1. UGC Sponsored National Conference January 6-8, 2015 University College, Mangalore
Indian banking – managing transformation in the era of globalisation & information technology

2. Introduction
Poverty not by laws but by institutions is a great sin (Charles Darwin)
Objectives of Paper: (i) to locate financial inclusion in the saga of Indian banking; (ii) to examine how banks have been able to integrate financial inclusion with the needs of the borrowers/depositors as well as the cost and capital structure of the banks; (iii) to find ways to fill the existing gaps; and (iv) to see what more can be done for financial inclusion in India

3. Cont’d
Developmental Banking 50s-70s; sustainable development – 80s to 90s, now “inclusive growth”
Financial exclusion – is considered a poverty indicator: no money to no bank account!
Financial Inclusion: sustainable finance

4. Financial Inclusion – What and Why?
Cheap and affordable, timely and accessible credit, no frills account: Micro credit+
Connecting people with the banking system
40% unbanked population, 90 percent uninsured
Overall, 73% of farmer households have no access to formal sources of credit.
Across regions, financial exclusion is more acute in Central, Eastern and Northeastern regions. All three regions together accounted for 64% of all financially excluded farmer households in the country. Overall indebtedness to formal sources of finance of these three regions accounted for only 19.66%.

5. Cont’d
House
Hold
Access

6. Financial Inclusion Initiatives and Banks’ Leverage
RBI’s Bank-led model; NABARD’s SHG-Bank linkage model
Basic Saving Bank Deposit (BSBD) accounts
Relaxed and simplified KYC norms 
Simplified Branch Authorisation Policy
Compulsory Requirement of Opening Branches in Un-banked Villages
Opening of intermediate brick and mortar structure
Financial inclusion plan
FIPs should be disaggregated and percolated down up to the branch level
Financial Literacy Centres (FLCs) + customer protection
ICT based banking services

7. Progress in Financial Inclusion
 Today 63% bank branches are in rural areas and semi-urban areas
As in December, 2012, there were over 1,52,000 BCs deployed by Banks. During , over crore transactions valued at Rs crore had been undertaken by BCs till December 2012.

8. Cont’d Swabhimaan Campaign (Feb 2011) USSD Based Mobile Banking
Direct Benefit Transfer (DBT
Expansion of ATM network -
Kisan Credit Cards
ICT
Financial Literacy Centres

9. Suggestions
Banks must change their mindset thoroughly in favour of social inclusion
Banks must not hesitate to do tight rope walking for the sake of bringing together demand-following and supply-leading approaches in order to balance efficiency with equity
While going in for cutting edge technology they must not lose sight of the bottom of the pyramid in Indian society: hi-tech and human touch, both ore needed for financial deepening and widening
Banks must be serious in reducing NPAs, transaction cost, and total operating costs, develop friendly service and quality products to suit all sections of the society
Financial literacy and then financial education must be in the agenda of modern banking also
Bank staff must be trained effectively not only in modern banking instruments but also in good financial mapping (including conceptual mapping and institutional mapping), nurturing future customers
In view of newer challenges and frequent problems from climate change, recession etc that impact small and marginal farmers, and small and medium entrepreneurs, banks must come out with new modes and avenues of finance to face risk and vulnerability
With New Age Banking: new technology, new banks, and new products coming up, ‘complementarity’ needs to be achieved in global and local institution-building (e.g. macro strategy and local participatory management)

10. Conclusion
When all over the globe, each economic activity is undergoing the process of “structural change and adjustment”, how can the banking sector – the provider of lifeblood to an economy – be left far behind? Banking in India, particularly over the past decade or so is intrinsically linked with the history and the country’s growth and development. They have been kind to the poorer sections of the society, but mere sympathy is not sufficient. They must support new growth with sustainability. They can and must develop themselves and the people at large, into social facilitators through finance and development. They should avoid unhealthy competition and work healthily towards a faster and more inclusive growth of the economy.

11. Gratitude Thank you all! Dr V. Basil Hans
St Aloysius College, Instituions
Mangaluru –

12. Ailments Changing occupations, entrepreneurship
Cost of credit is still high
Less of small and emergency funds
Not in sync with customers financial plan
Poor are not in think tank
Slow in microcredit ++