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Conclave Rep ort on

Financial Inclusion
in Orissa:
A way forward

March 2009

Centre for Youth and Social Development

E-1, Institutional Area, Gangadhar Meher Marg, Bhubaneswar – 751 013,
Tel. 0674-230774, 2301725, Fax: 0674-2301226

Swamshree Micro-Credit Services
M-75, Samanta Vihar, Near NALCO Chhak, Bhubaneswar – 751 017
Tel: 0674-2302646
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Financial Inclusion in Orissa: A way forward
Executive Summary Smt. Usha Padhi, Director, Mission Shakti; Shri Kripal Singh, General
Manager, SIDBI, Bhubaneswar and Shri D. B. Sarangi, Chief Financial
On the eve of its annual day celebration, CYSD organized a one-day Officer, ADHIKAR deliberated upon the role of federations, the
conclave titled “Financial Inclusion in Orissa: A Way Forward” in importance of financial literacy and the need for amending the current
association with Swayamshree Micro Credit Services (SMCS), practices respectively to make financial inclusion process more credible
Bhubaneswar on 23 March 2009. The day long conclave that witnessed the and effective in the third session on “Financial inclusion and financial
participation of more than 100 participants was held in DRTC-CYSD, literacy in Orissa”.
Bhubaneswar. The participants included government officials, bank officials,
academicians, MFIs and civil society representatives, media representatives, Expressing concern over the fact that the target of attaining 100% financial
etc. inclusion in 14 identified districts of Orissa is still eluding the banks, Prof.
Prafulla Kumar Dash, Dean IBS, Bhubaneswar in the fourth session on
Prior to beginning of the conclave CYSD unveiled its new logo “Financial inclusion in Orissa: Role of various stakeholders” urged for
representing its thematic areas of work and the people with whom it has developing and promoting a perspective that finance for the rural poor is a
been working. potential business opportunity and social obligation as well. In this regard,
he advocated the need for forging links between micro finance institutions
The conclave, which was divided into five sessions, began with spelling out and local communities. On the other hand, Shri Kedar Choudhury of
of the two broad objectives: Darbar Sahitya Sansad pleaded for giving due recognition to the community
driven financial institutions (CDFIs) for their contribution to financial

 To remove confusion, with respect to definition of financial inclusion, inclusion process.

 To define the role of various stakeholders in clear terms. In the final session, “Summing up: A way forward and future action
agenda” Shri Subrat Singhdeo, Madhyam Foundation, Bhubaneswar tried
The first session on “Financial inclusion in Orissa: Current issues and to consolidate the finding from each session and spelt out the following five
challenges” witnessed deliberations from Shri Sanatan Sethy, DGM, RBI, outcomes of the day long conclave.
Bhubaneswar and Shri Banabihari Panda, DGM, Indian Bank, Bhubaneswar
and a healthy discussion from participants. While Shri Sethi observed that 
 As financial inclusion and financial sustainability go together, the
financial inclusion is a must for poverty alleviation, Shri Panda emphasized implication is that the state has to play a bigger role and there is a
the need for spread of mobile telephony as the primary mover for financial need for commitment of resources for capacity building etc. to make
inclusion. During discussion concerns were raised on lack of method to financial inclusion a reality.
identify the real beneficiaries and the cost involving reaching to the poor. 
 Use of creative adult learning techniques to promote financial literacy.

 As financial literacy is in the interest of the service providers, the
Session II on “Strategy and approach towards financial inclusion in service providers must invest in such literacy programmes.
Orissa” witnessed Shri C. R. Patnaik, CGM, NABARD, Bhubaneswar and 
 MFIs need appropriate product design.
Prof. L. K. Vaswani, Pro-Vice Chancellor, KIIT University, Bhubaneswar 
 MFIs need to be well equipped with information on various insurance
shedding lights on the real objectives of financial inclusion following the products in order to pass them on to the beneficiaries.
Rangarajan Committee Report, concerns regarding shouldering
responsibility of the huge cost involved in reaching to the poor and the At the end, Shri Binaya Kumar Rout, CYSD read out the vote of thanks.
capacity of the poor to utilize the credit in desired manner.

