FINANCIAL INCLUSION

Submitted by – Ankur(62)Manu Singh(69)Ritu Sangwan(84)Surbhi Gupta(106)Zeeshan()

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 areas.

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.

In the current budget the govt has earmarked a sum of Rs 100 Crores for Banks to open branches in un banked and difficult areas.

Biometric card based authentication devices, are being used by the bank’s Business Correspondents at the villages.

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Financial Inclusion

No -FrillSB A/c with In-

built OD

Financial Literacy

Micro Remittance

Micro Recurring Deposit

Micro Insurance

Micro CreditBoth groups and

individuals

The Strategy

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

Programme has emerged as the major micro-finance Programme in the country and is being implemented by commercial banks, RRBs and co-operative banks.

The State Level Bankers Committee has set up 134 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’s 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.

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• 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 FORWARD : 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

Focussed shift towards smart cards, mobile banking, internet banking & kiosk banking platforms.

Micro insurance & micro mutual funds to provide a complete basket of services.

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Particulars 2011-12 2012-13

Total Villages to be covered at the end of the year

25000 32000

Out of Which 2000+ Population Villages 4163 4163*

Out of Which Less than 2000 Population 20837 27837

Deployment of BLBUs (CSPs) 15000 20000

Total Customers9.0 10.0

Mission to Achieve

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

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Financial Inclusion

Banking services to 3159 villages having 2000+ population through branchless banking

Concurrently cover unbanked villages having less than 2000 population

Financial Literacy through 13 RSETIs

and 6 FLCCs

Micro Credit, Micro Insurance & Micro-Remittancethrough:Branchless Banking

How the bank is moving ahead

The Strategy

Extent of Financial Exclusion

1. 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%

2. Geographical coverage- 5.2% villages are having a bank branch

3. Farmers coverage-- Out of 119 million farmers, small and marginal farmers

are 97.7 million (82.1 %)

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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

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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.

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Global Meltdown - An Opportunity

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.

REASONS FOR EXCLUSION

• 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

1. Do you have bank account?2. Did you face any problem while opening account?3. For what purpose you use your account?4. Are you aware that what type of services RBI provide?5. Do you know about banking credit?6. Purpose of taking a loan:• agriculture• animal husbandry • start own business• marriage • health• others

7.. For what reasons do you visit the bank?• Deposit money• withdrawing money • entry in pass book • depositing cheque• obtaining loans• repayment

8. 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 officials

9. 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

10. 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 !!!!