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PROJECT REPORT
ON
Study on Financial Inclusion in Banks
A Comparison beteen SBI Bank and ICICI Bank
Submitted by
!AJ"I #$C%& NARASIN'"
Roll No( ) *+
T,&,B,!,S,
$N-ER T"E '$I-ANCE OF
PROF, !E'"A NAIR
Submitted to $ni.ersity o/ !umbai in partial /ul/ilment
O/ t0e re1uirements /or t0e aard o/ de2ree o/
BAC"E#OR OF !ANA'E!ENT ST$-IES
PAT$C% 'A#A CO##E'E OF CO!!ERCE 3 !ANA'E!ENT
SANTACR$4 5E67 !$!BAI) 8***99
:*;9):*;
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CERTIFICATE
This is to certify that the project titled =ST$-& ON FINANCIA#
INC#$SION IN BAN%S, A CO!PARSION BET>EEN SBI BAN% AN-
ICICI BAN%? is a true and satisfactory work done by !a@0i #ucky
Narasin207 T,&,B,!,S,7 3Roll No( *+. The reportI submitted to University of
Mumbai in partial fulfilment for the requirements of the award of the degree of
=BAC"E#OR OF !ANA'E!ENT ST$-IES?for the academic year :*;9)
:*;
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-EC#ARATION
I !AJ"I #$C%& NARASIN'"& student of atuck$!ala %ollege of
%ommerce ' Management& T,&,B,!,S,hereby declare that I have completed
the project on =ST$-& ON FINANCIA# INC#$SION IN BAN%S, A
CO!PARSION BET>EENSBI BAN% AN- ICICIBAN%?in the academic
year :*;9):*;
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AC%NO>#E-'E!ENT
It is my earnest and sincere desire and ambition to acquire profound knowledge in the study
of 3anking and Insurance. I have had considerable help to advice at very outset of this
roject. It is my pleasure to acknowledge the help and guidance that I had received from
those personnel and to thank them individually.
4irst of all& I e#pect my sincere thanks to 5r. 6Mrs.7 Meeta athade& I8% rincipal for having
given me a chance to undergo the project work.
Secondly& I convey my sincere thanks to the %ourse %o$ordinator& Mrs 3yshi anikar for her
valuable suggestions and co$operation which helped me to complete the project successfully.
The completion of the project is a milestone in the life of the management student and its
e#ecution is inevitable without the co$operation of the project guide. I am deeply grateful to
my project guide rof. Megha air for her valuable ideas& required suggestions and
encouragement for refining this project study.
4inally& I thank all the staff members and my friends for their valuable support and
contribution to my project.
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EEC$TIE S$!!AR&
4inancial Inclusion is delivery of banking services of an affordable cost to the vast sections of
disadvantaged and low income groups. (s banking services are in the nature of public good& it
is essential that availability of banking and payment services to the entire population without
discrimination is the prime objective of the public policy. The banking industry has shown
tremendous growth in volume and comple#ity during the last few decades. 5espite making
significant improvements in all the areas relating to financial viability& profitability and
competitiveness& there are concerns that banks have not been able to include vast segment of
the population& especially the underprivileged sections of the society& into the fold of basic
banking services. Internationally efforts are being made to study the causes of financial
e#clusion and designing strategies to ensure financial inclusion of the poor and
disadvantaged. The reasons may vary from country to country and hence the strategy could
also vary but lot of efforts are being made as financial inclusion can truly lift the financial
condition and standards oflife of the poorand the disadvantaged.
The objective of financial inclusion is to deliver banking services at an affordable cost to vast
sections of the low$income groups. Indian 4inance Minister has set the ball rolling by
articulating the !overnment9s decision to provide essential financial services like savings&credit& micro insurance and remittance& for all villages with population over :&111 by March
:1;:. Therefore& the present study attempts to find out the impact of financial inclusion on
daily wage earners.
(t the end of March :1;:& 1.
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IN-E
Sr, No, Title P2, No,
; 4inancial Inclusion 1= $ :>: @verview of S3I 3ank :< $ >A
> @verview of I%I%I 3ank >= $
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%*(T"/ ;
Introduction to4inancial Inclusion
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C0apter *;
FINANCIA# INC#$SION
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
Introduction and Meaning of 4inancial Inclusion
"volution of 4inancial Inclusion In India
The resent ' Indian Scenario
/easons for 4inancial Inclusion
Importance of 4inancial Inclusion
eed ' illars of 4inancial Inclusion
Scope of 4inancial Inclusion
Institutions ' 4inancial Inclusion
Initiatives for 4inancial Inclusion In India
/3I Initiatives for 4inancial Inclusion.
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
INTRO-$CTION(
The Dorld is moving at an amaEing pace. !lobaliEation has enabled the rise of global trade
leading to wealth generation in developed as well as developing countries. Dealth can be
created in any part of the world with a single click of the mouse. 5eveloping nations& like
India have immensely benefited from the globaliEing economy. Dealth has been pouring into
the country as investments 6both direct and institutional7. Dealth has been also generated by
Indian companies from global trade. This has directly affected the lives of many citiEens in
our country. 4or many& there has been a dramatic increase in the disposable income. The
savings& consumption and investment patterns have changed in the past few years. This has
meant that there has been an increase in demand for many financial services from different
financial firms.
Since& there have been progressive reforms in the financial sector allowing for better and
easier facilities and options to the consumer. (n increasing financially aware middle class
have realiEed the importance of financial services. 3anks have streamlined and rationaliEed
themselves to meet up with the changing demands of the people. 3anks have become partners
in growth for many offering them a safer and secure future.
*owever& not all the reforms in the financial services sector have still been able to bring in
the other half of IndiaFs population who are un$banked. There are many reasons that
percolated into the lower strata of the society. It is easy to blame the capitalist are obvious for
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this kind of financial e#clusion. The new surge in the economy has not yet growth for this
sort of income disparitiesG however& the inefficiencies and the inadequacies of the government
and its policies are equally at fault for lack of reduction in poverty. "ven after B1 years of
Indian independence& ;8> of our population is still illiterate 6let alone financially literate7 and
at least :BH of the population still lives under the poverty line. There are many statistics&
which goes on to prove that for even a developing nation India has a long way to go.
Most of the un$banked or financially e#cluded population of India live in rural areasG
nevertheless there is also a significant amount of the urban population of India who face the
same situation even with easy access to banks. Many of the financially e#cluded in these
areas are illiterates earning a meagre income just enough to sustain their daily needs. 4or such
people& banking still remains an unknown phenomena or an elitist affair.
It is easier for them to keep their money at their house or with some money lenders and easily
make immediate purchases 6which make up most of their e#penditure7 rather than to follow
the cumbersome process at banks. ( lot of the financially e#cluded populations are at the
mercy of money lenders or pawn shop owners. They should be made a part of the formal
banking structure so that they could also have the benefits that the others enjoy. 3y making
them financially inclusive we are making their financial position less volatile. (t the same
time& we are treating them on an equal par with other members of the population so that they
wouldnFt be denied of access to a basic service such as banking.
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Back2round0
ationalisation of banks in India in ;2B2 and ;2=1 marked a paradigm shift in the focus of
banking from class banking to mass banking. The multi$agency approach consisting of
cooperatives& regional rural banks 6//3s7& commercial banks& non$banking financial a keyinstitutions& etc. has played a key role in catering to the credit needs of rural population. Most
of these agencies have been acting not merely as financial intermediaries but also playing a
key developmental role. In the post nationalisation era& launching of S*!$3ank linkage
programme in ;22: and its success as one of the largest micro credit programmes in the
world could be considered as a landmark programme can be regarded as the most potent
initiative since independence for delivering financial services to the poor in a sustainable
manner.
