1. 1 ROLE OF FINANCIAL SERVICE SECTOR IN ACHIEVING SUSTAINABLE GROWTH FOR INDIA AND BHARAT BY: R K DUBEY EXECUTIVE DIRECTOR

2. 2 BHARAT AND INDIA GROWTH - POLES APART

3. 3 BHARAT is that GRIM part of our nation which is underdeveloped & residing in RURAL AREAS. LACKING Basic facilities of FOOD, WATER, LIGHT AND SHELTER. COMBATING with chronic problems like POVERTY, UNEMPLOYMENT, MALNUTRITION etc. Lacking Basic rights of EDUCATION and HEALTH facilities. The major proportion of population is engaged in AGRICULTURE & dependent heavily on MONSOON for their BREAD & BUTTER.

4. 4 INDIA is that PLEASANT part of our nation which is DEVELOPED & residing in URBAN AREAS Which has an average GDP GROWTH above 8%. This part residing in towns and cities with HIGHRISE BUILDINGS, COMPUTERS, CARS AND MODERN GADGETS.

5. 5 INDIA still lives in the villages with 68% households living in RURAL INDIA versus 32% IN THE CITIES. There is huge INCOME DISPARITY between INDIA & BHARAT. POVERTY (% OF PEOPLE BELOW POVERTY LINE)

6. 6 RATIO OF PER CAPITA INCOME BETWEEN THE TOP 15% & THE BOTTOM 15% OF THE POPULATION Ratio of per capita income between the Top 15% and the Bottom 15% of the population (Measure of income disparity) has worsened over the period 2004-05 & 2009-10.

7. 7 BHARAT AND INDIA BRIDGING THE GAP WHILE ACHIEVING SUSTAINABLE GROWTH

8. 8 The Contribution of Financial, Insurance & Real Estate Sectors to the GDP is likely to be 18% in the FY2011-12. Financial Service Sector primarily & dominantly constitute of Banking Sector. So the Role of Banking Sector and PSU Banks is NOTEWORTHY.

9. 9 INCLUSIVE DEVELOPMENT can be viewed in terms of progress in SOCIAL AND FINANCIAL INCLUSION. A large part of the population, particularly segments like landless agricultural laborers, marginal farmers, scheduled castes (SCs), scheduled tribes(STs), and other backward classes (OBCs), continue to suffer social and financial exclusion.

10. 10 Creating Inclusive Business models Involving the poor as employees, entrepreneurs, suppliers, distributors, retailers, customers and source of innovation in financially viable ways. Developing Human Capital Improving the health, education, experience and skill of employees as well as business partners. Building Institutional Capacity Strengthening in industry associations, market intermediaries, universities, govt. civil society organization etc who may be able to play their roles effectively with the financial system

11. 11 DIRECT ROLE 1.PRIORITY SECTOR LENDING including Agriculture, Micro & Small Enterprises. 2.FINANCIAL ASSISTANCE To Medium & Large Corporates. 3.MICROFINANCE 4.FINANCIAL INCLUSION INDIRECT ROLE 1.Encouraging Consumerism through RETAIL LENDING. 2.INFRASTRUCTURE FINANCING 3.INFORMATION TECHNOLOGY 4.Finance to NBFCs 5.Creating EMPLOYMENT OPPORTUNITIES

12. 12 The thrust of Financial Inclusion started in April 2005 with Dr. Y V Reddy, the then RBI Governor, making a mention in Annual Statement for 2005-06. To achieve greater Financial inclusion, the banks were asked to provide banking facilities by – Opening of ‘NO FRILL’ OR ‘ZERO BALANCE’ ACCOUNTS Appointing BUSINESS FACILITATORS OR BUSINESS CORRESPONDENTS and Now OPENING of ULTRA SMALL BRANCHES etc.

13. 13 The financial inclusion has also been used to provide payments in SOCIAL SECURITY PENSIONS and NREGA schemes. SWABHIMAAN launched on 10th February 2011, is a step to take banks to the doorstep of Rural India instead of the latter having to go in search of banks. 73,000 identified habitations have been covered under “Swabhimaan” campaign by 31 st March, 2012. In 2012-13, “Swabhimaan” campaign to be extended to more habitations as announced in the Budget 2012-13.

