Report on Financial Inclusion in

Eastern Region (Odisha)

Prepared by:
Pawan Patel
Roll No. 210009
PGPDGM 21-23
“Poverty is the worst form of violence.” - Mahatma Gandhi
Introduction:
What is Financial Inclusion?
Financial inclusion means that individuals and businesses have access to
useful and affordable financial products and services that meet their needs –
transactions, payments, savings, credit and insurance – delivered in a responsible
and sustainable way. Financial inclusion is measured in three dimensions: (i) access
to financial services (ii) usage of financial services (iii) quality of the products and the
service delivery. Financial Inclusion can be achieved by the following:
i. BANKING THE UNBANKED
ii. SECURING THE UNSECURED
iii. FUNDING THE UNFUNDED

The impact financial inclusion through MNREGA and Pradhan Mantri Jan
Dhan Yojana can be observed. MNREGA was launched on 1 st April, 2008 for the
upliftment of vulnerable group. The payment was done through the job cards.
However, in my personal experience, I have seen that the labourers had to pay 20-
30% commission to Gram Pradhan to get the payment of job done under MNREGA
Scheme. However, after launch of Pradhan Mantri Jan Dhan Yojana, 99.7 per cent
payment is made through e-transfer as on 06.08.2021.[1]

Regional Profile of Odisha:

Brief details regarding the parameters belonging to Odisha state are as below: -
Total Districts – 30
Total population – 4.19 crore
Number of Bank Branches – 5450
Poverty Ratio – 32.6
Per Capita Income 2020-21 – 102156
Literacy Rate – 72.9
Tele- density – 76%

NAFIS-2016-17 (NABARD All India Rural Financial Inclusion Survey) was

undertaken by NABARD in all states on sample basis for the reference year 2015-
16.As per that survey result the estimated average monthly income of an agricultural
household for Odisha was INR 7731/- and the same for India was INR 8931/-for
2015-16.
During 2004-05 to 2011-12, the state could achieve higher poverty reduction i.e., by
24.6 percentage points, relative to the national level reduction of 15.3 percentage
points.

1. National and Regional Initiatives, Year wise targets

National Initiative and their performance in Odisha state

Pradhan Mantri Jan Dhan Yojana (PMJDY) - Pradhan Mantri Jan-Dhan Yojana
(PMJDY) is National Mission for Financial Inclusion to ensure access to financial
services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit,
Insurance, Pension in an affordable manner.

S.No. Year Number of PMJDY Deposit under Deposit per

Accounts (in PMJDY Accounts account (in Rs)
crores) (Rs. In crore)

1. August 17 30.09 65799 2187

2. August 18 32.54 82039 2521

3. August 19 36.79 102415 2783

4. August 20 40.41 130086 3219

5. August 21 43.04 146230 3398

There are 7432140 households in state of Odisha out of which 7420665 have
been covered under PMJDY Scheme which amounts to 99.85%. Out of 30 districts,
there is 100% coverage in 29 districts and only Malkangiri is lagging behind with 87.74%
household coverage.

https://pmjdy.gov.in/statewise-statistics

PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme launched on July

2021 for providing working capital loan up to Rs. 10,000/- to street vendors. Till
05.04.2022, 31,77,679 loans sanctioned. Union Government sanctioned Rs 8.2 crore
as collateral-free loans to street vendors in Odisha under Prime Minister Street
Vendor’s Amta Nirbhar Nidhi Scheme (PM SVANidhi) September 2020.

Pradhan Mantri Mudra Yojana (PMMY) - Under Pradhan Mantri Mudra Yojana

(PMMY), institutional collateral-free credit up to Rs. 10 lakh
As a result of these steps taken, as on 31.12.2021, over 32.53 crore loans, involving
a sanctioned amount of Rs. 17.32 lakh crore. Out of this, more than 21.98 crore
loans amounting to Rs. 7.55 lakh crore have been extended to Women borrowers.
This constitutes approx. 68% of the total number of loans and 44% of amount
extended under the Scheme.