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Financial Inclusion in Orissa: A way forward
Introducing the conclave address from Shri
On the eve of its annual day celebration, CYSD organized a one-day Parshuram Nayak,
conclave titled “Financial Inclusion in Orissa: A Way Forward” in Director, SMCS. Shri
association with Swayamshree Micro Credit Services (SMCS), Nayak put forth two
Bhubaneswar on 23 March 2009. The day long conclave that broad objectives and
witnessed the participation of more than 100 participants was held briefly described the
in DRTC-CYSD, Bhubaneswar. The participants included contents of each
government officials, bank officials, academicians, MFIs and civil session of the
society representatives, media representatives, etc. conclave before the
participants. The
CYSD unveiled the new logo objectives are:
“It is a historic day in the annals of CYSD as it completes 27 years
of arduous yet successful journey”said Shri Prafulla Kumar Sahoo, the 
 To remove confusion, with respect to definition of financial
Chairman of CYSD inclusion, and
while welcoming the 
 To define the role of various stakeholders in clear terms.
participants. As the
organization entered The conclave was divided into five sessions like:
into the 28th year of
playing an enabling role 1. Session-I: Financial inclusion in Orissa: Current issues and
while empowering the challenges
marginalized and 2. Session-II: Strategy and approach towards financial inclusion in
vulnerable section of Orissa
people to form an 3. Session-III: Financial inclusion and financial literacy in Orissa
inclusive society, it 4. Session-IV: Financial inclusion in Orissa: Role of various
reiterated its stakeholders
commitment towards the cause of such people. On this occasion it 5. Session-V: A way forward and future action agenda
unveiled a newly crafted logo for the organization depicting three
thematic areas on which CYSD has been working relentlessly, such Each session of approximately one hour witnessed deliberations
as primary education, sustainable livelihoods and participatory from the panelists followed by active participation from the
governance. Ms. Stephanie, a VSO volunteer working with CYSD participants during open house discussion.
explained that the logo illustrated the thematic areas of the
organization’s work and the people with whom it had been working. Session I – Financial inclusion in Orissa: Current issues
and challenges
The conclave begins The panelists for this session were Shri Sanatan Sethy, Deputy
At the outset, the Chairman, CYSD welcomed the participants and General Manager, RBI, Bhubaneswar and Shri Banabihari Panda,
introduced the delegates. This was followed by the welcome

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Financial Inclusion in Orissa: A way forward
DGM, Indian Bank, Bhubaneswar. Prof. Anup Dash from Utkal and community run on completely different models. According to
University, Bhubaneswar facilitated the session. him “while finance operates on exclusiveness, community runs on
the basis of inclusiveness”. Therefore, he expressed concern over
Critical examination of the role of SHGs: The call of the day how to bring together both inclusivity and exclusivity or in other
In his initial remarks, Prof. Dash expressed concern that micro- words, the community and finance together.
finance had become ossified over the years. He said that innovations
made nearly 30 Similarly, referring to the lack of accountability and credibility among
years back had only the micro finance institutions (MFIs) at macro level, Prof. Dash
been mass copied raised concern over making MFIs sustainable at grassroots level.
and in the process
the soul of micro- Concluding from such state of affair in micro finance sector that the
finance had been net result has been impoverishment of poor and more victimization
lost. Therefore, he of clients, Prof. Dash put forward the following suggestions to
suggested that revive the micro finance sector while fulfilling its objectives.
there was a need to
examine the 
 Capacity building of the poor so that they can adapt to the
number of real self extremely complex financial system.
help groups (SHGs) 
 The MFIs must be ready and well-equipped to absorb the
operating at the shocks.
ground level and to look into their performance.
Financial inclusion a must for poverty alleviation
Quoting Bijay Mahajan, he said “Micro-finance is barely an The dimension of poverty in India has been very large and civil
instrument for poverty alleviation”. In his remarks he also referred society has been
to the global initiative undertaken by Harper et al. to brainstorm on working
micro finance. Referring to the fact that SHG is an Indian relentlessly
contribution to the world, Prof. Dash said “SHG is one of the toward poverty
variants of different group based micro finance programmes”. alleviation. Having
“While promoting SHGs emphasis is being laid on institution and said this, Shri
community building”, he observed. He further observed that SHG Sanatan Sethy,
formation had two major objectives, such as 1) transformation in Deputy General
local power structure and 2) improvement in governance system. Manager, RBI,
Nevertheless, “numerically SHGs are on a decline and anecdotal Bhubaneswar in
stories are in use”, expressed Prof. Dash. his deliberation
emphasized the
Furthering his argument that the concept of micro finance has been role of economic growth in poverty alleviation. He opined “if we
ossified over the years, Prof. Dash put forth the theory that finance achieve 6-7% GDP growth we can probably overcome poverty”. In

