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Financial inclusion is the availability of banking services at an affordable cost to disadvantaged and low-income groups. In India the basic concept of financial inclusion is having a saving or current account with any bank. it includes loans, insurance services and much more.
One of the ways to enable the poor to come out of the clutches of poverty is to make available financial credit and micro savings. . Due to the sheer size of the population living in poverty. India is strategically significant in the global efforts to alleviate poverty and to achieve the Millennium Development Goal of halving the world¶s poverty by 2015.
The banks have been bestowed with several privileges. There has been expansion. especially of seeking public deposits on a highly leveraged basis. and consequently they should be obliged to provide banking services to all segments of the population. greater competition and diversification of ownership of banks leading to both enhanced efficiency and systemic resilience in the banking sector. on equitable basis .
. The first-ever Index of Financial Inclusion to find out the extent of reach of banking services among 100 countries. One of the reasons for opening new branches of Regional Rural Banks was to make sure that the banking service is accessible to the poor. India has been ranked 50.
. The study also wants to understand the working of FINO and to suggest a suitable model for the development of an institution for Kerala to provide financial inclusion.OBJECTIVES The primary objective is to understand the basic reasons of financial exclusion.
to the rural people. In most of the cases people with low income do not qualify for a loan. Most of the excluded consumers are not aware of the bank¶s products. Most of the banks need collateral for their loans. It is very difficult for a low income individual to find collateral for a bank loan. . The main reason for financial exclusion is the lack of a regular or substantial income. which are beneficial for them.
What we require is a business model and a delivery model Another important reason for the financial exclusion being the variety of services provide by the commercial banks to the needy people the need for value added services in their banking fields also became the order of the day . The second reason for financial exclusion is the absence of technical know how Now that technology has arrived. we have taken several initiatives to bring about financial inclusion.
Need to increase the bouquets of products The number of NFA opened present a very rosy picture. If the banks want customer acquisition and that poor customers transact with them. however. they must permit overdrafts in the accounts. . evaluation studies show that accounts once opened lie dormant as the poor do not have enough money to put in the deposit accounts.
. Banking to the poor is a viable business opportunity but costs and benefit exercise needs to be attempted by the banks to make financial inclusion congruent with their business models. Banks must view financial inclusion as a huge business opportunity and perfect their delivery models. Financial inclusion plans must be integrated with the normal business plans of the banks.
Once we analyze the factors of financial exclusion we can see that there are a lot of factors which hamper financial inclusion to the rural people . Operational Issues: Need for Intermediate Structure The banks need to examine the operational issues related to the BC model such as cash handling.
To solve all these problems in a greater way a Mumbai based financial inclusion company has started operations in the year 2006 .
.DISCUSSION AND METHODOLOGY Financial Inclusion Network & Operations Ltd. 2006 with the single objective of building technologies to enable financial institutions (FIs) to serve the under-served and the unbanked sector and also to service the technology requirements of entities engaged in servicing the bottom of pyramid customers. (FINO) was founded on 13th July.
illiterate populace & fool proof identity.5 million citizens are in rural India . The concept of FINO was germinated to overcome information gap. infrastructure. accessibility and reach. Over 90 percent of FINO¶s 18. high costs coupled with low returns and make financial services available to the unbanked.
At the time of its inception this company was looking around the work to accommodate the rural people in banking area In Mumbai alone the daily collection of fino is 2 Crores It works in the Asia¶s biggest slum in Mumbai that is Dharavi The customer called the FINO correspondent as Bandhu .
FINO is continuously enhancing its products and upgrading technology and scale to build capacity . FINO has a complete suite of Products to meet the Financial Inclusion needs of Financial Institutions. FINO Products are based on an in-house developed framework which combines World class proven biometric technologies with Standard Banking Architectures.
robustness and usability of it¶s solution in the government domain. FINO was easily able to prove the workability. . The initial foray into the Government sector was naturally NREGS which had a convergence of the banking segment with the government domain. The next step was disbursement of social security pensions to beneficiaries which was also successfully demonstrated and deployed. scalability.
. FINO was engaged as the IT consultant to the Government of India by the World Bank for the Cashless Health Insurance Scheme helping to set up the IT backbone for the scheme and participating in the complete scheme conceptualization and deployment.
FINO solution can be perfectly applied to various Government schemes. ± Benefit disbursal & collection ± For various government schemes like JNURM ± A tamper proof & verified MIS available within hours of disbursal/ collection ± Pension & Provident Funds ± Identification of beneficiary ± Identifying & removing Frauds . Some of these are discussed below.
± ± ± ± ± ± ± ± ± Ease for users Integrated payment cards Recharge at Banks & identified outlets Usage at network merchants thru smart card devices Omit unnecessary waste of infrastructure & disbursal costs Health Care Managing & monitoring specialty care like for HIV/ AIDS Ensuring correct medication disbursal Specific project(s) around credit bureau and identity management .
Cogent & Sagem. Communication gateways. BGS. Microsoft and many more for specific parts . IFLEX. Biometrics. Insurance. FINO has a strong and multi-dimensional R&D team with domain expertise in Banking. Smart Cards and Databases Partners with the best in each field ± IBM. Id In-house Expertise in the field of Large Backend systems. Security.
It is a good plat form for the development of financial inclusion in our rural areas Make the micro finance institution at present working in Kerala cam be legally registered with an apex body. Kerala state with high literacy rate. This institute can be given the charge of collecting disbursing all the services of the government The success story of Akshaya Kendra in Kerala can be sited here . having a good base for the development of Micro finance institutions .
CONCLUSIONS The importance of financial inclusion has been stressed from time and again by different authorities including RBI and Government of India There are certain basic factors which affect financial inclusion The Mumbai based organization is working with good spirit and solve almost all the problems affecting the financial inclusion The success story of FINO can be adopted in a state like Kerala for more financial inclusion .
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