Financial Incl Final

7/29/2019 Financial Incl Final

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Definition of Financial Inclusion

Financial Inclusion is theprocess of ensuringaccess to appropriate financial products and

services needed by all sections of the society in

general and vulnerable groups such as weakersections and low income groups in particular at an

affordable cost in a fair and transparent manner by

mainstream institutional players.

In advanced economies, Financial Inclusion is more about the

knowledge of fair and transparent financial products and a focus on

financial literacy.

In emerging economies, it is a question of both access to financial

products and knowledge about their fairness and transparency.


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Financial Inclusion Steps Taken in the

Past

1. Co-operative Movement

2. Setting up of State Bank of India

3. Nationalization of banks

4. Lead Bank Scheme

5. Service Area Approach

6. Self Help Groups

--- Still We Failed!


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Financial Exclusion

Why did We Fail?

Absence of Banking Technology

Absence of Reach and Coverage

Absence of Viable Delivery Mechanism

Not having a Business Model

Rich have no compassion for poor


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Why Are We Talking of

Financial Exclusion Now?Focus on Inclusive Growth

Banking Technology has arrived

Realisation that Poor is bankable


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What has been done so far

Business Correspondent (BC) Model for low cost

door step banking services in remote villages .

Board approved Financial Inclusion Plans (FIPs) ofbanks for 3 years,starting April 2010 .

Roadmap to cover villages of above 2000

population by march 2012


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Mandatory opening of 25 % of new branches in

unbanked rural centers.

Guidelines for convergence between ElectronicBenefit Transfer and FIP have been issued.

Pricing for banks totally freed . Interest rates on

advances totally deregulated.


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Approach adopted by RBI-

Achieving planned, sustained and structured financial

inclusion.

Technology-To be fixed first.

Multi-channel approach (Handheld devices, mobiles,

cards, Micro-ATMs, Branches, Kiosks,etc.)


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Front-end devices transactions must be seamlessly

integrated with the banks CBS.

Coverage- Ensure Transparency.

What is meant by BankingCoverage?A village is covered by banking service if either abank branch is present or a BC is physically

present or visiting that village.


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Financial literacy creates awareness to invest

more money, leads to liquidity crunch in the

market and helps in economic growthsimultaneously.

Availing credit facilities would help farmers to

produce more and that would increase GDP.

And small traders would also get benefit to

manufacture more units,that would increase

employment,in turn again a growth factor.


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Brings transparency in the system,which

leads to make trust of people and

investors also.

It would attract more FDI also.

It would uplift the standard of living.


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Documents

Financial Incl Final