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Financial Inclusion in Orissa: A way forward
other words, he emphasized the role of financial inclusion in the person. Similarly, he urged the MFIs to take up the role of
poverty alleviation and said “financial inclusion and poverty business correspondents to achieve the objectives of financial
alleviation cannot be separated”. inclusion.

Referring to the policy and related guideline formulation by RBI on Citing the unavailability of family-wise census data he urged RBI to
financial inclusion and subsequent evaluation in the experimental design a format so that the data would be available to all for use like
districts of performance of financial inclusion programme, he a telephone directory.
expressed concern that the extent of financial inclusion had not
been universal as many families were found not to have bank Referring to the current practice of SHGs opening account in the
accounts in their names. Therefore, in order to achieve total name of the group, Shri Panda expressed concern about the
financial inclusion he suggested cooperation of government agencies, individual members. With a view to make the benefits of financial
NGOs and SHGs with banks to open accounts. In addition, he also inclusion process accrue to all individual members, he urged the
was of the view that account opening procedure must be very NGOs and MFIs to ensure that members must open individual
simple. accounts.

Talking of business correspondent model, Shri Sethi informed that As remittance has been a major concern, Shri Panda observed that
this model allowed private agency to open an account for a person 100% core banking would make remittance easier in the absence of
through a smart card, and through this smart card money could be ATMs which would take time to reach all individuals.
transacted in favour of a customer. However, “remittance remains a
concern as facilitating money transaction through private On credit facility, Shri Panda was of the view that the beneficiary
organizations becomes a risky proposition”, he expressed. As a full should be charged 18% of interest on the sum provided by the MFIs
proof measure, he assured the audience that efforts were on to so that the MFIs would earn a profit of 5% as they got loan at a rate
make the business correspondent model viable/practicable one. of 13% from banks.

Shri Banabihari Panda, DGM, Indian Bank, Bhubaneswar, observed, “in As an incentive he suggested that the credible SHGs at the
simplistic terms financial inclusion means finance will be available to all grassroots level that were capable of bringing beneficiaries to bank
households”. He further said that financial inclusion encompasses must be paid for their service.
different components like savings, investment, credit, insurance and
remittance. Emphasizing the role of technology in achieving total financial Last but not the least, Shri Panda said “financial inclusion can only be
inclusion, Shri Panda suggested spreading mobile telephony among rural successful if the beneficiaries are involved and this can only done by
masses. the MFIs and NGOs.”

With reference to the role of various stakeholders in achieving Open house discussion
financial inclusion which is essential for economic development, Shri The presentations by panelists from representatives from RBI and
Panda urged the government officials at the ground level to facilitate Indian Bank were followed by open house discussion where the
the process of opening up of bank accounts by helping in identifying participants raised concerns regarding credibility and viability of

