A STUDY ON FINANCIAL INCLUSION

”A KEY FOR INCLUSIVE GROWTH”

Proposal for Management Thesis

Submitted to
K L University Business School

Submitted by
YOUNUS SYED
Reg No : 09101966

Under the Guidance of

Dr.G.SUNEETHA, Associate Professor
KLUBS, KL UNIVERSITY
Vaddeswaram, Guntur Dist
2009-2011
 A STUDY ON FINANCIAL INCLUSION
”A KEY FOR INCLUSIVE GROWTH”

Proposal for Management Thesis

Submitted to
K L University Business School

Submitted on: Evaluated by:

Signature of the Student: Signature of Faculty Supervisor:

Marks Allotted: Attested by HOD. KLUBS

 Title and Proposal Approval Form
The MBA Program (The Class of 2009 - 2011)
Part – A
(Please fill in Capital Letters only)

Enrolment No. 0 9 1 0 1 9 6 6

Name of the Student YOUNUS SYED

Semester II Semester III

1. Financial services and markets 5. Financial Derivatives
2. Security Analysis And Portfolio 6. International
Elective courses
Management Financial
selected Management
3. Business Data Networks
7. Software Quality
4. ISRM
Assurance
8. ERP
Sectorial Elective Banking
Course

Sector: Finance

Company Name: ICICI DIRECT

SIP Details SIP Title: Selling of life insurance and general insurance
products for ICICI DIRECT, Guntur.

Achievement: Achieved the given targets successfully.

Name of the Faculty Dr.G.SUNEETHA

Supervisor

Functional Area of Finance

the Supervisor

Rationale for Proposed Research Project (min. 500 words) – (Enclose Separate sheets):
 Part B

A Study on Financial inclusion, a key for inclusive

Title of Management Thesis growth

Relevant Functional Area Finance

1.Proposal of the Management Thesis (1,500 – 2,500 words) – (Enclose Separate

Sheets):
Proposal is submitted in next page

2. Schedule for implementation of Management Thesis: (Enclose in Separate Sheets

along with proposal)

Date: Signature of the Student

(For Office Use Only)

Review by Faculty Supervisor (Detailed comments of Faculty Supervisor on the Proposal
and the title are documented here.) (Enclose separate sheets if necessary)

Faculty Supervisor Head of the Department Director

Date: Date: Date:
 A STUDY ON FINANCIAL INCLUSION
”A KEY FOR INCLUSIVE GROWTH”

INTRODUCITON
Financial inclusion may be defined as 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.

The essence of financial inclusion is in trying to ensure that a range of appropriate financial
services is available to every individual and enabling them to understand and access those
services. Apart from the regular form of financial intermediation, it may include a basic no
frills banking account for making and receiving payments, a savings product suited to the
pattern of cash flows of a poor household, money transfer facilities, small loans and overdrafts
for productive, personal and other purposes, insurance (life and non-life), etc. While financial
inclusion, in the narrow sense, may be achieved to extent by offering any one of these services,
the objective of “Comprehensive Financial Inclusion” would be to provide a holistic set of
services encompassing all of the above.
Rangarajan Committee (2006) on financial inclusion observed that in India 51.4% of farmer
households are financially excluded from both formal and informal sources and 73% of the
farmer households do not access formal sources of credit. When the excluded sections
approach formal financial institutions they are confronted with problems of accessibility,
timeliness, inadequacy of credit.”Inclusion” entails understanding the poor and their lives, their
needs their productivity, their vulnerability. It is estimated that globally over two billion people
are excluded from access to financial services of which one third is in India.
Inclusion is a long term process of inclusive growth, providing full range of financial services,
not just micro credit has to be considered. Enabling poor people to participate in the growth
economy requires ensuring they get access to a whole range of financial services like
payments, remittances, savings, insurance, not just credit. Micro credit is part of financial
services; emphasis only on it may not help poor to come out of poverty. Similarly micro
finance institutions by themselves are an in adequate solution to the issue of financial inclusion
and we need to focus on inclusive financial sector has stated in the report of Rangarajan
Committee of financial sector. In fact, the inclusion is a continued banking relationship which
cannot rest until the poor households become environmentally sustainable, financially
sustainable and gender sensitive.

Financial inclusion mainly focuses on the poor who do not have formal financial institutional
support and getting them out of the clutches of local money lenders. As a first step towards
this, some of our banks have now come forward with general purpose credit cards and artisan
credit cards which offer collateral-free small loans. The RBI has simplified the KYC (Know
your customer) norms for opening a ‘No frill’ account. This will help the low income
individual to open a ‘No Frill’ account without identity proof and address proof.

