FINANCIAL INCLUSION

Himanshu Bhakuni MBA

3rd
 INTRODUCTION

Meaning: Financial Inclusion is the delivery of

banking services at affordable costs to vast
sections of disadvantaged and low income groups
including households, enterprises, SMEs, traders.

INDIAN SCENARIO
Around 50% of the Indian population suffers from chronic poverty and
hunger. Only 31 % of the Indian population has access to Banking
services. The rest 69 % are still deprived of bare minimum banking
services for which they are totally dependent on informal banking
sources like private money lenders.
While the need to solve this mammoth problem is great, we are
unable to reach large numbers of the poor with products, services and
information they need to achieve financial security

AIM
 Our national vision for 2020 is to open nearly 600 million new customers'
accounts and service them through a variety of channels by leveraging on IT.
However, illiteracy and the low income savings and lack of bank branches in rural
areas continue to be a road block to financial inclusion in many states.
To achieve this objective commercial banks have started a drive to
open branches in hitherto unbanked

STEPS
It can be said that Bank nationalization was first step towards Financial
Inclusion in India. RRBs were created to take banking services to rural people.
Public Sector banks are making use of the services of non-governmental
organizations (NGOs/SHGs), micro- finance institutions and other civil society
organizations as intermediaries for providing financial and banking services.
These intermediaries are being used as business facilitators (BF) or business
correspondents (BC) by commercial banks.
 With a view to achieve complete Financial Inclusion our bank has introduced
"no-frills" banking account viz “PNB Mitra account”. PNB has also launched
mobile ATMs to cover unbanked rural slum areas. General Credit Cards (GCC) are
issued to the poor and the disadvantaged with a view to help them access easy
credit.
PNB has donated 1.81 crores for spastics, handicapped through NGOs and
charitable institution. Banks are also engaging services of Ex-servicemen as
business facilitators.
Joint Liability Groups (JLGs) of the poor such as landless, share croppers and
tenant farmers is another innovative mechanism towards ensuring greater
financial inclusion. This mechanism has already been operationalised in a few
regions under a Pilot Project of NABARD. Commercial Banks have been actively
promoting such groups for effectively purveying credit and other facilities to such
clients.
Joint Liability Groups (JLGs) of the poor such as landless, share croppers and
tenant farmers is another innovative mechanism towards ensuring greater
financial inclusion. This mechanism has already been operationalised in a few
regions under a Pilot Project of NABARD. Commercial Banks have been actively
promoting such groups for effectively purveying credit and other facilities to such
clients.
In the current budget the government has earmarked a sum of Rs100 Crores for
Banks to open branches in unbanked and difficult areas. Biometric card based
authentication devices, are being used by the bank’s Business Correspondents
at the villages.

The Strategy
No -Frill
SB A/c with In-
built OD

Micro Credit
Both groups Financial
and individuals Literacy

Financial
Inclusion

Micro Micro
Insurance Remittance

Micro
Recurring
Deposit
 ACHIEVEMENTS
So far, 344 districts have been identified by State Level Bankers Committee
for 100 per cent financial inclusion. As a result of the campaign of the
public sector banks, 175 districts in 21 States and 7 Union Territories
have reported having achieved the target.
The self-help group (SHG)-bank linkage Programmed has emerged as the
major micro- finance Program in the country and is being implemented by
commercial banks, RRBs and co- operative banks.

The State Level Bankers Committee has set up

Rural Self Employment Training Institute (RSETI) at one in each district by
31.03.2008. These institutions are training at least one youth in a family below
poverty line (BPL) in various fields and enhance capacity building. The debt
waiver and debt relief scheme introduced in the last budget has been extended
even this year as part of financial inclusion.

Sbi initiatives for increasing

Awareness of rural masses
The bank has conducted various initiatives to spread both Credit/banking
awareness & ICT related product awareness among the masses. Organizing
Campaigns at village level to educate rural customers about various financial
offerings of SBI. Organizing meetings with village residents at Gram Panchayat
level along with Village Sarpanch, wherein the Sarpanch introduces the BC
(CSPs) & their products to the villagers.
Collaborating with the ‘Influential’ people in the villages (teachers, Social
workers, NGOs) in educating the rural customers about SBI offerings. Organizing
Road Shows, Skits etc. to create awareness about the advantages of Saving
money and using it for better utilities. Announcements on two-wheelers and other
vehicles about SBI offerings and informing the customers about the site &
schedule of enrolment camps in the village.
Way formed : vision –march 2012
No. of unbanked villages to be covered 1 lakh

Customer base to increase by 4 crores

No. of rural branches to go up to 10,000

No. of ATMs in rural areas to go up to 6,000

Focused shift towards smart cards, mobile banking, internet

banking & kiosk banking platforms.
Micro insurance & micro mutual funds to provide a complete
basket of services.
Mission to Achieve
 Particulars 2011-12 2012-13