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Financial Inclusion in Orissa: A way forward
MFIs and their operations, and also regarding the beneficiaries of process. While asking RBI as to why the banking correspondent
financial inclusion process. model and smart card could not take up, he remarked that
outcome of the pending micro finance bill would have far
Concerns: reaching implication on financial inclusion.
1. Prof. Dash raised concern over lack of methods to identify the
beneficiaries more personally. Similarly, referring to spread of Amidst these concerns, Ms. Naina Mohanty from Swayamshree,
technology, he expressed concern that technology could only Cuttack suggested that bankers should own the responsibility of
adopted by the haves and thus, in reality the excluded groups orienting the beneficiaries on financial inclusion process, thus
had remained excluded. reducing the financial burden on NGOs and MFIs.
2. Expressing his concern that MFIs and NGOs suffer from asset
Response from the panelists
loss, term loan etc. Shri Ramesh Das, a micro finance
Responding the Prof. Dash’s suggestion of opening up of 4000 -
consultant, asked what should be the strategy to overcome
5000 bank branches by each nationalized bank to achieve faster
these concerns.
financial inclusion, Shri Sethy from RBI said that there were 78,000
3. Deepak Kindo, a micro finance practitioner from Regional Rural branches of all banks in Orissa till date and the number had been
Development Centre in his views said that one of the primary increasing. Based on this achievement, he informed that it would
objectives of financial inclusion was accessibility of all to bank take much longer time to open 4000 – 5000 branches by each
accounts. His concerns are as follows. nationalized bank.
a. MFIs are overcrowded in certain places;
Nevertheless, in lieu he sought greater role from NGOs and MFIs
b. An important agenda like health insurance has been missing to make financial inclusion achieve its objectives at a desired pace.
from the ambit of financial inclusion; Also, in response to the query regarding opening of bank account in
c. Considering the fact that financial inclusion has always been the name of SHG rather than in the name of individual members,
started from the supply side, the concern is that no effort Shri Sethi said the idea is to reduce the transaction cost in favour of
has been made yet to know what the beneficiaries actually individual members.
want or what they demand;
Session II – Strategy and approach towards financial
d. Lack of clear identification of appropriate interest rate on a inclusion in Orissa
micro finance; and The second session facilitated by Shri Parshuram Nayak,
e. Lack of specification or consensus as to who should bear Director,SMCS, witnessed deliberation from two distinguished
the cost of different processes involved in financial inclusion panelists – Shri C. R. Patnaik, Chief General Manger, NABARD,
like social mobilization and technology upgradation. Bhubaneswar and Prof. (Dr.) L. K. Vaswani, Pro-Vice Chancellor,
School of Rural Management, KIIT University, Bhubaneswar.
4. Shri Subrat Singhdeo of Madhyam Foundation in his remarks
echoed the concerns of the preceding speaker and asked whose
In his deliberation, Shri Patnaik, CGM, NABARD informed the
agenda was financial inclusion and who should finance the whole participants about the history and need of financial inclusion, and

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Financial Inclusion in Orissa: A way forward
emphasized the need to push the concept forward in order to see It can also be noted here that following the Baidyanathan Committee
how would it work and how much successful would it be in Report to facilitate total financial inclusion massive recapitalization is
addressing the issue of poverty. Shri Patnaik’s deliberations are as being done in the country through credit cooperatives.
The concept of banking correspondent model has evolved to counter
the lack of required manpower to reach all people in the current
Poverty is multi dimensional and strategies have been made to
banking system. Similarly, the idea of creating a financial inclusion
address the issue of rural poverty. This, in turn, has led to the
fund is to build conducive environment so that technology adoption
evolution of concept of cooperatives. One of the major initiatives to
will be easier and banks can reach to the targets easily by not
address poverty has been to ensure access to credit.
involving huge expenditure.
In the early 1990s when the concept of SHG-bank linkage was
mooted there were not many takers. But NABARD took the challenge Micro finance is a mirage and concerns are galore
and during 1993 initiated the process with a target of only 500 SHGs This was clearly reflected in the deliberation of Prof. Vaswani. As an
with an objective of providing hassle free credit to these SHGs. independent observer, minting no words on achievements of micro
finance, he straight away raised certain pertinent concerns/doubts
Through the journey it was recognized that only facilitating credit for the micro finance policy makers and practitioners to ponder
would not be helpful to address poverty unless infrastructure building, over. These concerns are as follows.:
forward-backward linkages and other support services were
emphasized. Therefore, the state took the onus of building of
infrastructure and in the following years NABARD took a lead role in

 There has been no assessment as to how many people have
this through disbursement of Rural Infrastructure Development Fund real access to credit. Also, even after nearly two decades,
(RIDF) for creation of rural infrastructure. there is no clear picture regarding the impact of micro
finance on the living standard of the poor.
Following 2004 NSSO data whereby it was learnt that most of the 
 If technology has to be developed what should be the cost
rural population were still out of the reach of formal credit facility, of reaching to the poor and who should bear the cost,
Rangarajan Committee came out with a strategy to include such particularly in the context where the cost of reaching to the
excluded group into the credit net. The Committee spelt out the need poor has become astronomical?
for financial inclusion as a policy measure to address the issue of

 Similarly, referring to the fact that micro finance is a very
poverty which would ensure avenues for people to:
manpower intensive sector, he asked do we have enough

 Save their savings competent manpower and money to compensate the labour

 Credit facilities of such manpower.