5espite large scale deepening and widening of formal as also informal credit delivery system&
it is estimated that ?;& :11?7 to the total adult population was only
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-EFINITION(
-e/ined by RBI(
4inancial Inclusion Is the process of ensuring access to appropriate and services needed by
vulnerable groups such as weaker sections and low income groups at an affordable cost in a
fair and transparent manner by main stream Institutional players
4inancial Inclusion& broadly defined& refers to universal access to a wide range of financial
services at a reasonable cost. These include not only banking products but also other financial
services such as insurance and equity products. *ousehold access to financial services is
depicted
4inancial inclusion denotes delivery of financial services at an affordable cost to the vast
sections of the disadvantaged and low$income groups. The various financial service1s include
credit& savings& insurance and payments and remittance facilities. The objective of financial
inclusion is to e#tend the scope of activities of the organiEed financial system to include
within its ambit people with low incomes.
!EANIN'(
4inancial inclusion is delivery of banking services at an affordable cost to the vast sections of
disadvantaged and low income groups. Unrestrained access to public goods and services is
thesine qua nonfor an open and efficient society. 3anking services are in the nature of public
good& it is essential that availability of banking and payment services to the entire population
without discrimination is the prime objective of the public policy.
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EO#$TION OF FINANCIA# INC#$SION IN IN-IA
olicy makers have grabbed with the issue of reducing the scope of informal sector since
colonial times. icholson report 6;=2
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(gricultural 5ebt /elief Scheme and 4inancial Sector /eforms
S*!$3ank +inkage as the most suitable model in Indian conte#t a8c to (3(/5
:111$/eforms sharply focused on (gricultural credit
doubling the flow of agricultural credit K implementation of agricultural credit package
(nnual Special (gricultural %redit lan
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ON TRAC%S OF N-A 'OERN!ENT
4inancial inclusion is e#pected to make significant changes in the economy& especially the
rural economy& which is e#pected to witness a revolution in availability of financial
instruments mainly because of which will operate through the banking system will also
ensure regularity of flow of liquidity in households and therefore opportunities for
investment.
P!J-& No, o/ Accounts 4ero balanced accounts
Public sector banks 2.;: H
Pri.ate sector banks :.11 = ?2.>H
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T"E PRESENT SCENARIO FINANCIA# INC#$SION
4inancial inclusion& in the sense of e#tending banking products at an affordable cost to the
vast sections of disadvantaged and low income groups& is not new to India. 4or more than
three decades after nationaliEation of major commercial banks in ;2B2& Indian banking has
shown tremendous growth in volume and outreach resulting in increase in the total number of
branches of scheduled commercial banks from =&>:; in the year ;2B2 to B=&B=; as at the end
of March :11B and reduction of the average population per branch office from B?&111 to
;B&111 during the same period. ublic sector banks were in the forefront of reaching out to
sections that were once neglected and designing new& innovative loan products for agriculture
and small$scale industries sectors is an outstanding e#ample in this regard.
There are& however& concerns that banks have still not been able to reach a vast segment of
the population and provide them with basic banking services. !rowth has also not been
uniform across all the regions8 States of the country and there still continue to be wide gaps in
the availability of banking services in the rural areas. Dhile from the policy angle none of the
earlier measures aimed at broad basing their clientele has been withdrawn& the banks might be
laying somewhat less emphasis on inclusive practices in view of the thrust on profitability.
3anks are working overtime to utilise their quota of branch licences before the end of this
financial year. It is good to see some large banks getting their act together to open fully$
networked branches and (TMs simultaneously across the country. @pening many branches
and (TMs on the same day requires meticulous strategy and well$coordinated efforts& which
by no means is a small achievement. This is a great effort by the banks to promote financial
inclusion& which is critical to promote equitable economic growth& as a large part of the
country is under banked.
( 4inancial Inclusion survey was conducted by Dorld 3ank in India between (pril$)une&:1;; which included face to face interviews of >&< per cent of people had formal accounts
versus the global average of
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IN-IAN SCENARIO) FINANCIA# INC#$SION
The bank nationaliEation in India marked a paradigm shift in the focus of banking as it was
intended to shift the focus from class banking to mass banking. The rationale for creating
/egional /ural 3anks was also to take the banking services to poor people. The branches of
commercial banks and the //3s have increased from =>:; in the year ;2B2 to B=&:=:
branches as at the end of March :11
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REASONS FOR FINANCIA# INC#$SION
There are a variety of reasons for 4I. In remote& hilly and sparsely populated areas with poor
Infrastructure& physical access itself acts as a deterrent.4rom the demand side& lack of
awareness& low$income8assets& social e#clusion& illiteracy act as barriers. 4rom the supply
side& distance from branch& 3ranch timings& cumbersome documentation and procedures&
unsuitable products& language& staffs (ttitudes are common reasons for e#clusion. (ll these
result in higher transaction cost apart from rocedural hassles. @n the other hand& the ease of
availability of informal credit sources makes this opular even if costlier. The requirements of
independent documentary proof of identity and address can be a very important barrier in
having a bank account especially for migrants and slum dwellers.
'ender issues((ccess to credit is often limited for women who do not have& or cannot
hold title to assets such as land and property or must seek male guarantees to borrow.
A2e /actor(4inancial service providers usually target the middle of the economically
active population& often overlooking the design of appropriate products for older or
younger potential customers.
#imited literacy(+imited literacy& particularly financial literacy& i.e.& basic mathematics&
business finance skills as well as lack of understanding often constrains demand for
financial services.
Place o/ li.in2((lthough effective distance is as much about transportation infrastructure
as physical distance& factors like density of population& rural and remote areas& mobility of
the population 6i.e.& highly mobile people with no fi#ed or formal address7& insurgency in
a location& etc.& also affect access to financial services.
Psyc0olo2ical and cultural barriers(The feeling that banks are not interested to look
into their cause has led to self$e#clusion for many of the low income groups. *owever&
cultural and religious barriers to banking have also been observed in some of the
countries.
#e2al identity(+ack of legal identities like identity cards& birth certificates or written
records often e#clude women& ethnic minorities& economic and political refugees and
migrant workers from accessing financial services.
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Social security payments(In those countries where the social security payment system is
not linked to the banking system& banking e#clusion has been higher.
Bank c0ar2es(In most of the countries& transaction is free as long as the account has
sufficient funds to cover the cost of transactions made. *owever& there are a range of
other charges that have a disproportionate effect on people with low income.
Terms and conditions(Terms and conditions attached to products such as minimum
balance requirements and conditions relating to the use of accounts often dissuade people
from using such products8services.
Type o/ occupation( Many banks have not developed the capacity to evaluate loan
applications of small borrowers and unorganised enterprises and hence tend to deny such
loan requests.
#e.el o/ income(4inancial status of people is always important in gaining access to
financial services. "#tremely poor people find it difficult to access financial services even
when the services are tailored for them. erception barriers and income discrimination
among potential members in group$lending programmes may e#clude the poorer members
of the community.
Attracti.eness o/ t0e product(3oth the financial services8products 6savings accounts&
credit products& payment services and insurance7 and how their availability is marketed
are crucial in financial inclusion.
The major reasons were8are (bsence of TechnologyG (bsence of reach and coverageG (bsence
of Liable 5elivery MechanismG not having an appropriate 3usiness model and /ich have no
compassion for poor.
