 1,00,000/-.
Banks can restrict the nature of services offered, number of transactions permitted etc.
Some misconceptions
Financial Inclusion (FI) is the latest fad . FI is only social service; not a good business proposition. FI simply means opening as many bank accounts as possible. Everyone handles money. Therefore, everyone is financially literate.
Benefits of Greater FI
For the common man escape from the clutches of money lenders; sending / receiving remittances; no need to hold savings in cash etc. For the banks achieving access to a large untapped pool of customers. For the Govt.- ensuring flow of aid / grants to the targeted beneficiary. For the RBI - spread of banking culture and extension of the reach of formal financial system.
A few statistics
households
financially
73%: Farmer households having no access to formal sources of credit. 64%: Share of Central, Eastern and North Eastern regions in the total financially excluded farmer households in the country.
Source: NSSO Survey 59th Round
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TARGET
By 2012: Cover at least 50% (55.77 million) of the excluded. By 2015: Include the remaining. 250 new households per branch per annum to be covered by all semi-urban and rural branches of banks and RRBs.
Source: Report of the Committee on Financial Inclusion in India (Chairman: Dr C. Rangarajan); 6 January 2008
Initiatives by RBI
No-frills accounts in November 2005. Now, with Overdraft facility. Business Facilitator/Business Correspondent model for greater outreach. KYC norms relaxed. GCCs introduced. Project Financial Literacy & multi-lingual website. Working Group Report on Technology based FI for RRBs. Funding support through IDRBT envisaged. Contribution to FIF and FITF (managed by NABARD).
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*Provisional
Andhra Pradesh
Pilot project in six districts of Warangal for disbursement of SSP and NREGS benefits through BCs with the use of smart cards and mobile technology. Launched by Rural Development Deptt. of A.P. Govt. Involving 6 banks. Project coordinated by RBI. MIS provided to Govt. by IDRBT. Project now being up-scaled to cover the entire State.
Dharavi (Maharashtra)
Dharavi is Asias largest slum with 3-3.5 lakh workers. Smart card based banking introduced by Indian Bank to provide doorstep-banking for the slum dwellers, many of whom are migrants. The facility has enabled workers to save and migrants to send remittances easily and reliably. Life and health insurance are also being offered. The model is now being extended to Guntur town (AP) and Tharamani (Chennai).
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Pragati Gramin Bank, Bellary: Loans under DRI scheme disbursed to 260 small vendors. Mann Deshi Mahila Bank, Mahaswad (Satara): Business school on Wheels to enable poor women in rural areas to become entrepreneurs. SBI Tiny Card: Tech. based FI in Aizawl. PNB: Bhamashah Project for rural women in Rajasthan.
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Some States have reached this stage. We have a lot of catching up to do!
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Goals
Programme on IT-Enabled Financial Inclusion for banks and senior Govt. officials. Distribution of financial literacy related books in Maithili and Bhojpuri. State Level Essay Competition for school children. Jingle on FI on Radio Mirchi. RBI Stall at Sonepur Mela.
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Seminar on Financial Inclusion involving State Govt., bankers, experts, Industry chambers, NGOs etc. Programmes on local radio / TV. Debates in schools / colleges. Comic booklet on FI. Road-shows on FI in various districts of Bihar.
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Problems? No Challenges!
Measuring actual extent of financial exclusion. Inadequate awareness levels. Low literacy rates. Poor saving habits. Consumption oriented expenditure patterns. Lack of infrastructure. Varied local conditions. Small ticket transactions & high transaction costs. Agent and vendor risk. Recovery related issues. Dormant accounts. Sustainability factor.
AND.OUR ATTITUDE
Not all hurdles can be removed but surely all can be overcome!
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Prescription
Innovative promotion. Basic product design. Affordable pricing model. Inexpensive and reliable delivery module. Continuous monitoring. EXTEND : Financial advice and credit counselling. MODIFY : Credit usage pattern. ENHANCE : Credit absorption capacity.
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State Government & local administration. Banking Industry and Developmental Institutions. Section 25 companies / Insurance agents. NGOs / SHGs /MFIs/ Farmers clubs/ PACS. Ex servicemen /retired govt. and bank employees/ teachers. Post Offices / Panchayats. IT service providers. Schools and Colleges. Media.
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It pays to remember
Good ideas are not enough: An idea is only as good as its implementation. Detailed schemes are not enough: Lack of public awareness can bury the best scheme.
We can all contribute by generating publicity and ensuring action at the ground level.
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THANK YOU!
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