 Insurances 
 How are the poor going to utilize the credit made available

 Remittances to them and do they have capacity to utilize the fund as

 Financial advices desired?

 Who would take responsibility for their capacity building?
The objectives of Rangarajan Committee Report may be achieved by 
 What about the market linkage and do all beneficiaries have
2015. viable enterprise options and entrepreneurial ability?

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Financial Inclusion in Orissa: A way forward
Open house discussion According to her financial inclusion is “delivery of financial services
Responding to Shri Kindo’s queries regarding the burgeoning cost of to the disadvantaged and excluded section in an affordable cost”.
reaching to the poor and other strategies than recapitalization Having said this, she, however, opined that the term ‘affordable’ is
adopted by NABARD, Shri Patnaik, CGM, NABARD clarified that ambiguous or relative. Then she went on to add that “financial
“financial inclusion means people should get financial products and inclusion is estimated by finding out the ratio of people having bank
services at affordable cost, and it is not about only micro finances accounts to the total adult population, which is 56% for India as per
and SHGs”. Nevertheless, he also expressed his anxiety regarding the NSSO data”. Further, she expressed her views that “financial
the rising cost and said it would defeat the purpose of financial inclusion helps people to participate in the development process,
inclusion. thus augmenting economic growth”.

Similarly, responding to the concern regarding lack of monitoring According to her poverty is not the only factor excluding people
mechanism to monitor the performance of financial inclusion from financial inclusion. The other factors are social inhibition,
process, Shri Patnaik said it was practically difficult to monitor all 32 illiteracy, volume of paper work in bank etc. In this context, she
lakh SHGs linked to banks and therefore, he sought cooperation observed that “financial inclusion is a part of the wider goal of social
from MFIs and SHGs to make the process more transparent and inclusion and the first step is increasing financial literacy”.
effective through evolving self-monitoring mechanism. And, in this
regard he urged the participants to suggest ways to improve the In an attempt to define financial literacy, she said “it includes
system and evolve self-monitoring mechanisms. awareness, knowledge and skill building of the target group to make
decision on savings, borrowings etc.” In other words, she observed
Prof. Vaswani suggested expansion of avenues and reach by that “financial literacy enables a person to manage his/her own
NABARD so as to reduce the transaction cost. money and plan well in advance so as not to fall prey to debt trap
and therefore, it is as much useful to a poor as it is to a rich
Session III – Financial inclusion and financial literacy in person”.
The third session witnessed deliberations from Smt. Usha Padhi, Finally, she concluded saying “financial inclusion is not the goal,
Director, Mission Shakti, Government of Orissa, Shri Kripal Singh, rather it is just a facilitating tool/instrument to increase the standard
General Manager, SIDBI, Bhubaneswar and Shri D. B. Sarangi, Chief of living of any person” before allowing the panelists to share their
Financial Officer, ADHIKAR. Prof. Bedabati Mohanty facilitated the views.
Smt. Usha Padhi, Director, Mission Shakti
Referring to the UN statement that “there is nothing to keep the As the Director of Mission Shakti, Government of Orissa, Smt.
bankables unbankable” and the fact that the poor should have access Padhi has been the playing the anchor role in promoting SHGs
to banking services is a global concern, Prof. Mohanty tried to across Orissa and is committed to the cause of women
define financial inclusion and financial literacy in Indian context in empowerment and poverty reduction by making economic activities
the following terms. sustainable for the women while ensuring a sustainable credit inflow
through SHG-bank linkages.

