Financial Inclusion: A Tool of Socio-Economic Development

Presented By-

Himani Saxena Asst. Prof. Maharaja Institute of Management & Technology, Gwalior

 In India, almost half the country is unbanked. Only 55% of the

population have deposit accounts and 9 % have credit accounts with banks. India has the highest number of households (145 million) excluded from Banking. There was only one bank branch per 16,000 people. 6 lakh villages in India, rural branches of SCBs including RRBs number 33,495. Only a little less than 20% of the population has any kind of life insurance and 9.6% of the population has nonlife insurance coverage. Just 18 % had debit cards and less than 2 percent had credit cards.

Contd
only 45% of the adults in India have access to a bank

account. This figure falls to 27% for rural households with access to any financial services. According to RBI statistics, 72% of those earning less than Rs. 50,000 a year lack a bank account. With 40% of the Indian households earning less than Rs. 75,000 a year, this creates a big challenge for banking coverage.

FINANCIAL INCLUSION
Financial Inclusion is the process of ensuring access to appropriate financial products and services needed by all sections of the society in general groups such as weaker sections and low income groups in particular at an affordable cost in a fair and transparent manner by mainstream institutional players.

No -Frill

SB A/c with OD Electronic fund transfer

Financial Literacy

Financial advice

Financial Inclusion

Insurance facility

Cheque facility

Micro Recurring Deposit Credit & debit card access

Entrepreneuria-l credit

Need of Financial Inclusion

Physical distance Lack of awareness, financial illiteracy Mutual disbelief Lack of appropriate products/services

Benefits Of Inclusive Financial Growth

Growth with equity Financial Transactions Made Easy Safe savings along with financial services Inflating National Income Becoming Global Player

Approaches adopted by RBI & Indian Government

6 millions No Frill Accounts. Board approved Financial Inclusion Plans (FIPs) of

banks for 3 years, starting April 2010. 40% net bank credit to the priority sector. National Pilot Project for Financial Inclusion (NPPFI). Nationwide programme on financial inclusion: Swabhimaan.

Contd..
Launching of a National Rural Financial Inclusion Plan

(NRFIP). National Mission on Financial Inclusion (NaMFI). Unioninclusion by Union Bank of india. Branch base Model (PNB Mitra & KYC Norms) and Branchless Model (BC) by PNB.

National Pilot Project for Financial Inclusion

This project was launched and implemented from 1- Jan2006 to 31-12-2006. Objectives: To cover the entire population of union territory for opening Zero or low balance account. To sanction overdraft to all eligible person for consumption needs. To sanction general credit card and kisan credit card. 75% of the population has to be brought under overdraft & KCCS, GCCS.

Swabhimaan

 Swabhimaan was launched in February, 2011 by the

Government.
This campaign promises to bring basic banking services to

73,000 unbanked villages with a population of 2,000 and above by March, 2012 and at least 5 crore new accounts will be opened.
The movement will facilitate opening of banks accounts,

provide need-based credit, remittance facilities and help to promote financial literacy in rural India.

National Rural Financial Inclusion Plan (NRFIP)

To provide access to financial services, including credit

to at least 50% of the financially excluded rural households through rural/ semi-urban branches of commercial banks and RRBs.

Financial Inclusion Promotion & Development Fund (FIPF)

The FIPF will focus on:
Farmer Service Centres
Promoting Rural Entrepreneurship Self Help Groups Developing of Human Resources of Banks Promotion of Resources Centres

Union inclusion by UBI

Opening up 11 specialized Financial Inclusion

branches Bio- Metric card Mobile Van banking Comic Book series for financial literacy

Financial Inclusion Models by PNB

Brick & Mortar Model - Opening PNB MITRA-No frill accounts (Zero balance accounts) with relaxed KYC norms - Launched PNB Mitra ATM card; withdrawal limit : upto Rs. 5,000 per day. ICT (Information & Communication Technology)

Model
BCs are engaged by the Bank/technology providers BC Agents (BCAs) contact the customers for enrollment

and issue biometric smart cards.

Achievements Last Years and Targets for Next 2 years

S.N o. 1 2 3 4 Particulars
Total no. of BC deployed

March 2010 33,042 21,499

March 2011 58,361 22,684 76,801 355

March 2012 Target 1,25,988 24,618 1,97,523 1,361

March 2013 Target 1,87,972 25,694 3,20,441 2,177

Villages covered through branches

Villages covered through BCS 33,518 Villages covered through other modes 100

5
6 7 8

Villages covered total

No Frill Accounts, no. in lakh KCCS , no. in lakh GCCS, no. in lakh

54,757
495.53 195.24 6.37

99,840
743.9 224.89 9.5

2,23,502
1,096.24 322.59 46.89

3,48,312
1,s633.15 407.33 81.13

Suggestions
Coordination with UIDAI Establishment of Financial Counseling Centres Strategize the Provision of Bank Credit Adequate Publicity for the Project of Financial Inclusion

Conclusion
Financial exclusion still exists on wide majority parts of rural

India. The importance of credit facility to agriculture remains unutilized for the actual purpose for which it is being granted. The policy moves and measures from banking institution should be more effective and liberal in grant of credit and loans with a careful management with the upcoming years there is a strong hope that the vision and mission of financial inclusion will be successful and a large group of customers would enjoy the benefits of banking services.