Just half of Indians have a savings bank account

The new CRISIL Inclusix index on financial inclusion says that the bottom 50 districts have just three banks per 100,000 of population
THINKSTOCK

BS REPORTER
Mumbai, 27 June

ndias lack of financial inclusion is well known but that slightly more than 50 per cent of the population just has a simple savings bank account is distressing. For some time now, financial inclusion has been foremost on the mind of Indias policy makers, political parties and the government. In fact, financial inclusion is also the key critical parameter by which the new banking licences are expected to be issued. But although the trend is improving at the grass-root level, financial inclusion is far lower than desirable. In a study done by Crisil, just one in two Indians has access to a savings bank account and just one in seven Indians has access to bank credit. There are merely 684 million savings bank accounts in the coun-

SOUTHERN REGIONS ARE MILES AHEAD

try with a population of 1.2 billion. The picture, in fact, looks bleaker if one excludes western and southern India. Financial penetration is the highest in the southern region with a score of 62.2, while western region has 38.2. The study conducted on the basis of three parameters branch, deposit and credit penetration across the 632 districts in India shows the bottom 50 districts have just three banks per 100,000 of

population, just half of the 7.6 bank branches on an all-India level. These districts have just two per cent of the total bank branches in the country. Besides, they also have just 4,068 loan accounts per 100,000 of population as compared to an all-India level of 11,680 accounts. The study also notes that theres a wide disparity in basic banking services in India. For instance, Indias six largest cities have 11 per cent of the countrys bank branches, while there are four districts in north-India with just one branch per district. Southern states, however, have raced ahead in financial inclusion. On an all-India level, the score stands at 40.1 in 2011, southern states have a score of 62.2. The top five districts with the highest scores are from the southern region, four of them from Kerala. Financial inclusion has still a long way to. Lack of awareness, low incomes, poverty and illiteracy are among the key factors that lead to a low demand for financial services and, consequently, to exclusion. No wonder the government has been focusing on improving education while the RBI in its recent guidelines for new banking licence has insisted that 25 per cent of the branches have to be opened in unbanked rural centres.

INCLUSIX SCORES
CRISIL Inclusix Scores State/UT 2009 2010 2011 CRISIL Inclusix Ranks 2009 2010 2011

DISTRIBUTION OF STATES AND UNION TERRITORIES BASED ON CRISIL INCLUSIX

Level of Financial Inclusion CRISIL Inclusix Score Number of States/Uts

Puducherry Chandigarh Kerala Goa Delhi Andhra Pradesh Tamil Nadu Lakshadweep Himachal Pradesh Karnataka Punjab Uttarakhand Haryana Andaman & Nicobar Islands Odisha Sikkim Tripura Gujarat Maharashtra Daman & Diu Dadra & Nagar Haveli Mizoram Jammu & Kashmir Uttar Pradesh Rajasthan Jharkhand Madhya Pradesh Meghalaya West Bengal Assam Arunachal Pradesh Chhattisgarh Bihar Nagaland Manipur INDIA

68.8 74.4 67.9 67.0 68.1 52.9 53.9 52.6 51.7 51.5 51.5 45.6 40.8 40.7 33.4 36.7 35.6 34.5 33.2 32.8 30.8 30.8 31.1 29.6 29.0 25.1 26.3 25.4 25.3 22.9 24.7 22.0 19.9 20.0 13.6 35.4

75.9 82.4 71.3 72.6 58.4 57.6 57.6 52.6 53.2 54.7 51.8 48.5 43.8 42.8 36.7 42.9 37.7 36.8 34.8 34.2 33.8 34.1 32.9 31.5 30.2 27.3 29.1 27.2 27.2 25.7 26.3 24.8 21.4 21.6 15.6 37.6

79.6 78.1 76.1 72.0 64.2 61.3 60.5 58.7 58.5 57.7 55.7 50.5 48.4 45.1 40.6 40.0 38.7 38.6 37.5 37.3 37.1 34.9 33.8 33.5 32.7 30.1 29.9 29.2 28.8 28.2 27.4 27.0 23.5 23.1 16.6 40.1

2 1 4 5 3 7 6 8 9 11 10 12 13 14 18 15 16 17 19 20 23 22 21 24 25 29 26 27 28 31 30 32 34 33 35

2 1 4 3 5 6 7 10 9 8 11 12 13 15 18 14 16 17 19 20 22 21 23 24 25 27 26 28 29 31 30 32 34 33 35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

HIGH ABOVE AVERAGE BELOW AVERAGE LOW

> 55 Between 40.1 and 55.0 Between 25.0 and 40.0 < 25

11 4 17 3

SCORES ACROSS ALL THREE DIMENSIONS AT A REGIONAL LEVEL

Region Branch Penetration 2009 2011 Credit Penetration 2009 2011 Deposit Penetration 2009 2011

Numbers denote states rankings in financial inclusion

Southern Region Western Region Northern Region Eastern Region North-Eastern Region India

49.6 39.4 36.9 27.4 27.7 37.3

54.5 43.7 40.9 29.9 29.9 41

68.8 26.9 26.2 20.1 17.9 33.5

77.1 28.2 27.4 23.7 21.6 36.8

55.1 40.4 40.7 26.5 27.7 39.7

66 47.7 49.1 34 36.5 48.3