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Financial Inclusion in Orissa: A way forward
Talking of the 
 To increase the competency of women members of SHGs
importance of in the process of decision making at different level of
SHG-bank linkage society.
she said just 
 To sensitize the stakeholders of SHGs and Federations on
opening an account Credit availability, Credit planning, financial management,
would not micro insurance and so on.
empower an 
 To make them skillful in efficient accounting of their
individual woman. investments for different economic growth.
While assuring the 
 To broaden their knowledge and increase their efficiency in
audience that policy financial vis-à-vis resource and time management.
wise no differential
treatment is being (For the detailed presentation on Mission Shakti, its achievements in Orissa etc.
meted out to SHGs of different categories, she said Mission Shakti by Smt. Usha Padhi, Director, Mission Shakti, Government of Orissa, please refer
had given an impetus to the SHG movement in the state. She was to Annex-I)
categorical in saying that NGOs must take up the role of facilitators
to create demand among SHGs. Shri Kripal Singh, General Manager, SIDBI, Bhubaneswar
During deliberation, Shri Singh observed that “because there is lack
Emphasizing the role of federations at the block levels as umbrella of capacity of perception among people, there is lack of access to
bodies for all SHGs in that particular block, she said that it was a felt financial products and services by the people in the underserved or
need for an institutional set up. It was realized that practically it was unserved areas”. Therefore, he opined that “financial inclusion is not
not impossible to monitor all SHGs across the state. Therefore, this only opening of no-frill account, but to reach out to all people with
realization resulted in giving way to formation of federations at the all financial products and services”. In this regard, he advised the
block levels and corresponding capacity building of these federations MFIs to study the rural situation. Accordingly, they should educate
to take up monitoring and other related tasks like SHG-bank the people on why to take loan, and how to utilize it and repay the
linkage, loan recovery and record maintenance. loan.

In her remarks, Smt. Padhi also emphasized the role of financial According to Shri Singh “financial literacy is knowledge, awareness
literacy in achieving the objectives of Mission Shakti. The followings, and information regarding saving, borrowing etc.” Observing that
according to her, are the primary objectives of financial literacy the poor should have clarity about financial loans and term of loans
programmes. etc., he opined that the poor should also know why to and where
to borrow from along with what were the associated pre- and post-

 To aware poor women members of SHGs on importance of borrowing factors. He reiterated the role of MFIs and NGOs to
financial planning and income enhancement. create financial literacy n this regard as well.

 To increase the efficiency of SHGs to plan for future
secured financial growth.

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Financial Inclusion in Orissa: A way forward
Shri D. B. Sarangi, Chief Financial Officer, ADHIKAR inclusion. With a view to bring convergence he felt that the role of
Like the other panelists, Shri Sarangi also expressed that financial various stakeholders had been very important and therefore, he
inclusion was nothing but inclusion of those people who could not requested the panelists to deal elaborately on the role of various
be included in the financial system so far. He observed that in stakeholders in realizing the objectives of financial inclusion.
independent India’s history, MFI is the recent edition of
experimentation towards achieving total financial inclusion followed Prof. Prafulla Kumar Dash, Dean, IBS, Bhubaneswar
by experimentation with banks and other financial institutions. In his presentation Prof. Dash highlighted the concept and scope of
Nevertheless, he was convinced that financial inclusion was a financial inclusion.
process for achieving development/growth. He also deliberated
upon the
Shedding light on bank correspondent model, Shri Sarangi felt that consequences of
the concept was problematic because of its inherent faulty nature. financial inclusion in
For example, he said withdrawal through such model was time general while
consuming and taking back cash from the customer to the bank narrating the global
involved high risk. experiences in
promoting financial
Emphasizing the need for promoting financial literacy, Shri Sarangi inclusion. In the
advocated for reforms in the nitty-gritty of financial inclusion context of
process involving further amendments in order to make the process extending banking
more credible and effective. services to the rural poor, he observed that the following steps had
been taken up till the 1980s.
Session IV: Financial inclusion in Orissa: Role of
various stakeholders 
 A hugely expanded bank branch and cooperative network and
Prof. Prafulla Kumar Dash, Dean, IBS, Bhubaneswar; Shri Kedar new organizational forms like RRBs;
Choudhury, Darbar Sahitya Sansad, Balipatna; Shri Jayanta Narayan 
 A greater focus on credit rather than other financial services
Sarangi, APD, TRIPTI; and Shri Biswaraj Pattanaik in their like savings and insurance;
deliberations tried to clarify the roles of various stakeholders in 
 Lending targets directed at a range of ‘priority sectors’ such as
making financial inclusion a reality. The session was facilitated by agriculture, weaker sections of the population, etc.
Shri Nasir Ali from CYSD.
However, in the present context he suggested the following
In his initial remarks Shri Ali opined that financial inclusion was a measures to achieve financial inclusion:
product of convergence of different types of determinants like  Putting ceilings on interest rates;
social, cultural and political. And, “this convergence has not yet  Facilitating government subsidies; and
been articulated probably”, he expressed. Further, emphasizing the  Developing and promoting a perspective that finance for the
need for a vision on products, market and entrepreneur ability he rural poor is a potential business opportunity and a social
suggested for organizing a methodological workshop on financial obligation as well.