In such cases banks can take the individual’s introduction from an existing customer whose full
KYC norm procedure has been completed. And the introducer must have a satisfactory
transaction with the bank for at least 6 months. This simplified procedure is available to those
who intend to keep a balance not exceeding Rs.50,000 in all accounts taken together. With this
facility we can channel the untapped, considerable amount of money from the low income
group to the formal economy. Banks are now permitted to utilize the service of NGOs, SHGs
and other civil society organizations as intermediaries in providing financial and banking
services through the use of business facilitator and business correspondent models.

Self Help Groups are playing a very important role in the process of financial inclusion. SHGs
are usually groups of women who get together and pool money from their savings and lend
money among them. Usually they are working with the support of an NGO. The SHG is given
loans against the group members’ guarantee. Peer pressure within the group helps in improving
recoveries. Through SHGs nearly 40 million households are linking with the banks. Micro
finance is another tool which links low income groups to the banks.

Yet, banks are fighting to fulfill the Financial Inclusion dream. The main reason is that the
products designed by the banks are not satisfying the low income families. The provision of
uncomplicated, small, affordable products will help to bring the low income families into the
formal financial sector. Banks have limitations to reach directly to the low income consumers.
Correspondents can be considered to be an excellent channel which banks can use to distribute
their product information. Educating the consumers about the financial benefits and products of
banks which are beneficial to low income groups will be a great step to tap their potential.

Banks are now using new technologies like mobile phones to reach low income consumers. It
is possible that the telephone providers themselves will start basic banking services like savings
and payments. Indian telecom consumers have few links to financial institutions. So without
much difficulty telecom providers can win the battle with banks. Banks should therefore be
proactive about transferring this technology into an opportunity.

The Indian Government has a long history of working to expand financial inclusion.
Nationalization of the major private sector banks in 1969 was a big step. In 1975 GOI
established RRBs with the same aim. It encouraged branch expansion of bank branches
especially in rural areas. The RBI guidelines to banks shows that 40% of their net bank credit
should be lent to the priority sector. This mainly consists of agriculture, small scale industries,
retail trade etc. More than 80% of our population depends directly or indirectly on agriculture.
So 18% of net bank credit should go to agriculture lending. Recent simplification of KYC
norms are another milestone.

Financial inclusion is a great step to alleviate poverty in India. But to achieve this, the
government should provide a less perspective environment in which banks are free to pursue
the innovations necessary to reach low income consumers and still make a profit. Financial
service providers should learn more about the consumers and new business models to reach
them.

OBJECTIVE:
 To study the steps taken by NABARD to implement Financial Inclusion.
 To study the process of implementation of financial inclusion.
 To study the impacts after the implementation of Financial Inclusion.
 To study and identify the financial services as part of financial inclusion.
PROBLEM STATEMENT:
The main problem is to study and identify how the financial inclusion is being
implemented in India and what are steps the taken by NABARD for implementation of
financial inclusion.

PURPOSE AND NEED OF STUDY:

The main purpose of this thesis is to know how financial inclusion

implementation is important in India and what are the impacts after the implementation of
financial inclusion.

SCOPE OF PRESENT STUDY

The scope of the study is in the region of Vijayawada. The study is about the financial
inclusion, a key for inclusive growth.

RESEARCH METHODOLOGY

Sampling: The sampling process is one of important aspects of this thesis. The type of
sampling in this thesis is Random Sampling. Random sampling is process of selecting of some
people randomly in the given population.

Sampling size: The sample size in the thesis is taken as 100 members.

DATA COLLECTION

1. Questionnaires (primary data)

2. Secondary data
DATA ANALYSIS

This thesis is mainly based on the descriptive data.The data is analysed with the help of
descriptive data that will be collected during the thesis.

RESEARCH PLAN
S.NO PARTICULARS DATE NO.OF WEEKS
1 Articles submitted 18-10-10 1
2 Data collection 25-10-10 to 1
30-10-10
3 Data Analysis 13-11-10 to 2
18-11-10
4 Report Writing 18-11-10 to 2
20-11-10
5 Final Thesis 27-11-10 1

S.No Schedule For Seminars Dates

1 Seminar on title and proposal 13-10-2010
2 Seminar on review of literature 25-10-2010 to 30-10-10
3 Seminar on data collection 1-11-2010 to 6-11-10
4 Seminar on data analysis 22-11-2010 to 27-11-10

REFERENCE
Website:
 www.chillibreeze.com
 www.nabard.org/report_comfinancial.asp
 economictimes.indiatimes.com/...financial-inclusion.../6574000.cms
 wikipedia.org/wiki/Financial inclusion

 www.financialinclusion.in