Total Villages to be covered at the end of 25000 32000

the year

Out of Which 2000+ Population Villages 4163 4163*

Out of Which Less than 2000 Population 20837 27837

Deployment of BLBUs (CSPs) 15000 20000

Total Customers
9.0 10.0
 *No of villages with 2000+ population is 3159 allotted by SLBCs for coverage by
March, 2012

The Strategy
How the bank is moving ahead

Concurrently Financial literacy

Cover unbanked through 13RSETIS
Villages having less
Than 200 population

Banking services to Micro Credit, Micro

3159 villages having
 2000+ population remittance through
through branchless Financial Branchless Banking
banking
Inclusion

1.
2. Coverage of (Estimates based on various studies
and Market Surveys):
 Check in accounts - 40%
Life Insurance - 10.0%
 Non-Life Insurance - 0.6%
 Credit Card - 2%
 ATM + Debit Card - 13%
 Geographical coverage
- 5.2% villages are having a bank branch
Farmer’s coverage-
- Out of 119 million farmers, small and marginal
Farmers are 97.7 million (82.1 %)

Pre- requisites for the success of financial inclusion

 Appropriate Technology
 Appropriate and Efficient Delivery model
 Mainstream banks’ determination and involvement
 Strong Collaboration among Banks,Technical Service Provider,
BC Services
 Involvement of all.
 Especially the state administration at grass-root level
 Liberalization of BC model

Report of the financial inclusion in India (chairman: dr. c.

rangarajan, 2008)

Setting up of a National Rural Financial Inclusion Plan with a target of

providing access to financial services to at least 50 per cent (50.77 mn) of
excluded rural households by 2012 and the remaining by 2015.

 Encouraging SHGs in excluded regions, measures for urban

micro-finance and separate category of MFIs.

 RRBs to extend banking services to unbanked areas.

 Use of PACS and other co-operatives as BCs and co- operatives to

adopt group approach for financing excluded groups.
  Focus on Inclusive Growth
 Focus on Domestic Consumption and Investment
 Focus on increased Social Sector Spending
 Emphasis on giving benefits to poor clients
 Global (bigger) players looking Inward
 Reduction of Cost

Let us Give One Big Push to Financial

Inclusion!

Measures of financial inclusion

Common measure : % of adult population having bank a/c – By this

standard, 59% have accounts – 41% unbanked – In rural areas 39%
covered, 60% in urban areas – Unbanked population highest in NE
and Eastern regions. Exclusion from credit markets high : Number
of loan a/cs 14% of adult population – Coverage 9.5% in rural & 14%
in urban areas – Regional disparity large : 25% in Southern, 7% in
NER, 8% in Eastern, 9% in Central region – Of 203 million
households, 147 million in rural areas – 89 million farmer
households – 51% have no access to formal or informal credit –
73% have no access to formal credit – No data available for non-
farm & urban households.
Sources of credit – Non-institutional from 70.8% (1971) reduced to
42.9% (2002) – Post-1991 increased – Share of money-lenders in
rural areas increased from 17.5% (1991) to 29.6% (2002) –
Reduced from 40% (1981) to 25% (2002)
 Who are excluded
Marginal farmers, landless labour,oral lessees, self employed
unorganized sector, urban slum dwellers, migrants, ethnic
minorities, socially excluded groups, senior citizens, women NER,
Eastern & Central regions most excluded.

Remote, hilly & sparsely populated areas with poor infrastructure and
difficult physical access.
• Lack of awareness, low income, social exclusion, illiteracy.
• Distance from bank branch, branch timings, cumbersome
documentation/procedures, unsuitable products, language, staff
attitude are common reasons – Higher transaction cost.
• Ease of availability of informal credit.
• KYC – documentary proof of identity/ address
 Conclusion
Credit has done more to enrich nations than all the gold mines in the
world put together. Commercial banks act as spokes in the wheels
for drive to achieve 100 % financial inclusion in India. Financial
inclusion through Commercial banks shall wipe out the last tear
from the face of most deprived person on the Indian soil.
QUESTIONNAIRE
 Do you have bank account?
 Did you face any problem while opening account?
 For what purpose you use your account?
 Are you aware that what type of services RBI provide?
 Do you know about banking credit?
 Purpose of taking a loan:
o agriculture
o animal husbandry
o start own business
o marriage
o health and others
  For what reasons do you visit the bank?
 Deposit money
 withdrawing money
 entry in pass book
 depositing cheque
 obtaining loans
 repayment
 Why you initially did not possess a bank account?
 Lack of financial knowledge
 Low incomes and assets
 illiteracy/language
 Banking procedure are cumbersome
 Documents required for opening
 Unsuitable banking products/schemes
 Transaction costs
 Attitude of bank official
Are you aware and have you availed any of these services?
 Services Aware Availed
Depositing/Withdrawing cash
 Passbook
 Cheque Book
 Loans
 Overdraft
 General credit card
 ATM Card
 How many times do you visit the bank branch in a month to obtain the
above facilities?
 Once
 Twice
 Four-Five
 More than 5 times
THANK YOU!!!!