Good Afternoon to all the Dignitaries and Participants of this Seminar from

UCO BANK Commercial Bank’s strategies for financial inclusion.

FINANCIAL INCLUSION What is Financial Inclusion ? While defining the term “FINANCIAL INCLUSION”,we can look at it in two ways viz., perceiving the term directly, or explaining the opposite of the term, which will help deriving the meaning of the subject. We can start from the opposite viz. ‘Financial Exclusion’, which may be defined as inability of an individual to access a range of basic financial services from the formal sector.

In a competitive and diverse market, the products are made for the cross section of specified customers rather than for the society as a whole. In the financial market context, this has led to restricted access of financial services to under served section of the society. The non- accessibility of such vulnerable groups is termed as ‘ Financial Exclusion ’.

This broadly refers to inability of some individuals to access basic financial services. Taking cue from this, we can understand the term ‘ Financial Inclusion ’ in a better way, which may be defined as provision of basic financial services to vast section of underprivileged, disadvantaged and under served section of the society.

Reasons for Financial Exclusion Basically, Financial Exclusion has two barriers, viz., Demand, and Supply side barriers. The barriers can be defined as follows : Demand Side Barriers : 1.Complexity : The excluded section of the society find financial services complex in nature. They see no reason to go to the bank for small transactions, which in their opinion are time consuming and perplexing.

2.Physical Dimension : Vast number of rural population resides in small villages, often located in remote areas devoid of financial services. Thus, the overall transaction cost to the customer in term of both time and money proves to be a major deterrent for visiting financial institute. 3.Lack of Literacy : The inability to read and write also affects participation in social economic activities to a very large extent.

4.Human Capacity : A large segment of the rural population suffers from low level of social capital as well as skills and knowledge. They believe that only those belonging to the higher strata go to banks. 5.Affinity for the informal sector : The under privileged section of the society find informal sector more friendly and as such, they develop affinity which always drive them to approach this sector for their credit needs.

6.Fear of getting into debt : Often they feel uncomfortable with using financial services especially credit, and believe that by getting loans they are entering into a debt trap. 7.Uneconomical Production System : The small & marginal farmers constitute 60% of farming community at all India level. The total cost of production & value of the produce of these farmers is very small. Both the farmers & financial institutions may have a low propensity to access or service such credit.

Supply Side Barriers: 1.Identification Problem : Often the marginalized section does not have an identity proof to be able to open an account.The KYC norms further alienate them. 2.Unbankable rural population : There exists a perception that large numbers of rural population are unbankable as their capacity to save is limited. 3.Outreach Issue : Very often, even if a person is bankable, the distances are too long for services & supporting the accounts at reasonable costs.

4.Financial Terms : Bankers often use sophisticated financial terminologies, which the masses are unable to comprehend. 5.Bankers Approach : Bankers do not look favourably at small/ consumption loans often required by marginalized section as they perceive it as non- productive.

Launching of the Programme: First such programme was launched as a National Pilot Project in the Union Territory of Pondicherry on in Mangalam Village, which became the first village in the country where the entire eligible population were brought under the fold of banking services.

Role of RBI: RBI, it its Annual Policy Statement for the year had made a reference for the concept of Financial Inclusion. In their subsequent Annual Policy Statement for the year , RBI indicated that SLBC Convener Banks in all States/Union Territories are required to identify at least one District in each State/UT for achieving 100% Financial Inclusion by providing a ‘No Frill’ account and General Purpose Credit card (GCC) on the line of initiatives taken in Pondicherry.

100% Financial Inclusion Government of India is giving more and more thrust on 100% financial inclusion as there are a vast number of people, potential entrepreneurs, small enterprises and others, who are excluded from the financial sector. The Reserve Bank has introduced various new measures to encourage the expansion of financial coverage in the country.

The Convener Banks of State Level Bankers’ Committee to set up a Financial Literacy-cum- Counselling Centre. IT initiatives for Financial Inclusion. Banking through Business correspondents / service providers.

Action points for achieving 100% financial inclusion: 1. Allocation of villages/wards to the various banks operating in the District for taking responsibility of ensuring 100% financial inclusion. 2. Surveying the villages/wards by the bank branches with the help of Government / Panchayet/Municipality officials to identify the families having no bank account.

3 Mass campaign for awareness among the people about the programme jointly by banks,Panchayets, Municipalities, Govt. Departments etc. This is very important for achieving 100% financial inclusion. Unless people, mainly in rural areas are aware about banking facilities the desired goal will not be achieved. Rural ‘Mela’ and electronic-media (Radio & Television) may be used very effectively.

4. Opening of hassle-free bank accounts i.e No Frills Account and issue of General Credit Card (GCC). 5. Achieving 100% financial inclusion by providing these facilities to bring them under bank fold. 6. Circulating all the decisions along with necessary guidelines to Bank branches/Government Departments/ Panchayets/ Municipality officials for proper implementation of the programme.

7. Discussion in each BLBC/DLCC/DLRC meetings for monitoring and review of the meetings for monitoring and review of the progress. progress.

Roll of UCO BANK : UCO Bank is the Convener of SLBC in the State of Himachal Pradesh and Orissa. As SLBC convenor in the State of Himachal Pradesh, UCO Bank has achieved 100% Financial Inclusion with the active support of all banks and Govt. line deptts. in the State. It is the first state in the country achieving 100% Financial Inclusion.

In Orissa, where our Bank is Convener of SLBC, Ganjam District was initially selected for 100% Financial Inclusion. 5 more districts Puri, Cuttack,Keonjhar Nayagarh & Rayagada in Orissa has been identified for 100% financial inclusion. Apart from these six districts, it was decided to take up Gajapati District, dominated with minority community for 100% financial inclusion in the 110th SLBC meeting for Orissa.

In West Bengal, 100% Financial Inclusion has been achieved in Hooghly District, which is our Lead District ; and it is the first district in West Bengal achieving 100% financial inclusion.