*Source- PMMY Annual Report 2020-21

Odisha was among top 10 performing state for sanctioning the amount during FY
2020-21.
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri
Suraksha Bima Yojana (PMSBY)-
PMJJBY and PMSBY were launched on 9th May, 2015 with a view to
enhance the level of insurance penetration in the country and to provide insurance
cover to common people, especially poor and the under-privileged sections of the
society. While PMJJBY offers life insurance cover of Rs 2 lakh, PMSBY offers
accidental death or total permanent disability cover of Rs.2 lakhs and permanent
partial disability cover of Rs.1 lakh.
National performance
Scheme Cumulative Enrolment (01.04.2017 to 23.02.2022
PMJJBY 9,27,78,284
PMSBY 17,74,81,194
Performance in Odisha
 Scheme Total enrolment Claim settlement ratio
PMJJBY 9,18,132 96.69%
PMSBY 35,93,515 94.77%
https://pib.gov.in/Pressreleaseshare.aspx?PRID=1526183
Jan Dhan-Aadhaar-Mobile (JAM) – JAM trinity used to directly transfer the fund to
beneficiary account.
Jan Dhan Darshak (JDD) App data- In order to ensure availability of banking outlet
(Bank branch/ Business Correspondent/ India Post Payments Bank) within 5
kilometres of all inhabited villages in country, the Government has launched a
Geographic Information System (GIS) based App., namely, JDD App. For the state
of Odisha, out of the 44,982 inhabited villages mapped on this App, 44,977 villages
(99.99 %) are covered with a banking outlet

Regional Initiative in Odisha

BALARAM (Bhoomihina Agriculturist Loan and Resources Augmentation Model) –
This scheme aims to form One lakh Joint Liability Groups of Lessee Cultivators /
sharecroppers or oral lessees in the State covering 5 lakh such farmers over a
period of 2 years which will serve their common interest regarding access to credit
from formal financial sector.

Kalinga Sikhya Sathi Yojana - interest subsidy scheme for higher education to
meritorious students

Mission Shakti - the self-help mission for empowering women through promotion of
Women Self Help Groups (WSHGs) to take up various socio-economic activities
which was launched in the state on 8th March 2001. Now, interest free loan upto 3
lakh can be availed under this scheme. Currently, there are 280150 account opened
under Mission Shakti and loan of amount Rs. 6000 crore was disbursed.

FI success in Odisha
As per Census 2011, only 45% of households in Odisha availed of banking
services, as compared to 58.7% at the national level. The push towards financial
inclusion in the form of Jan DhanYojana has led to significant progress. As of March
2020, more than 1.54 crore bank accounts have been opened under the Jan
DhanYojana in Odisha. These were primarily concentrated in rural areas (111.29
lakh accounts as compared to around 43.13 lakh accounts in urban areas). In all,
1.27 crore accounts were opened in public sector banks, followed by sponsored
Regional Rural Banks (RRBs) and private sector banks. 5.8.4 District-wise analysis
reveals that out of the 1.54 crore Basic Savings Bank Deposit accounts opened,
Mayurbhanj (7.39%), Ganjam (6.15%) and Khurda (5.59%) were the top three
districts.
Even though 52% of bank branches are located in rural areas, the availability
of ATMs is skewed towards urban/semi-urban areas. In all,4,422 ATMs are present
in urban centres in the State as compared to 2,346 in rural areas as depicted below.
The present status of branch and ATM opening in the State indicates that banks are
yet to give due importance for installation of ATM at rural branches.

In terms of revised guidelines on Branch Authorisation policy, the penetration

of banks has increase as it the target is completely achieved. Provision of banking
services through banking outlets for half year ended September 2021 is as below: -

State villages having villages having villages having

population more than population more population less than
5000 than 2000 2000

Target Achieved Target Achieved Target Achieved

Odisha 78 78 1877 1877 45888 45888
A total of Rs. 13313 crore has been sanctioned under PMMY from 01.04.2021 till
25.02.2022. The details of Shishu, Kishor and Tarun category wise loan are as
below: -
State Shishu Loan Kishor Loan Tarun Loan
Number Sanctione Number Sanctioned Number Sanctioned
of A/c d Amount of A/c Amount of A/c Amount
Odisha 2699997 7535.03 376627 3950.44 24292 1828.25

Total CURRENT TOTAL BANKING OUTLETS/BC OUTLET as on 31.12.2021 in

Odisha
S.No. Bank type BANKING OUTLETS/BC
OUTLET
1 Public Sector Bank 9364
2 Private Sector Bank 2450
3 RRBs 1790
4 Small Finance Banks 43
Total 13647