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I!PORTANCE OF FINANCIA# INC#$SION IN IN-IA
The policy makers have been focusing on financial inclusion of Indian rural and semi$rural
areas primarily for three most important pressing needs0
Creatin2 a Plat/orm /or Inculcatin2 t0e "abit to Sa.e !oney( The lower income
category has been living under the constant shadow of financial duress mainly because of
the absence of savings. The absence of savings makes them a vulnerable lot. resence of
banking services and products aims to provide a critical tool to inculcate the habit to save.
%apital formation in the country is also e#pected to be boosted once financial inclusion
measures materialiEe& as people move away from traditional modes of parking theirsavings in land& buildings& bullion& etc.
Pro.idin2 Formal Credit A.enues(So far the unbanked population has been vulnerably
dependent of informal channels of credit like family& friends and moneylenders.
(vailability of adequate and transparent credit from formal banking channels shall allow
the entrepreneurial spirit of the masses to increase outputs and prosperity in the
countryside. ( classic e#ample of what easy and affordable availability of credit can do
for the poor is the micro$finance sector.
Plu2 'aps and #eaks in Public Subsidies and >el/are Pro2rammes(( considerable
sum of money that is meant for the poorest of poor do not actually reach them. Dhile this
money meanders through large system of government bureaucracy much of it is widely
believed to leak and is unable to reach the intended parties. !overnment is therefore&
pushing for direct cash transfers to beneficiaries through their bank accounts rather than
subsidiEing products and making cash payments. This laudable effort is e#pected to
reduce governmentFs subsidy bill 6as it shall save that part of the subsidy that is leaked7
and provide relief only to the real beneficiaries. (ll these efforts require an efficient and
affordable banking system that can reach out to all. Therefore& there has been a push for
financial inclusion.
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NEE- OF FINANCIA# INC#$SION IN IN-IA
5A 'RAP"ICA# REPRESENTATION6
PI##ARS OF FINANCIA# INC#$SION
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SCOPE OF FINANCIA# INC#$SION
The scope of financial inclusion can be e#panded in two ways.
Through state$driven intervention by way of statutory enactments 6 for instance the US
e#ample& the %ommunity /einvestment (ct and making it a statutory right to have bank
account in 4rance7.
Through voluntary effort by the banking community itself for evolving various strategies
to bring within the ambit of the banking sector the large strata of society.
Dhen bankers do not give the desired attention to certain areas& the regulators have to step in
to remedy the situation. This is the reason why /eserve 3ank of India is placing a lot of
emphasis on financial inclusion. In India the focus of the financial inclusion at present is
confined to ensuring a bare minimum access to a savings bank account without frills& to all.
Internationally& the financial e#clusion has been viewed in a much wider perspective. *aving
a current account 8 saving account on its own& is not regarded as an accurate indicator of
financial inclusion. There could be multiple levels of financial inclusion and e#clusion. (t
one e#treme& it is possible to identify the super$includedF& i.e.& those customers who are
actively and persistently courted by the financial services industry& and who have at their
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disposal a wide range of financial services and products. (t the other e#treme& we may have
the financially e#cluded& who are denied access to even the most basic of financial products.
In between are those who use the banking services only for deposits and withdrawals of
money. 3ut these persons may have only restricted access to the financial system& and may
not enjoy the fle#ibility of access offered to more affluent customers.4inancial Inclusion
should include access to financial products and services like&
3ank accounts K check in account
Immediate %redit
Savings products
/emittances ' ayment services
Insurance K *ealthcare
Mortgage
4inancial advisory services
"ntrepreneurial credit
INSTIT$TIONS AN- FINANCIA# INC#$SION
4inancial Institutions& both large and small have an important role to play in financial
inclusion. Dith their organiEed structure and effective management larger financial
institutions could act as mentors for small financial services firm by ensuring a strong
financial backing.
Commercial Banks( %ommercial banks could act as an important part of the process to
achieve full financial inclusion. "specially with simplified savings bank accounts
6including no$frills account7& rela#ed ,-% procedures& primary sector lending and even
microfinance.
Cooperati.e Banks(The Urban and /ural cooperative banks could cater to populationsthat are generally neglected by the commercial banks. Their position allows them to reach
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out to the people far easier than the more formal commercial banks. Since they are
operated by the members of the banks themselves& there would be more involvement from
the people of such cooperatives.
Re2ional Rural Banks(Through priority sector lending& ,%%s and !%%S the //3s
could ensure a steady flow of credit to the rural poor especially the marginal farmers. The
//3s like the commercial banks can deal with the agencies like !@s who are interested
in helping out the poor and the weaker sections.
Non)Bankin2 Financial Companies 5NBFCS6( The 34%s could include both large
and small financial firms which provide financial services. They could offer specific
financial products to the poor and low income people such as micro$insurance& micro$
credit& etc. The 34%s could create financial awareness among the people by not only
offering alternative financial services but also spreading financial literacy by providing
financial advices.
Post O//ice Sa.in2s Bank( These along with their e#tensive network could offer wide
variety of small and micro financial services to the people. The ost @ffice Savings bank
could utilise their staff to deliver door$to$door service to the people.
!icro Finance Institution 5!FIs6( Micro 4inance Institutions or M4Is are created withthe specific aim of e#tending financial services to the poor and the weaker sections of the
populations. ( M4I could be independent or as in most cases are promoted by !@s&
government agencies& 34%s& commercial banks and other institutions. Micro 4inance
Institutions have so far been the most successful at ensuring basic financial services to the
unbanked sections of the populations. (long with the S*! movement& the M4Is has
enabled the wealth generation in many underdeveloped rural as well as neglected urban
areas in India.
Non)'o.ernmental Or2aniDations 5N'Os6(!@s could provide financial assistance to
the poor and the weaker sections through !@ promoted M4Is or by providing financial
advice. !@s working the poor and the economically deprived can more closely analyse
their spending patterns and credit requirements. %ommercial banks and other large
financial agencies can work closely with !@s to ensure that the dealings with the poor
and the weaker sections turn out to be a fruitful activity not only for the people but also
for the lending agencies.
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INITIATIES FOR FINANCIA# INC#$SION IN IN-IA
4inancial inclusion in the Indian conte#t implies the provision of affordable financial
services& viE.& access to payments and remittance facilities& savings& loans and insurance
services by the formal financial system to those who tend to be e#cluded. In order to e#pand
the credit and financial services to the wider sections of the population& a wide network of
financial institutions has been established over the years. The organised financial system
comprising commercial banks& regional rural banks 6//3s7& urban cooperative banks
6U%3s7& primary agricultural credit societies 6(%S7 and post offices caters to the needs of
financial services of the people. 3esides& M4Is& self$help groups 6S*!s7 also meet the
financial service requirements of the poorer segments. 4urthermore& development to the
institutional framework in recent years has focussed on new models of e#panding financialservices involving credit dispensation using multiple channels such as civil society
organisations 6%S@s7& nongovernment organisations 6!@s7& post offices& farmersF clubs& and
panchayats as business facilitators8correspondents. Specific financial instruments8products
were also developed in order to promote financial inclusion.
