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Inclusive Finance India Report
Prof. MS Sriram, Visiting Faculty, Centre for Public Policy, IIM, Bangalore
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Changing landscape of Financial Inclusion in India
M s sRIRAM
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Foundation: Hard Infra (March 2016)
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Foundation: Hard Infra (March 2016)
New
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Foundation: Hard Infra (March 2016)
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Foundation: Hard Infra
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Commercial Banks Decrease in the number of accounts and amounts disbursed in small borrowal accounts Touch points have increased Offsite touch points have increased Targets for Priority Sector largely achieved, but sub targets on agriculture and weaker sections has gaps, particularly with public sector banks Swabhimaan, PMJDY, branch opening, BC and all other initiatives leading to a buzz, with some CASA deposits but not lead to meaningful business. Inclusion is just “pass through” business for banks as of now.
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RRBs All were profitable, but we see 5 RRBs have slipped into losses in 2015 and 2016 No information on fresh investments in RRBs after the Act was amended to include a fourth investor, and an independent director representing those interests Growth of branch network slower than commercial banks, but significant number of ultra small branches opened. For branches largely in Rural and semi urban areas, RRBs have 1024 ATMs Marginal increase in “small borrowal accounts” at the sub Rs.200,000 category Reduction in accounts in the sub category CD ratios low at 66%, high CASA, but falling to 51% (from 60%) Agriculture the most significant portfolio (65%); Disbursal to SF/MF is also proportionally highest (69%) PSL targets 75% (with 15% weaker section) Challenges in portfolio diversification, credit offtake. Opportunities PSLC Trading.
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PMJDY: Impressive growth
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PMJDY: Impressive growth… but….
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Digital Transactions
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Mobile Transactions
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Mobile Transactions… but….
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Rural Co-operatives
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Rural Co-operatives
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Rural Co-operatives
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UCBs
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UCBs
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Post offices: Network
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SHGs Number of SHGs: Regional spread more even
Credit linkage: Skew towards south continues, more so after AP Multiple players, approaches NPA a concern. Interest subvention a concern Digitisation a big initiative – leading to better information, securitization and deepening of engagement with financial markets No signs of “individualization”
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MFIs: Impressive growth, but some concerns
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New Institutions and their implications
Small Finance Banks Objectives Policy direction Incentives Design Challenges
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New Institutions Payment Banks Objectives Design Focus Economics
Business Models and their implications Scope for collaboration on the liabilities side?
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Challenges Real Sector for livelihoods
Basic Real facilities for risk cover Carrying costs with multiple back end players
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Thanks
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