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Financial Inclusion in Orissa: A way forward
Further, he also observed that financial inclusion would lead to In his deliberation, Shri Choudhury tried to portray a critical
socio-economic empowerment and subsequently to betterment of appraisal of government promoted financial inclusion processes till
life of the excluded people. While expressing optimism for the date and how had
business potential in Orissan context despite high risk perception, they failed in
he, however, expressed concern that the attainment of 100% achieving their
financial inclusion of 14 identified districts in Orissa had missed the objectives. On the
dateline. other hand, he
In conclusion, he suggested that considerable faith in
the abilities of

 Addressing financial exclusion would require a holistic approach community driven
on the part of the banks in creating awareness about financial financial institutions
products, education, and advice on money management, debt (CDFIs) like NGOs
counseling, savings and affordable credit. and MFIs and self

 The banks would need to evolve specific strategies to expand help cooperatives to effectively promote financial inclusion among
the outreach of their services in order to promote financial the poor.

 One of the ways in which this could be achieved in a cost- While expressing his concern that “a small CDFI struggles hard in
effective manner is through forging links between microfinance balancing between effective inclusion of poor, and sustainable and
institutions and local communities. efficient finance management”, he strongly felt that “more number

 Banks should give wide publicity to the facility of no frills of strong intermediaries can effectively and efficiently do larger
account. financial inclusion of the poor”. He also advocated for the following

 Technology could be a very valuable tool in providing access to roles by different stakeholders in order to make the objectives of
banking products in remote areas. ATMs cash dispensing financial inclusion a reality.
machines could be modified suitably to make them user friendly
for people who were illiterate, less educated or did not know 
 Financial Intermediation to be widened.
English (may be, Hindi also). 
 More number of CDFIs to be promoted, nurtured and
(For the detailed presentation by Prof. Prafulla Kumar Dash please refer 
 Banks need to partner with local CDFIs.
to Annex-II) 
 Soft loan/ capital to be available to CDFIs at lower rate.

 Self Help Cooperatives need soft loan fund and support.
Shri Kedar Choudury, Darbar Sahitya Sansad 
 Waiver business needs to be either opposed or universalized.
Giving a brief account of the activities and outreach of Darbar
Sahitya Sansad Shri Choudhury opined that the services of the (For the detailed presentation by Shri Kedar Choudhury please refer to Annex-III)
formal financial institutions to poor had remained little despite long

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Financial Inclusion in Orissa: A way forward
Shri Jayanta Narayan Sarangi, APD, TRIPTI, Bhubaneswar While the first session dealt with the meaning and objectives of
In his remarks, Shri Sarangi observed that the main aim of financial financial inclusion, Shri Singh observed that poverty emerged as the
inclusion is livelihood sustenance and not micro finance. single most important concern during every deliberation and
Nevertheless, he was of the view that SHGs were considered as discussion. “The discussion primarily revolved around opening up of
vectors for livelihood sustenance through micro finance. He also no-frill account”, he added.
informed that the SHGs promoted by TRIPTI in the project districts
were addition to those already or being formed under Mission Outcome

 As financial inclusion and financial sustainability go together, the
implication is that the state has to play a bigger role and there is a
Responding to Prof. Anup Dash’s suggestion that ICDS workers at
need for commitment of resources for capacity building etc. to make
the grassroots level must be treated with some kind of incentives
financial inclusion a reality.
and their capacity building should be the top priority for effective
financial inclusion, Shri Sarangi assured the participants and the
organizers to take up the suggestion to the policy level. Reiterating the observations made by the panelists that financial
services must be backed by financial literacy, Shri Singh remarked
Shri Biswaraj Pattanaik that the major challenge before financial literacy programme was
While emphasizing the need for promotion of financial literacy that they were not cost effective. Referring to the Phillipines model
programme, Shri Pattanaik observed that the NGO and MFI where financial literacy is built in with credit facility and results are
workers working at the grassroots level should raise questions beneficial, Shri Singh advocated for integration of financial literacy at
before government officials regarding any flaw in implementation of primary education level as done in Phillipines.
financial inclusion programmes. He, nonetheless, also advocated for
adoption of smart business plan by the NGOs and MFIs for an Outcome
effective and efficient implementation of financial inclusion

 Use of creative adult learning techniques to promote financial literacy.
programmes. Thus, in his deliberation, Mr. Pattanaik among other
stakeholders gave more emphasis on the role of the intermediaries 
 As financial literacy is in the interest of the service providers, the
like the NGOs and the MFIs. service providers must invest in such literacy programmes.