The broad strategy for financial inclusion in India in recent years comprises the following
elements0
"ncouraging penetration into unbanked and backward areas and encouraging agents and
intermediaries such as !@s& M4Is& %S@s and business correspondents 63%s7 4ocussing on a decentralised strategy by using e#isting arrangements such as State +evel
3ankersF %ommittee 6S+3%7 and district consultative committee 65%%7 and
strengthening local institutions such as co$operatives and //3s Using technology for furthering financial inclusion
(dvising banks to open a basic banking no frillsF account
"mphasis on financial literacy and credit counselling
%reating synergies between the formal and informal segments
The objective of bringing financially e#cluded people within the fold of the banking sector
received renewed emphasis in :11
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(s the central bank of the country& the /eserve bank of India has taken steps to ensure
financial inclusion in the country. It has tried to make banking more attractive to citiEens by
allowing for easier transactions with banks. In :11? /3I appointed an internal group to look
into ways to improve 4inancial Inclusion in the country. It came out with a report in :11 billion in March :1;;
O.ercomin2 #an2ua2e Barrier( +arge sections of the Indian population are not familiar
with "nglish and *indi& the languages mostly used in bank forms. 3anks are therefore
required to provide forms pertaining to account opening disclosure etc. in the regional
language as well.
Simpli/ication o/ %no &our Customer 5%&C6
Norms and 'uidelines( To open a /egular (ccount& a customer has to provide
documents on 6a7 roof of identity& and 6b7 roof of address& as per /3I guidelines. 3ut
customers face difficulties in providing the requisite documentation for opening regular
bank accounts. (lso& most rural inhabitants do not have any of the identity documents that
are required for account opening and compliance with ,now -our %ustomer 6,-%7
norms. 4or that reason& the account opening process has been simplified for people who
intend to keep balances not e#ceeding /s.
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Financial #iteracy Pro2ram( 4inancial +iteracy rograms have been initiated by /3I to
improve financial education and literacy so that people will become aware about the basic
financial terms and services provided by banks and financial institutions. /3I provides
support to 4inancial +iteracy and %redit %ounseling %enterFs 64+%%s7.The broadobjective of the 4+%%s will be to provide free financial literacy8education and credit
counseling.
Simpli/ied branc0 aut0oriDation( Dith the objective of facilitating uniform branch
growth& /3I has permitted banks to freely open branches in tier III to tier LI centres with
population less than
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%isan Credit Cards 5%CCs6( ,isan %redit %ards to small time farmers have been issued
by banks. (s on March :1;:& the total number of ,%%s issued has been reported as >1
million with a total amount outstanding to the tune of /s.:& 1B= billion. The figure&
respectively& were :A million and /s.;& B11 billion on March& :1;;.
Role o/ 'o.ernment
State !overnments can play a proKactive role in facilitating 4inancial Inclusion. Issuing
official identity documents for opening accounts& creating awareness and involving district
and block level function arise in the entire process& meeting cost of cards and other devices
for pilots& undertaking financial literacy drives are some of the ways in which the State anddistrict administration have involved themselves.
India post is also looking to diversify its activities and leverage on its huge network of post
offices& the postmanFs intimate knowledge of the local population and the enormous trust
reposed in him. 3anks are entering into agreements with India post for using post offices as
agents for branchless banking.
Initiati.e o/ State 'o.ernment)Pictures o/ tec0nolo2y at ork,
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%*(T"/ :
@verview of S3I 3ank'
I%I%I 3ank
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C0apter *:
OERIE> OF SBI
@verview
Introduction
Lision& Mission ' Lalues
*istory of the bank
SD@T analysis of S3I 3ank
Initiatives of S3I for 4inancial Inclusion
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
T"E BAN%ER TO EER& IN-IAN
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OERIE>(
State 3ank of India is the largest and one of the oldest commercial bank in India& in e#istence
for more than :11 years. The bank provides a full range of corporate& commercial and retail
banking services in India. Indian central bank namely /eserve 3ank of India 6/3I7 is the
major shareholder of the bank with A
billion with the public holding 6other than promoters7 at ?1.>H. S3I has the largest branch
and (TM etwork spread across every corner of India. The bank has a branch network of
over ;. @f this& :2.H during the last five years.
5uring the same period& net interest margin 6IM7 of the bank has gone up from as low as
:.2H in 4-1: to >.?1H in 4-1B and currently is at >.>:H bank. The introduction of this
scheme leads to strong protests and S3I faced with a prospect of losing its talented employees
and be left with less efficient employees 6:1;:7. Ouality is our essence and we& at State 3ank
of India& have always stressed on the Oualitative aspect. %onsequently in this run for quality&
quantity has always pursued us. De look forward to reaching the Eenith and reaffirm our
commitment to the process of sound nation$building.
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INTRO-$CTION
State Bank o/ India 5SBI6& with a :11 year history& is the largest commercial bank in India in
terms of assets& deposits& profits& branches& customers and employees. The !overnment of
India is the single largest shareholder of this 4ortune
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E!P#O&EES
S3I is one of the largest employers in the country having ::=&:2B employees as on >;st
March :1;>& out of which there were ?B&=>> female employees 6:;H7 and :&?1: disabled
employees 6;H7. @n the same date& S3I had ?>&
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CORE CO!!IT!ENTS ) O$R STREN'T"
"motion
5iscipline
5uty
o discrimination
Ouality
!ive respect
Self$respect
Truth
%ollective Materialism
(bsolute *onesty
>"AT( ( commitment of State 3ank of India to the genuine needs and rights of anybody '
everybody $ 3e it to a depositor& Share *older& consumer.... all business associates and Sahara
India 4amily Members.
NEE-( India needs effective consumer protection and protection of workers9 genuine rights.
There are various agencies& promising protection ' action. 3ut no e#ternal body can provide
justice unless the company becomes 9OU(+IT- %@S%I@US9 DIT* ST/I%T+- @
5IS%/IMI(TI@ @+I%- (5 )USTI%" %@S%I@US"SS as its very dominating
nature.
!OTTO( De not only believe but practice @ 5IS%/IMI(TI@& )USTI%" ' *I!*OU(+IT- $ means enthusiastic& productive performance of duty Q,(/T(L-(9 towards the
consumer9& workers9 genuine satisfaction.
AI!( To provide justice $ be it a matter of the tiniest imperfection or injustice in our
%@MMITM"T $ products or services. 5irect or indirect& short term or long term
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ISION7 !ISSION 3 A#$ES
ision Statement(
Q3ecome first in %ustomer SatisfactionQ
!ission Statement(
To be prompt& polite and proactive with our customers.
To speak the language of young India.
To create products and services that help our customers achieve their goals.
To go beyond the call of duty to make our customers feel valued.
To provide service even in the remotest part of our country.
To offer e#cellence in services to those abroad as much as we do to those in India.
To imbibe state of the art technology to drive e#cellence.
alues Statement(
To always be honest& transparent and ethical.
To respect our customers and fellow associates.
To be knowledge driven.
To learn and share our learning.
ever take the easy way out.
5o everything we can to contribute to the community we work in.
To nurture pride in India
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"ISTOR& OF SBI BAN%
The origin of the State 3ank of India goes back to the first decade of the nineteenth centurywith the establishment of the 3ank of %alcutta in ;=1B in %alcutta. Three years later the bank
received its charter and was reKdesigned as the 3ank of 3engal 6: )anuary ;=127. ( unique
institution& it was the first jointKstock bank of 3ritish India sponsored by the !overnment of
3engal. The 3ank of 3ombay 6;< (pril ;=?17 and the 3ank of Madras 6; )uly ;=?>7
followed the 3ank of 3engal. These three banks remained at the ape# of modern banking in
India till their amalgamation as the Imperial 3ank of India on :A )anuary ;2:;. rimarily
(ngloKIndian creations& the three presidency banks came into e#istence either as a result of
the compulsions of imperial finance or by the felt needs of local "uropean commerce and
were not imposed from outside in an arbitrary manner to moderniEe India9s economy. Their
evolution was& however& shaped by ideas culled from similar developments in "urope and
"ngland& and was influenced by changes occurring in the structure of both the local trading
environment and those in the relations of the Indian economy to the economy of "urope and
the global economic framework.