Bank Wise Branch Network as on 31.12.2021 in Odisha shows that around 50%
bank branch network exist in rural areas.
S.No. Bank type Rural Semi Urban Urban Total
1 Public Sector 1510 835 690 3035
Bank
2 Private Sector 303 384 277 964
Bank
3 RRBs 829 101 52 982
4 Small Finance 135 73 46 254
Banks
5 Orissa Co- 155 96 98 349
operative Banks
Total 2932 1489 1163 5584

User awareness, participation and challenges

As per the Census 2011, about 83.3% people of Odisha are living in rural areas.
Odisha, being one of the poorest states in India need to be financially inclusive
for the growth of its economy as well as to make its people financially stable,
especially the rural mass. In Odisha, about 50 financial institutions including 28
NBFC-MFIs operate and offer diversified financial services such as micro credit,
micro insurance, pension services, etc. to this segment.
According to the estimation of the Agriculture Census 2015-16, there are 48.66
lakhs operational holdings in Odisha. Out of this about 9.05 lakhs operational
holdings are of "leased in" tenancy status (2.83 lakhs are of "wholly leased in" and
6.22 lakhs are of "partly leased in" tenancy status). In brief about 18.6% of
operational holdings are being operated by sharecroppers out of which 93.2% are
small and marginal farmers. In the pilot with dairy farmers in Odisha, nearly 80% of
the women respondents reported an increase in dairy income post digitization of
their payments

Mission Shakti has become a silent revolution in the state with 6,02,013 WSHGs
comprising 70,00,010 women. Progress of Women SHGs (In Number)

Challenges: -
Able to transact in local language. Merchants were more likely to adopt digital
payments if they were comfortable speaking and working in local. Many digital
services are only available in those Hindi and English and so a merchant in
Odisha who only speaks Odia would be excluded.
Infrastructure – Of total 6,798 gram panchayats in Odisha, 4,253 are
unbanked, therefore, physical infrastructure and simplification of verification
process will boost the confidence in general public for financial activities. Govt
of Odisha launched 5T vision to bridge the gap between technology and citizen.
5T states that team work, technology, transparency, transformation and time limit.
Financial Literacy and understanding – financial support has been provided
by NABARD to banks for Mobile Demonstration Van for conducting Financial and
Digital literacy camps in rural areas to create awareness about financial and
digital literacy among people
poor connectivity, socio-cultural barriers and poor delivery of products
are also major challenges. Besides, issues such as inadequate consumer
 protection measures and gender inequality need to be addressed at the earliest
to increase the financial inclusion and expand banking service network in rural
areas.

Sustainable growth and incentive

The government of Odisha set up the following motto: Transformation towards a

New Odisha –

 An Empowered Odisha – where poverty will be a thing of the past

 An Empowered Odisha – where women are equal partners in growth and
development.
 An Empowered Odisha – which is inclusive of all vulnerable sections in its
landscape of development.