Session V: Summing up: A way forward and future Observing that starting from people, the target beneficiaries, to
action agenda bankers, MFIs and NGOs to the regulators and policy makers are
Shri Subrat Singhdeo of Madhyam Foundation, Bhubaneswar tried to the major stakeholders in the financial inclusion process, Shri Singh
summarize the day’s proceedings in the previous sessions while also seconded the views of Shri Kedar Choudhury that CDFIs, having a
trying to put across his views for setting up a future action agenda huge potential to make financial inclusion a reality, must get a due
to make financial inclusion a reality with involvement of NGOs and place in the policies regarding financial inclusion.
Raising concern over the fact that the current practice enhances
financial grants to government promoted SHG federations while

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Financial Inclusion in Orissa: A way forward
ignoring those promoted by NGOs and MFIs, he urged the Conclave on Financial Inclusion in Orissa: A Way Forward
participants to ask this questions to the policy makers. Reiterating Monday, March 23, 2009 at CYSD, Bhubaneswar
the concerns made earlier, Shri Singh observed that the outcome of
the pending Micro Finance Bill, 2007 had a large implication for AGENDA
remittance. Session/Time Agenda for discussion/Resource person
10.00-10.10 AM Welcome address by Shri P. K. Sahoo, Chairman, CYSD
Concluding from the panel and open house discussion that lot of Session I Financial inclusion in Orissa: Current issues and
handholding supports are being meted out for capacity building of (10.10-11.10 AM) challenges
the beneficiaries and intermediate functionaries, he expressed  Mr. Santana Sethy, DGM, RBI, Bhubaneswar
concern that no efforts were made towards convergence of such  Mr. Banabihari panda, DGM, Indian Bank, Bhubaneswar
activities. Facilitator: Prof. Anup Dash, Utkal University
Session II Strategy and approach towards financial inclusion in
Outcome (11.10-12.00 PM) Orissa

 MFIs need appropriate product design.  Shri C. R. Patnaik, CGM, NABARD, Bhubaneswar
 Prof. (Dr.) L. K. Vaswani, Pro-VC, SRM, KIIT University,

 MFIs need to be well equipped with information on various insurance Bhubaneswar
products in order to pass them on to the beneficiaries. Facilitator: Shri Parshuram Nayak, Director, SMCS
Session III Financial inclusion and financial literacy in Orissa
(12.00-01.00 PM)
Vote of thanks Panelists:
At the end of the day-long conclave Shri Binaya Kumar Rout,  Smt. Usha Padhi (IAS), Director, Mission Shakti,
Monitoring and Evaluation Specialist from CYSD gave the vote of
 Shri Kirpal Singh, GM, SIDBI, Bhubaneswar
thanks. In his address, Shri Rout on behalf of CYSD and SMCS  Shri D. B. Sarangi, Chief Financial Officer, ADHIKAR
expressed sincere gratitude to all the panelists and participants for Facilitator: Prof. Bedabati Mohanty, Utkal University
their valuable contribution to the conclave and finally called it a day. Lunch Break (01.00-02.00 PM)
Session IV Financial inclusion in Orissa: Role of various stakeholders
(02.00-03.20 PM)
 Prof. Prafulla Kumar Dash, Dean, IBS, Bhubaneswar
 Mr. Kedar Chaudhury, DSS, Balipatna
 Mr. J.N.Sarangi (OAS), APD, TRIPTI, Bhubaneswar
 Facilitator: Shri Nasir Ali, Director, L&A, CYSD
Session V A way forward & future action agenda
(03.20-04.50 PM)
Mr. Subrat Singhdeo, Madhyam Foundation, Bhubaneswar
Vote of thanks Mr. Binaya Kumar Rout, Monitoring & Evaluation Specialist,

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Financial Inclusion in Orissa: A way forward