The State 3ank of India& the countryFs oldest bank and a premier in terms of balance sheet
siEe& number of branches& market capitaliEation and profits is today going through a
momentous phase of change and transformation the two hundred year old public sector
behemoth is today stirring out of its public sector legacy and moving with an ability to give
the private and foreign banks a run for their money.
The bank is entering into many new businesses with strategic tie ups ension 4unds& !eneral
Insurance& %ustodial Services& rivate "quity& Mobile 3anking& oint of Sale Merchant
(cquisition& (dvisory Services& structured products etc. "ach one of these initiatives having a
huge potential for growth.
The bank is forging ahead with cutting edge technology and innovative new banking models&
to e#pand its rural banking base& looking at the vast untapped potential in the hinterland and
proposes to cover ;11&111 villages in the ne#t two years. (t the end March& :1;;& the total
number of branches was ;>&
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S>OT ANA#&ISIS OF SBI
STREN'T"S(
S3I is the largest bank in India in terms of market share& revenue and assets.
(s per recent data the bank has more than ;>&111 outlets and :: countries engaging currency trade all over the world.
The bank has a merged with State 3ank of Saurashtra& State bank of Indore and the bank
is planning to go further acquisition in the current 4-:1;:.
S3I has the first mover advantage in commercial banking service.
S3I has recently changed its vision and mission statements showing a sign of inclination
towards new age banking services.
*as a separate act for itself. Thus& a special privilege.
3iggest branch network in the country
4irst public sector to move to %3S.
>EA%NESS(
*uge amount of staff.
"#pected to e#perience high level of attrition due to retirement of its top management.
Still carries the image of the old !ovt. sector bank.
+ack of proper technology driven services when compared to private banks.
"mployees show reluctance to solve issues quickly due to higher job security and
customersF waiting period is long when compared to private banks.
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The banks spend a huge amount on its rented buildings.
S3I has the largest number of employees in banking sector& hence the bank spends a
considerable amount of its income in employeeFs salary compensation.
In spite of moderniEation& the bank still carries the perception of traditional bank to new
age customers.
S3I fails to attract salary accounts of corporate and many government sector employees
salary accounts are also shifted to private bank for ease of operations unlike before.
OPPORT$NITIES(
S3IFs merger with five more banks namely State 3ank of *yderabad& State bank of
atiala& State bank of 3ikaner and )aipur& State of bank of Travancore and State bank of
Mysore are in approval stage.
Mergers will result in e#pansion of market share to defend its number one position.
S3I is planning to e#pand and invest in international operations due to good inflow of
money from (sian Market.
Since the bank is yet to moderniEe few of its banking operations& there is a better scope of
using advanced technologies and software to improve customer relations.
-oung and talented pool of graduates and 3 schools are in rise to open new horiEon to so
called old government bankJ.
Make better use of its %/M.
T"REATS(
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et profit of the year has decline from 2;BB.1< in the year 4- :1;1 to A&>A1.>< in the
year 4-:1;;.
This shows the reduce in market share to its close competitor I%I%I.
@ther private banks like *54%& (RIS bank etc.
45Is allowed in banking sector is increased to ?2H & this is a major threat to S3I as
people tend to switch to foreign banks for better facilities and technologies in banking
service.
@ther governments banks like 3& (ndhra& (llahabad bank and Indian bank are
showing
%ustomer prefer to switch to private banks and financial service providers for loans and
mortgages& as S3I involves stringent verification procedures and take long time for
processing.
INITIATIES OF SBI FOR FINANCIA# INC#$SIONSBI #A$NC"ES TIN& S!A## ACCO$NTS
The objective of State 3ank of India in the present day conte#t is to ensure financial inclusion
of the whole population irrespective of areas and sectors. The 9inclusion9 phenomenon cannot
be confined to few pockets of area and people. S3I9s answer to financial inclusion is the 9S3I
Tiny project9& which can in simple terms be defined as a 3ank in a 3o#J. The entire set up
consists of a cell phone which serves as @S machine& a finger print reader and a tiny printer&
all of which can be packed into a ;1 inch by ;1 inch bo#. (ll these work on rechargeable
batteries. S3I Tiny accounts 6no frills accounts7 are opened on the smart cards. The smart
card is akin to an e$purse and stores information about the customer& the account number&
finger prints as well as the balance in the account. The smart card can handle up to ;B
accounts including loan accounts. This card is highly secure as it works on the bio$metric
validation of the customer. The card works on the /adio 4requency Identification 6/4I57
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technology. S3I is today using this technology in our smart cards which work in conjunction
with a mobile or a hand held connectivity device which works on ear 4ield %ommunication
Technology 64%7. Transactions are possible both in online and off line mode. It also permits
the real time updating of balances in the card. 3y issuing a smart card to the rural customer&
the cost of the transaction is reduced because we are dispensing with paper based transactions
and shifting the actual operation of transacting on the account away from the branch to
%ustomer Service oint 8 rovider 6%S7 at the outlet in the location of the rural customer
EFFORTS OF SBI
'RO$P
FINANCIA# INC#$SION As on ;,*,:*;9 As on *,*+,:*;9
umber of 3% outlets
;:.12
:2&?;?
4inancial +iteracy %entres 64+%s7
o. of 4+%s
o. of outdoor activities conducted
o. of persons participated in outdoor activities
o. of persons converted to customers
:;:
:=&=A2
;A&>2&>;>
:&B:&:A;
:;2
>:&B2A
:;&B:&=;=
>&
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FINANCIA# INC#$SION( "I'"#I'"TS FOR T"E C$RRENT &EAR
The 3ank has set up ?
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C0apter *
OERIE> OF ICICI
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
@verview
Introduction
Lision& Mission' Lalues
*istory of the bank
SD@T analysis of I%I%I 3ank
Initiatives of I%I%I bank for 4inancial Inclusion
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
%"A&AA# AAP%A
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OERIE>(
ICICI Bankis an Indian multinational banking and financial services company
headquartered in Ladodara. (s of :1;? it is the second largest bank in India in terms of assets
and market capitaliEation. It offers a wide range of banking products and financial
services for corporate and retail customers through a variety of delivery channels and
specialiEed subsidiaries in the areas of investment banking& life& non$life insurance& venture
capital and asset management. The 3ank has a network of >&=11 branches and
;;&;B:(TMs in India& and has a presence in ;2 countries. I%I%I 3ank is one of the 3ig 4our
banks of India& along with State 3ank of India& unjab ational 3ank and 3ank of 3aroda.
The bank has subsidiaries in the United ,ingdom& /ussia& and %anadaG branches in UnitedStates& Singapore& 3ahrain& *ong ,ong& Sri +anka& Oatar and 5ubai International
4inance %entreG and representative offices in United (rab "mirates& %hina& South (frica&
3angladesh& Thailand& Malaysia and Indonesia. The company9s U, subsidiary has also
established branches in 3elgium and !ermany. In March :1;>& @peration /ed Spider showed
high$ranking officials and some employees of I%I%I 3ank involved in money laundering.
(fter a government inquiry& I%I%I 3ank suspended ;= employees and faced penalties from
the /eserve 3ank of India in relation to the activity. The 3ank is a financial services group
providing a range of banking and financial services including commercial banking& retail
banking& project and corporate finance& working capital finance& insurance& venture capital
and private equity& investment banking& broking and treasury products and services. Its
operating segments include /etail 3anking& Dholesale 3anking& Treasury& @ther 3anking&
+ife Insurance& !eneral Insurance and @thers. /etail banking includes e#posures of the 3ank&
which satisfy the criteria of orientation& product& granularity and low value of individual
e#posures for retail e#posures laid down in 3asel %ommittee on 3anking Supervision
document International %onvergence of %apital Measurement and %apital Standards0 (
/evised 4ramework. Dholesale banking includes all advances of the 3ank to trusts&
partnership firms& companies and statutory bodies. Treasury includes the entire investment
and derivative portfolio of the 3ank.