Government of Odisha is providing the financial support through various central

government and state government scheme to the vulnerable groups of the society.
Mission Shakti is one the flagship scheme of state govt. for providing the collateral
free loan to women self help groups and through which they earn money and are
becoming self-reliance. By the end of 2019-20, there were about 6.0 lakh SHG with
more than 70.0 lakh members. Mission Shakti activities have ushered in a New Era
in Women Empowerment and has become a mass movement in the State.
The convergence involving Mission Shakti with other departments like Pachayati Raj
and Drinking water Department, Fisheries and ARD Department, WCD giving
positive results in the field of water, pisciculture etc.
Use of technology and accessibility
Cost is the key constraint in delivery of financial services. Therefore, with the help
of technology, telephones and IT enabled services, USSD, NFC etc. cost effective
solution can be delivered to the customers especially in rural areas. Blockchain
technology can be harnessed to identify the strategic location for establishment of
ATMs/ Bank Branches to improve the accessibility.
Security and Privacy
In the world of technology, the security and privacy of data is biggest challenge. As the
dependency of banks on technology is increasing, banks are facing exponentially
increasing privacy and security risks to their valuable assets. With this, the cyber-crimes
related to banks have also increased manifold even as security mechanisms employed
by banks are no longer optimum. Financial frauds are increasing day by day. Scamsters
are duping the customers in the name of KYC update, credit card renewal etc. Jamtara
and Mewat are synonyms of cheating cases. As the banks of new era are mainly
focusing on mobile banking, app banking, the vulnerability is increasing.
The countries are more focusing of data privacy and security as GDPR in European
Union, Customer Data Right, Australia. In India, data is protected by IT Rules. Therefore,
India also need specific regulation for data protection and privacy.
Customer will feel free and safe to do financial transactions, if his data is safe and
secure, and the redressal mechanism is smooth and fast.
FI measures
In order to create demand for banking services, NABARD has facilitated to
conduct 9,473 literacy awareness programme, road shows, seminars and other
activities in the State of Odisha in the last three years.
Vision of Mission Shakti aims to make Odisha a land of equal opportunities
irrespective of gender where women are empowered to live with dignity and enjoy
economic prosperity.
Odisha is the first State in the country to adopt the model of Self-Help Group
to extend banking services in un-banked areas for financial inclusion. In 2019-20, a
total of 2,02,604 SHGs have been credit-linked with banks, availing a total credit of
INR. 2,315.53 crore. Odisha received the National Award for outstanding
performance in Financial Inclusion under DAYNRULM in 2018. Further, Gajapati
District received cash award from NITI AYOG for best performance in Financial
Inclusion among Aspirational Districts of India
As per Census 2011, only 45% of households in Odisha availed of banking
services, as compared to 58.7% at the national level. The push towards financial
inclusion in the form of Jan DhanYojana has led to significant progress. As of March
2020, more than 1.54 crore bank accounts have been opened under the Jan Dhan
Yojana in Odisha.
Govt. of Odisha have decided to provide space in Bharat Nirman Rajiv Gandhi
Seva Kendra (BNRGSK) Buildings/GP Offices to open brick and mortar bank
branches /HTA/BC in GP Hqrs. for public sector banks/ RRBs/ Private sector
banks ,free of costs for the next 5 years and continuance of the existing banking
operations in BNRGSK Buildings / GP offices in the GPs having no banks / post
offices.
Digital connectivity is necessary to ensure financial inclusion. As on
18.5.2020, 3610 GPs/BHQs have been connected through Optical Fibre Cable under
Bharat Net Phase-I covering 18 districts.
Observations

As of May 26, 2021, about 103 million people had enrolled for PMJJBY and
234 million people had signed up for PMSBY.
 Under PMJDY, more than 430 million accounts have been opened with
deposits totalling Rs 1,46,230 crore and over 312 million RuPay payment
cards have been issued.
It can be observed that as compared with the performance in 2018, the
accessibility of formal financial services in terms of ATMs per lakh population has
improved. However, the number of ATMs in rural areas is less as compared to urban
and semi-urban areas.
The extent of credit given by Scheduled Commercial Banks per person has
enhanced from INR 42,695 in 2018 to INR 44,762 in 2019. The trend of financial
inclusion in other indicators has shown upward movement.
For every customer, security and privacy is primary concern in financial
transactions. Therefore, banks require more robust framework to tackle this problem.

Recommendations
constraints must be removed on the supply side (financial institutions) and the
demand side (target segment).
• Banks are required to implement Financial Inclusion Plans in true sprit.
• Greater operational flexibility to banks and NBFCs may be granted for
expansion and financial inclusion in priority sector lending.
• Indian Post Payment Bank can be restructures as PPP model to infuse capital
and talent from private sector organizations.
• Banking Correspondent may be incentivized for extra-ordinary performance.
• Relaxation in terms of paper work, minimum balance etc. can be provided to
rural customers.
• Similar type of schemes can be consolidated for better understanding of
marginal and vulnerable population.
• More ATMs may be opened in rural areas.
References:

https://www.rbi.org.in/scripts/annualpublications.aspx?
head=handbook+of+statistics+on+indian+states
99.7 per cent payment of MGNREGA wages being made through e-transfer |
Ministry of Rural Development | Government of India
https://finance.odisha.gov.in/sites/default/files/2021-02/Economic_Survey.pdf
https://www.ijrar.org/papers/IJRAR2002136.pdf
https://www.statista.com/statistics/1034708/india-scheduled-commercial-bank-offices-by-
region/
https://pib.gov.in/PressReleasePage.aspx?PRID=1749749
https://pmjdy.gov.in/statewise-statistics
https://www.mudra.org.in/
https://missionshakti.odisha.gov.in/
https://agriodisha.nic.in/content/pdf/BALARAM_OG_FINAL.pdf