14. 14 Banks have been giving Bulk loans to Micro Finance Institutions & Small Borrowers. Till recently, there were 1659 MFI availing total credit of Rs 14,000 crore from the bank in turn benefiting 30 million people across India. However in 2010-11, the sector ran into difficulty with reports of unfair practices by MFI to recover Loan. Banks also extending micro-finance program in the country through SELF-HELP GROUP (SHG)-BANK LINKAGE PROGRAMME. Thus reaching POOREST OF POOR

15. 15 MSME (MICRO, SMALL and MEDIUM ENTERPRISE) sector employs an estimated 59.7 million persons spread over 26.1 million enterprises. MSME sector accounts for about 45% of the manufacturing output and around 40% of the total export of the country. MSMEs are nursery to INDUSTRIALISATION. Understanding this need, banking sector have been extending its arm to strengthen the BACKBONE of INDIAN ECONOMY Around Rs 4.64 Lakh crore outstanding to MSE as on March 2011, out of which 81% of the credit is provided by public Sector banks.

16. 16 A target of 40 per cent of Adjusted Net Bank Credit (ANBC) has been stipulated for lending to the priority sector by domestic SCBs. Within this, sub-targets of 18 per cent and 10 per cent of ANBC have been stipulated for lending to agriculture and the weaker sections respectively. Over the period 2005-06 to 2010-11, there have been 3 times increase in lending to the priority sector.

17. 17 Banks are having bouquet of retail lending products like Housing Loans, Vehicles Loans, Consumer Loan, Mortgage Loans etc. These products can now be focused on BHARAT to bring parity in retail finance between the Urban and Rural. BANKS have been financing the FMCG companies which are investing in rural areas. Rural India, in turn, consumes products sold by these companies. This consumption boom drives GDP growth. There have been massive increase in consumption in Rural India than Urban India between 2001 & 2011 as per census data: Increase in Homes using: Between 2001 & 2011 (In %age) RuralUrban Two Wheelers161110 LPG Cylinders for Cooking14499 Banking Services119101 Television11445

18. 18 The Eleventh Five Year Plan emphasized the need for removing infrastructure bottlenecks for sustained growth. An investment of Rs 45 lakh crore (for about US$ 1 trillion) has been projected during the Twelfth five year plan in infrastructure sectors through a mix of public and private sectors. Government has been taking various initiatives to create conducive environment to attract large scale investment into infrastructure.

19. 19 A greater thrust is given on financial sector in general & banking sector in particular for infrastructure financing. Net bank credit to infrastructure finance have increased five times over the period 2006-07 to 2010-11. There have been continuous efforts to come up with innovative way of financing infrastructure. Take out financing is one of them.

20. 20 The IT initiatives have been taking on a “ENABLER/PERFORMER/TRANSFORMER” role in financial services companies and making a positive contribution to innovation Level of satisfaction with IT performance is definitely driving Business Innovation and Change IT in financial services appears to be quite mature in managing service delivery

21. 21 The IT function has track record of regularly exceeding expectations Higher emphasis on customer services is reflected by outcome of Alternate Delivery Channels. The financial sector is far more likely to use social networking and micro-blogging sites to engage with (Internal) stakeholders in the near future for sustaining the growth of the business.

22. 22 India's GDP is set to quadruple over the next ten years and Indian economy is likely to be a US$ 4.5 trillion. As economy grows at a fast pace, the demand for credit will also rise and thus role of banks to cater to the needs of growing economy will rise. The proportion of working age population (15-59 years) is likely to rise from around 58% in 2001 to over 64% by 2021. This 'demographic dividend' provides India great opportunities, but also poses a great challenge.

23. 23 The development of financial sector is critically dependent on financial inclusion. Banks need to take various behavioral and motivational attributes of potential consumers for financial inclusion to succeed. A major challenge in the times ahead would be to meet financing requirements, particularly of the Infrastructure, Unorganized sector and the Self-employed in the micro and small business sector. The UIDAI's Aadhaar project for providing unique identity numbers to residents, has huge potential to improve the delivery of social sector schemes like rural employment guarantee.

24. THANK YOU