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To assist in the creation& e#pansion and moderniEation of private concerns
To encourage the participation of internal and e#ternal capital in the private concerns
To encourage private ownership of industrial investment
I%I%I 3ank9s !reen initiative is to make healthy environment in the organiEation i.e. to
create intrapersonal skills among the customer and understanding between employees of
the organiEation.
INTRO-$CTION(
I%I%I 3ank was originally promoted in ;22? by I%I%I +imited& an Indian financial
institution& and was its wholly$owned subsidiary. I%I%I9s shareholding in I%I%I 3ank was
reduced to ?BH through a public offering of shares in India in fiscal ;22=& an equity offeringin the form of (5/s listed on the -S" in fiscal :111& I%I%I 3ank9s acquisition of 3ank of
Madura +imited in an all$stock amalgamation in fiscal :11;& and secondary market sales by
I%I%I to institutional investors in fiscal :11; and fiscal :11:. I%I%I was formed in ;2
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The merger would enhance value for I%I%I shareholders through the merged entity9s access to
low$cost deposits& greater opportunities for earning fee$based income and the ability to
participate in the payments system and provide transaction$banking services.
The merger would enhance value for I%I%I 3ank shareholders through a large capital base
and scale of operations& seamless access to I%I%I9s strong corporate relationships built up
over five decades& entry into new business segments& higher market share in various business
segments& particularly fee$based services& and access to the vast talent pool of I%I%I and its
subsidiaries.
In @ctober :11;& the 3oards of 5irectors of I%I%I and I%I%I 3ank approved the merger of
I%I%I and two of its wholly$owned retail finance subsidiaries& I%I%I ersonal 4inancialServices +imited and I%I%I %apital Services +imited& with I%I%I 3ank. The merger was
approved by shareholders of I%I%I and I%I%I 3ank in )anuary :11:& by the *igh %ourt of
!ujarat at (hmadabad in March :11:& and by the *igh %ourt of )udicature at Mumbai and
the /eserve 3ank of India in (pril :11:. %onsequent to the merger& the I%I%I group9s
financing and banking operations& both wholesale and retail& have been integrated in a single
entity.
I%I%I 3(, offers a wide range of banking products and financial services to corporate and
retail customers through a variety of delivery channels and through its specialiEed
subsidiaries and affiliates in the areas of investment banking& life and non$life insurance&
venture capital and asset management or wealth management. The 3ank currently has its
subsidiaries in the United ,ingdom& /ussia and %anada& branches in Unites States&
Singapore& 3ahrain& *ong ,ong& Sri +anka& Oatar and 5ubai International 4inance %entre
and representative offices in United (rab "mirates& %hina& South (frica& 3angladesh&
Thailand& Malaysia and Indonesia. The bankFs U, subsidiary has established branches in
3elgium and !ermany
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ISION7 !ISSION3 A#$ES
ision(
To be the dominant +ife& *ealth and ensions player built on trust by world$class people and
service. This we hope to achieve by0
Understanding the needs of customers and offering them superior products and serviceG
+everaging technology to service customers quickly& efficiently and convenientlyG
5eveloping and implementing superior risk management and investment strategies to
offer sustainable and stable returns to our policyholdersG
roviding an enabling environment to foster growth and learning for our employeesG
(nd above all& building transparency in all our dealings.
!ission(
@ur mission is to become the best 9%ustomiEable "$+earning and (pplications %ompany9 in
terms of quality& cost and delivery. The fundamental goal of the company is to raise the
practice as well as level of collaborative rapid "$+earning and (pplications 5evelopment.
Through our products& services ' solutions we facilitate the process of knowledge sharing
smoothly and in a cost effective manner.
alues(
The success of the company will be founded in its unflinching commitment to < core values $$
Integrity& %ustomer 4irst& *umility& assion and 3oundary$less. "ach of the values describes
what the company stands for& the qualities of our people and the way we work. "very member
of the I%I%I rudential team is committed to the < core values and these values shine forth in
all we do.
Boundary lessK I will treat organiEation agenda as paramount
Inte2rityK Dhat I do when nobody is watching me
"umilityK @penness to learn a change
Customer FirstK Service e#cellence towards Internal and "#ternal %ustomers
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PassionK 5emonstrates infectious energy and enthusiasm
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"ISTOR& OF ICICI BAN%
I%I%I 3ank was established by the Industrial Credit and In.estment Corporation o/ India
5ICICI6& an Indian financial institution& as a wholly owned subsidiary in ;22?. The parent
company was formed in ;2
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S>OT ANA#&ISIS OFICICI
STREN'"TS(
I%I%I is the second largest bank in terms of total assets and market share
Total assets of I%I%I is /s. ?1B:.>? 3illion and recorded a ma#imum profit after ta# of
/s.
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There are also complaints of customer assault and abuse while recovering and the credit
payment reminders are sent even before the deadlines which annoys the customers
The bank service charges are comparatively higher
The employees of I%I%I are bank in ma#imum stress because of the aggressive policies of
the management to win ahead in the race. This may result in less productivity in future
years
OPPORT$NITIES(
3anking sector is e#pected to grow at a rate of ;AH in the ne#t three years
The concept of saving in banks and investing in financial products is increasing in rural
areas as more than B:H percentage of IndiaFs population is still in rural areas.
(s per :1;1 data in T@I& the total number b$schools in India are more than ;
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Though customer acquisition is high on one side& the unsatisfied customers are increasing
and make them to switch to other banks.
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INITIATIES OF ICICI BAN% FOR FINANCIA# INC#$SION
ICICI Bank #aunc0es :* 'ramin Branc0es under Financial Inclusion Plan
I%I%I 3ank +imited& IndiaFs largest private sector bank& said that it has started :1 new
!ramin branches across /ajasthan as part of its financial inclusion plan that aims at providing
banking services in unbanked villages. (ll these branches have been opened in small villages&
which were so far devoid of any banking facility. The Thikaria!ramin branch is one of the :1
branches the 3ank inaugurated in /ajasthan. The other !ramin branch in the same 5ausa
district is at adari. @ther branches opened in the state are at ritampuri and 3asri,hurd
villages in Sikar districtG at *udeel and +alas villages in agaur districtG at ::M+& 2M+&
!hamurwali and Sanwatsar villages in !anga agar districtG at 3hawad& 5anwara& oonasar
and )akhan villages in )odhpur districtG at @twala and (lasan villages in )alore districtG at
3hinyad and ,anasar villages in 3armer district and at !udli and Sangwa villages in Udaipur
district.
Dith these launches& I%I%I 3ank has opened over ;?1 rural branches in /ajasthan& which is
one$fourth of the total number of rural branches across the country. The addition of these new
branches has increased the network of I%I%I 3ank in /ajasthan to more than ?11 branches.
It is our constant endeavor to provide the entire gamut of financial services in rural and
remote areas& which include credit& savings& investments and insurance products. In line with
this approach& we have launched :1 !ramin branches& which will provide all basic banking
services in unbanked villages& which is a key part of our 4inancial Inclusion strategy.
4armer finance through ,isan %redit %ard 6,%%7 and (gri$term +oan 6(T+7 for the
cultivation and development of agricultural land.
