1. Financial Inclusion : The Task
Gourav Kumar Vani

2. Financial Inclusion - Definition
Delivery of financial services at an affordable cost to vast sections of disadvantaged and low income groups

3. “The process of ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and low income groups at an affordable cost in a fair and transparent manner by mainstream Institutional players.”

4. Scope Of
FINANCIAL INCLUSION

5. Extending basic banking facilities to unbanked & marginally banked
Adopting both Branch and Branchless Banking
Providing Financial Literacy for gainful utilization of services
“ Need” creation among the target group
Extending a combination of banking product
No Frill Savings Account
Micro Credit
Micro Insurance
Remittance
Overdraft
Spreading Financial Literacy
Village Knowledge Centers
Financial Literacy and Credit Counseling Centers

6. No frills account?
An account with ‘zero’or minimum balancewith maximum balance of Rs 50,000/-at any given point in time and total credit in a year not exceeding Rs 1,00,000/-.

7. Benefits of Greater FI
For the common man–escape from the clutches of money lenders; sending / receiving remittances; no need to hold savings in cash etc.
For the banks–achieving access to a large untapped pool of customers.
For the Govt.-ensuring flow of aid / grants to the targeted beneficiary.
For the RBI -spread of banking culture and extension of the reach of formal financial system.

8. Continued……… To achieve the growth with equity. Get rid of poverty.
To attract global market players to our country.
To increase the employment and business opportunity.
To baring more transparency in the system.

9. A few statistics 51.4% of farmer households financially excluded.
73%: Farmer households having no access to formal sources of credit.
64%:Share of Central, Eastern and North Eastern regions in the total financially excluded farmer households in the country

10. Continued ……..
India has currently the second highest number of financially excluded households in the world.
Approximately, 40% of India’s population has bank accounts , and only about 10% have any kind of life insurance cover, while a meager .6% has non-life insurance cover.

11. Why Financial Inclusion ?
High transactions costs of borrowers
High transactions costs of savers
High transactions costs of banks
High risk cost
Inappropriate products

12. Who are excluded ? Marginal Farmers Landless Farmers Self Employed
Urban slum developers
Migrants
Minorities
Social excluded groups
Senior citizens
Women

13. Measures for promoting financial inclusion
Products
No frill account
KYC norms simplified
Introduction of GCC
OTS for overdue loans upto Rs.25,000/-
KCC

14. Measures for promoting financial inclusion
Use of intermediaries
Linkage of SHGs with bank
29 lakh SHGs credit linked
42 million families covered
Linkage of MFIs with banks
Business facilitators and correspondence model.

15. Measures for promoting financial inclusion
Others
IT solution for financial inclusion
Credit counseling and financial education
Revamping of RRBs and cooperative banks

16. Funds for Financial Inclusion
Micro Finance Development and Equity Fund
Financial Inclusion Fund for Development and Promotional Interventions
Financial Inclusion Technology Fund to meet cost of technology

17. Meeting the expectations of poor from financial inclusion requires taking into account their
Seasonal inflow of income from agricultural and rural occupations
Migration from one place to another
Seasonal/ irregular work availability and income
Security and safety of deposits
Low transaction cost
Minimum paper work
Frequent deposits in smaller amounts
Quick and easy access to their savings in times of needs
Products suitability to income and consumption pattern in villages

18. FIPs- PERFORMANCE ANALYSIS
Completed 2 years of implementation of Board approved self set FIPs in March 2012.
3171 rural branches opened during the two year period.
BCs deployed- tripled in 2 years from to
Total No. of banking outlets gone up- from to
54 Million NFAs added.
ICT based accounts -Substantial growth - Percentage of ICT accounts to total NFAs-increased from 25 % to 50%.
Ascending trend in OD Accounts.
4.8 million KCC and about 1 Million GCC added.
FIPs- PERFORMANCE ANALYSIS
Completed 2 years of implementation of Board approved self set FIPs in March 2012 Completed 2 years of implementation of Board approved self set FIPs in March 2012.
317 rural branches opened during last two years.
BC’s deployed tripled in last two years from to
Total number of banking outlets gone up from to
54 million No Frill Accounts (NFAs) added.
ICT based accounts-substantial growth-% of total ICT accounts from total NFA accounts increased from 25 to 50.
Ascending trend in over draft accounts
4.8 million KCC and 1 million GCC..

19. FIP AT GLANCE Particulars Year ended Mar 10 Year ended Mar 12
Progress-April 10 - Mar 12
No. of BCs/BC Agents Deployed
33042
96828
63786
Banking Outlets through Branches
21475
24701
3226
Banking Outlets through BCs
32684
120355
87671
Banking Outlets-Through other Modes 99
2478
2379
Total Banking Outlets
54258
147534
93276
No Frill A/Cs (No. in Millions)
49.33
103.21
53.88
Overdraft- No Frill A/Cs (No. in Millions)
0.13
1.52
1.39
BC- ICT Based A/Cs (No. in Millions)
12.54
52.07
39.53
EBT A/Cs-through BCs (No. in Millions)
7.48
21.76
14.28
KCC(No. in Millions)
17.63
22.34
4.71
GCC(No. in Millions)
.45
1.27
.82

20. Road map for villages with >2000 population
At least one banking model in all unbanked villages with population >2000 through branch/BC/ other models.
Roadmap prepared for opening of bank outelets till march 2012— villages identified and allotted among all banks.
Progress up to march Banking outlet opened in villages,2493 branches,69374 BCs,2332 other models.
Outlets opened in all villages allotted to RRBs,,761 branches,20985 BCs ,1023 other modes..

21. Financial Inclusion : Challenges
Holistic approach( problem with Adhar card )
Viability(low population)
Scalability(no brick and mortar structure)
Adoption of technology
Use of intermediate agencies(Banking correspondents).

22. Continued .. Lack of co-ordination
Effective delivery mechanism- still being experimented.
Appropriate business model yet to evolve-availability of suitable products .
ICT based BC model –yet to stabilize.

23. Select success stories
Andhra Pradesh
Pilot project in six districts of Warangal for disbursement of SSP and NREGS benefits through BCs with the use of smart cards and mobile technology.
Launched by Rural Development Department of A.P. Govt.
Involving 6 banks.
Project coordinated by
MIS provided to Govt. by IDRBT.
Project now being up-scaled to cover the entire State.
RBI.

24. Dharavi(Maharashtra)
Dharavi is Asia’s largest slum with lakh workers.
Smart card based banking introduced by Indian Bank to provide doorstep-banking for the slum dwellers, many of whom are migrants
The facility has enabled workers to save and migrants to send remittances easily and reliably.
Life and health insurance are also being offered.
The model is now being extended to
Guntur town (AP) and Tharamani (Chennai).

25. Some innovative steps
PragatiGramin Bank,Bellary: Loans under DRI scheme disbursed to 260 small vendors.
MannDeshiMahilaBank, Mahaswad(Satara):‘Business school on Wheels’ to enable poor women in rural areas to become entrepreneurs.
SBI Tiny Card:Tech. based FI in Aizawl.
PNB:‘BhamashahProject’for rural women in Rajasthan.

26. Thank you