Financial Inclusion 2

3/3/2021 Financial inclusion
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Financial inclusion
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Priyank Thada, Working

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Published on Dec 9, 2017
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Financial inclusion
1. 1. Submitted By: Priyank Thada Dev Patel FINANCIAL INCLUSION
2. 2. INTRODUCTION • Financial Inclusion is the process of ensuring access to appropriate financial
products and services needed by all sections of the society in general and vulnerable groups such as
weaker sections and low income groups in particular at an affordable cost in a fair and transparent
manner by mainstream institutional players. • The objective of Financial Inclusion (FI) is to extend
financial services to the large hitherto unreserved population of the country to unlock its growth
potential. In addition, it strives to achieve more inclusive growth by making financing available to the
poor in particular.
3. 3. FINANCIAL INCLUSION-WHO ARE THESE PEOPLE? • Underprivileged section in rural and
urban areas like, Farmers, small vendors, etc. • Agricultural and Industrial Labourers • People engaged
in un-organised sectors • Unemployed • Women • Children • Old people
4. 4. BACKGROUND • The Reserve Bank of India (RBI) set up the Khan Commission in 2004 to look
into financial inclusion • In India, financial inclusion first featured in 2005, when it was introduced by
K.C. Chakraborty, the chairman of Indian Bank. • Mangalam became the first village in India where all
households were provided banking facilities. • In January 2006, the Reserve Bank permitted
commercial banks to make use of the services of non-governmental organizations (NGOs/SHGs),
micro-finance institutions, and other civil society organizations as intermediaries for providing
financial and banking services. • Reserve Bank of India’s vision for 2020 is to open nearly 600 million
new customers' accounts and service them through a variety of channels by leveraging on IT.
5. 5. FACTORS AFFECTING ACCESS TO FINANCIAL SERVICES • Psychological and cultural
barriers: Many people willingly excluded themselves due to psychological barriers and they think that
they are excluded from accessing financial services. • Legal Identity: Lack of legal identity like voter
Id, driving license, birth certificates, employment identity card etc. is also a major factor affecting
access to financial services. • Level of income -Low income people generally have the attitude of
thinking that banks are only for the rich people. • Limited literacy- Lack of financial literacy and basic
education prevent people to have access to financial services. Financial literacy involves encouraging
people to use various financial products through various economic agents like NGOs (Non-Profit
Organizations), MFIs and Business Correspondents etc.
6. 6. STEPS TAKEN BY GOVERNMENT AND RBI In India, RBI has initiated several measures to
achieve greater financial inclusion. • Opening of no-frills accounts: Basic banking no-frills account is
with nil or very low minimum balance • Relaxation on know-your-customer (KYC) norms: KYC
requirements for opening bank accounts were relaxed for small accounts in August 2005, details of
name, address and Aadhaar number. • Engaging business correspondents (BCs):In January 2006, RBI
permitted banks to engage BF’s and BCs as intermediaries for providing financial and banking
services. It allows banks to provide doorstep delivery of services, especially cash in-cash out
transactions.
7. 7. • Use of technology: to make effective use of information and communications technology (ICT), to
provide doorstep banking services through the BC model. • Opening of branches in unbanked rural
Centre's: To further step up the opening of branches in rural areas so as to improve banking penetration
and financial inclusion rapidly • Ensuring reasonableness of bank charges: Accordingly, and in order to
ensure fair practices in banking services, the RBI has issued instructions to banks making it obligatory
for them to display and continue to keep updated, in their offices/branches as also in their website, the
details of various services charges. • General Credit Cards (GCCs)-Banks have been advised to
consider introduction of a General Purpose Credit Card (GCC) facility up to Rs.25,000/- at their rural
and semi-urban branches. The credit facility is in the nature of revolving credit entitling the holder to
withdraw up to the limit sanctioned. Based on assessment of household cash flows, the limits are
sanctioned without insistence on security or purpose.
8. 8. • Kisan Credit Cards (KCCs)- Kisan Credit Cards to small time farmers have been issued by banks.
As on March 2012, the total number of KCCs issued has been reported as 30 million with a total
amount outstanding to the tune of Rs.2, 068 billion. The figure, respectively, were 27 million and Rs.1,
600 billion on March, 2011.
9. 9. PRADHAN MANTRI JAN DHAN YOJNA • Launched by the PM of India, Narendra Modi on 28
August 2014. • Run by Department of Financial Services, Ministry of Finance, on the inauguration
day, 1.5 Crore (15 million) bank accounts were opened. • By 28 January 2015, 12.58 crore accounts
were opened, with around 10590 crore (US$1.7 billion) were deposited under the scheme.
10. 10. BENEFIT OF PMJDY • Interest on deposit. • Accidental insurance cover of Rs.1.00 lac (to be
given by HDFC Ergo) • No minimum balance required. • Life insurance cover of Rs.30,000/- (to be
given by LIC) • Easy Transfer of money across India • After satisfactory operation of the account for 6
months, an overdraft facility will be permitted • Accidental Insurance Cover, RuPay Debit Card must
be used at least once in 45 days. • Overdraft facility up to Rs.5000/- is available in only one account
per household, preferably lady of the household.
11. 11. FUTURE PROSPECTS • With a vision to attain inclusive growth, the Government, RBI and the
implementing agencies are required to place mind and hearts together to develop methods and
measures to take forward financial inclusion. • The need is to develop and apply scalable, platform-
independent technology solutions which, if implemented on a large scale, will bring down the high
cost of operation. Proper and efficient technology, thus, holds the key for financial inclusion to take
place on an accelerated scale. • There is also an opportunity for banks to improve delivery mechanism
and existing structure of operations. The mass banking with no-frills accounts can become a win-win
situation for both the banks and the customers. • The financial institutions, especially the banks, can
speed up the financial inclusion process by increasing enrolment of SHGs through bank linkage
programme. Rural penetration and banking is solution to financial inclusion.
12. 12. THANK YOU
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3/3/2021 Financial inclusion

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