/ural 3usiness %redit 6/3%7 to meet working capital and term loan requirements of
business entities in rural and semi$urban areas.
@verdraft 6@57 against fi#ed deposits 6457 under the 3ankFs ,isan,alpvriksh scheme for
rural customers.
Larious basic savings accounts to the customers based on their profile and requirements.
4unding to several Self$*elp !roups.
These branches also service business correspondents 63%s7
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I%I%I 3ank has undertaken a wide range of initiatives in the last few years as part of its
financial inclusion agenda. In this state& I%I%I 3ank is also engaged in "lectronic 3enefit
Transfers 6"3T7 for disbursement of wages to the Mahatma !andhi ational /ural
"mployment !uarantee Scheme 6M!/"!S7 workers. It has a wide distribution network to
service its rural and under banked customers.
I%I%I 3ank has >&>
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Beyond !icrocredit(Micro$savings0 /ecogniEing the need for easy savings facilities for
its low$income customers& I%I%I 3ank has launched a micro$savings facility under its
Qbusiness correspondentQ model. ( state$of$the$art solution based on a biometric$enabled
smartcard and a battery$operated authentication device developed by an I%I%I partner&
4inancial Information etwork and @perations 64I@7& the micro$savings product
provides access to a savings account with convenient features. The product combines
security& convenience 6pro#imity& convenient opening times and minimal paperwork7&
appropriate design 6frequent deposits& small variable amounts and quick access7 and
positive returns. The customer receives interest as in a regular savings account and can
maintain Eero opening balance. The customer also gets doorstep banking through business
correspondents. (part from this savings account& the bank also offers recurring and fi#ed
deposits to enable customers to avail of higher return on their savings. Today& I%I%I 3ank
works with ?; business correspondent partners operating out of ;:A branches across the
country& serving over AA&111 customers.
!icro Insurance(I%I%I rudential +ife Insurance9s provision of micro$insurance
services has promoted financial security among the rural poor and increased their comfort
to avail credit facilities 6micro$credit7 for undertaking income$generating activities.Increased credit worthiness results in availability of low cost capital that is employed in
entrepreneurial activities. Similarly& I%I%I +ombard 6www.icicilombard.com7 provides a
range of non$life insurance products& including health& weather and cattle insurance to
help mitigate the impact of other contingencies such as illness and crop failure.
'o.ernment >el/are Sc0emes(The rural Indian economy is e#posed to fundamental
risks and has limited access to risk mitigating solutions. In order to achieve significant
impact& it is critical to operate on a large scale with operational costs that are one tenth of
those in urban areas. To achieve this& I%I%I +ombard has worked on the premise that the
governments9 social and welfare initiatives can be outsourced for better implementation
and has focused on mass$based social and employee welfare schemes. I%I%I +ombard has
structured need$based& cost effective insurance solutions for a number of state
governments and ministries of the !overnment of India covering around =2 million lives
for ersonal (ccident insurance and *ealth insurance.
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NO FRI## AGC) T"E S!A##EST -EPOSIT A#SO !ATTER
I%I%I 3ankFs o 4rills (ccount& places emphasis on the smallest of deposits. @ur o 4rills
(ccount is available to you without any minimum monthly average balance requirement.
T0e ICICI Bank Ed2e
The monthly average balance requirement for this account is nil
4ree I%I%I 3ank LIS( debit card
@ne chequebook of ;< leaves per annum free. -ou can request for additional cheque
books 6 ;< leaves7 at /s. >1 6plus service ta# as applicable7 per chequebook
Internet 3anking facility is not available to the customers
Mobile 3anking facility is not available to the customers
%ash transactions at base branch is free for the first ? transactions of a monthG Thereafter
in the month& /s. 21 per transaction
(ll anywhere banking transactions chargeable at normal charges as published from time
to time
Interest is payable half$yearly
4ree Ouarterly statement& free monthly e$mail statement on request
Money Multiplier 4acility shall not be available to the customers
'ENERA# CON-ITIONS FOR NO)FRI##S SAIN'S PRO-$CT
The account is available only for resident Indians above the age of ;= years. The account is
not available to individuals in the capacity of *U4 ,artas. /Is and foreign nationals will
not be offered this product. (ll general terms and conditions applicable to savings bank
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accounts as published on the I%I%I 3ank website at www.icicibank.com for the establishment
of a relationship and the opening and operating of accounts are applicable to this account.
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ICICI PARTICICPATES IN PRA-"AN !ANTRI JAN)-"AN &OJANA
Opens one lak0 accounts under t0is pro2ramme
Aims to cross :* million accounts by end o/ t0is /iscal
Ne -el0i( I%I%I 3ank& IndiaFs largest private sector bank& announced its participation in the
transformational financial inclusion mission& radhanMantri )an 5han-ojana 6M)5-7& by
opening one lakh basic savings bank deposit accounts.
The 3ank has opened these accounts through a special drive& across its network of more than
>&A11 branches. Under this scheme& the 3ank offers each account holder a passbook& a /uay
5ebit %ard with an accidental cover and literature on banking facilities at the time of opening
anaccount.
The I%I%I !roup has always been a catalyst in India9s growth. De have a vision of a strong
and prosperous India. ( key element of this vision has always been financial inclusion& which
is integral to creating opportunity for all sections of society and achieving inclusive growth.
I%I%I 3ank has been working on a comprehensive financial inclusion plan over the last four
years. The radhanMantri )an 5han-ojana inspires us to renew our commitment to the goal
of financial inclusion with even greater vigour and focus.
Today through our network& we cover appro#imately ;
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showcased the process of remitting through mobile wallets. This service allows urban
migrants to send money back to their families in a transparent and convenient manner.
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FINANCIA# INC#$SION STRATE'&
I%I%I 3ankFs financial inclusion strategy encompasses rapid e#pansion in the rural markets&
leveraging its strengths in technology and delivering relevant products and services to the
rural and unbanked population through its multi$channel network.
Reac0in2 rural India(To provide branch banking services to its rural customers&
I%I%I 3ank added more than A&AB> branches& out of which& more than
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%*(T"/ >Introduction to
o 4rill (8c
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C0apter *8
NO FRI## AGC
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
Introduction and Meaning of o 4rill (8c
"ligibility ' omination
4eatures ' 3enefits
"ase of ,-% orms ' orms 3y /3I
5ocuments /equired 4or o 4rill (8c
Terms ' %onditions of o 4rill (8c
/3I replaces o 4rill (8c with 3asic Savings (8c.
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
INTRO-$CTION(
In :11
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!EANIN'(
9o 4rills 9account is a basic banking account. Such account requires either nilJ minimum
balance or very low minimum balance. %harges applicable to such accounts are low. Services
available to such account are limited.
In what can be described as a watershed (nnual olicy Statement& the /3I in :11
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>0o is it /orH
This account& too& is basically for the low$income group. %hildren or students who are
beginning to learn to save can also benefit from this account.
(s of now& other than a salary accounts which offer Eero balance option& all banks have a
minimum balance requirement for normal savings account.
>0o O//ers No Frill AGcH
State$owned banks have responded quickly to /3I9s suggestions& and a few private and
foreign banks have followed suit. The State 3ank of India is offering a 9no$frills9 account to
anyone whose monthly income is /s
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E#I'IBI#IT&(
The o 4rills (ccount is available for resident Indian.
"ligibility0 ensioners& agriculture labourers& employees of unorganiEed sector& member
of S*!& self$employed person& students& rural folk etc.
ot$ "ligible$Institutions& organiEation& /I& bank staff
ero minimum balance requirement i.e. you can maintain this account without any
minimum or average balance requirement.
NO!INATION(
omination facility available for bank deposits
There can be only one ominee for a deposit account whether held singly or jointly
( person legally empowered to operate a minor9s account can file a nomination on behalf
of the minor (pplicants can make nomination by filling up the 4orm prescribed under the 3anking
%ompanies 6omination7 /ules ;2=< The nomination details can be changed during the subsistence of the account relationship
by filling up the 4orm prescribed under the 3anking %ompanies 6omination7 /ules ;2=< 4or more details approach your bank
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FEAT$RES 3 BENEFITS(
(dult Individuals can open account.
4irms 8 )oint accounts not eligible
Simplified ,now -our customer norms to be complied
S3 no$frill account to be opened with minimum ero balances at all branches& subject to
compliance of all other terms and conditions.J
4ree 5ebit %um (TM card issued at all %3S branches6(nnual %harges applicable fromne#t year7
Dithdrawals through (TMs ' branch withdrawals $ ma# : per month.
o third party withdrawals
omination facility is available ' compulsory.
Interest ?.11 H p.a. Interested will be calculated on daily products basis from
1>.1
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There is also a provision for 3asic Saving 3ank 5eposit (ccount& it is operational for a
year and requires renewal.
Total credits in the account should not e#ceed /s.;& 11&1118$ in a year.
(ny number of accounts in a family can be opened under this scheme.
There is no restriction on entries for deposit of %ash8%heques in the account.
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EASE OF %&C NOR!S(
The /3I has also eased the 9know your customer9 6,-%7 norms to keep the procedural
hassles involved in opening a bank account to the minimum. This is to enable those belonging
to low$income groups to open bank accounts without documents of identity and proof of
residence.
In such cases& banks can take the individual9s introduction from an e#isting account holder on
whom the full ,-% procedure has been completed and has had satisfactory transactions with
the bank for at least si# months. The photograph and address of the prospective account
holder need to be certified by the person who introduces him8her.
These simplified ,-% norms are applicable for those who intend to keep balances not
e#ceeding /s =2
53@5.(M+.o. AA 8;?.1;.11;8:1;1$;; dated )anuary :A& :1;;& foreign remittances are not
to be allowed to be credited into a 9small account9& unless the identity of the client is fully
established through the production of officially valid documents& as referred to in sub$rule 6:7
of rule 2 of the rules notified by the !overnment of India under the revention of Money
+aundering (ct. In view of the above& customers holding accounts under the category 9o
4rills (ccount9 are hereby requested to submit copies of identity and address proof to the
3ank& and get their accounts converted into a regular Savings (ccount if they are e#pecting
receipt of foreign remittance credits in their account.
In the absence of submission of valid Identity and address proof& we will be constrained to
return any foreign remittance received in the account.
lease contact the branch staff for further clarifications and details.
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-OC$!ENTS RE$IRE-(
Application Form3 : P0oto2rap0s
Proo/ o/ identity 5any o/ t0e /olloin2 6 /or indi.iduals
assport
( %ard
"mployee identity card
5riving +icense
(ny other valid proof
Proo/ o/ address 5any o/ t0e /olloin26
"lectricity bill 6 should not be older than three months7
Telephone bill
/ation card
Statement of account from e#isting bank
Income 8 wealth ta# assessment
5ocument 8 communication issued by !@I 8 State !overnment8 +ocal 3ody
(ny other valid proof.
TER!S 3 CON-ITIONS(
The account is required to be introduced by another account holder maintaining
satisfactory account with bank for at least for si# months and is fully ,-% complied. hotographs of the perspective customer who proposes to open the account and also his
address is certified by the introducer. The bank may charge the customer service charges as decided from time to time for any
or all of the services rendered to the account holder after informing the customer. (ny government ta#es or dues that become contingent to the use of the facilities e#tended
by the bank by regulation will be debited to the customerFs account. The bank reserves its right with absolute discretion to revise the fees8charges related to
the account from time to time.
3alance in o 4rill (ccounts should not e#ceed /s. IT" =BASIC SAIN'S AGC?
(ccording to the /3I notification& with a view to doing away with the stigma associated with
the nomenclature no$frillsF account and making the basic banking facilities available in a
more uniform manner across the banking system& it has been decided to modify the guidelineson opening of basic banking no$frillsJ accounts. The no$frills account came with certain
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restrictions& which varied from bank to bank. Dhile some banks offered no$frills account to
individuals who earned below /s.;1& 111 per month& a few others offered this service to
individuals who maintained less than/s.
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But #imitations Remain
+ike the no$frills account& this account too provides basic services such as deposit and
withdrawal of cash at the bank branch and automated teller machines 6(TMs7 and electronic
payment channels such as Internet banking& among others& and requires minimal paperwork.
Though the limitations that were applicable on no$frills accounts have been removed& some
others have been introduced.
*ere& you can withdraw money only four times in a month& including withdrawals from
(TMs. (fter the first four withdrawals& you will either be charged a fee or will be denied
withdrawal& depending on the bank. (lso if you are a basic savings bank deposit account
holder& you will not be eligible to open any other savings bank deposit account in the same
bank. So if you had a savings bank deposit account in that bank& which you had opened with a
minimum balance amount& you will have to close it within >1 days from the date of opening a
basic savings bank deposit account.
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RBI REP#ACES =NO FRI## AGC >IT" =BASIC SAIN'S AGC?
%*(T"/ ?Introduction to
riority Sector
+ending
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C0apter *9
PRIORIT& SECTOR #EN-IN' 5PS#6
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
Introduction and Meaning of S+
eed 4or S+
The Thrust (reas of S+6;2B27
Dhy S+ ' %hanging %riteria of S+ 6re ' ost 4orm eriod7
(reas under riority Sector
%urrent Targets in S+
/3I !uidelines on Deaker Sections
S+ ' 5ouble /epression
/3I /evises S+ orms
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
INTRO-$CTION(
The financial policy in India is influenced by the objective of restoring sectional balance
within credit disbursement and for channelling to the weaker sections within these sectors.
riority sector bank lending has been an instrument of this financial policy. The 3ank
%ompany (cquisition (ct ;2B2 leading to the ationaliEation of the ;? commercial banks
has implicitly made it clear in its preamble.
The banking system touches the lives of millions and has to be inspired by larger social
purpose and has to sub$serve national priorities and objectives such as rapid growth of
agriculture small scale industries and e#ports raising employment levels& encouragement of
new entrepreneur and development of backward regions. 4or this purpose it is necessary for
the !overnment to take direct responsibility for the e#tension and diversification of banking
services and forth working of a substantial part of the banking systemJ.
There has been a substantial reorientation of banking policy after the nationaliEation of banks
in ;2B2. This has been accomplished through social orientation of banking and administrative
intervention by way of stipulating targets& sub$targets& credit guarantee and refinance facilities
for financing the preferred sectors of the economy known as priority sectors& where
agriculture& small industries& small business and small transport operators& retail traders and
education were given priority status.
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!EANIN'(
riority sector lending is providing easy& adequate and timely credit to priority sectors that
otherwise would not receive easy finance. riority sector plays an important role in the
economic development of the country. Therefore the %entral government of any country givesthis sector priority 6first preference7 in obtaining loans from banks at a low rate of interest
.this is known as a Qriority Sector +endingJ. It is a policy of providing a specified portion of
bank lending to the important sectors of the economy. It includes agriculture& small$scale
industries& cottage sector& tiny sector& e#port sector and other small business firms. /3I was
the first to initiate priority sector lending scheme in India.
NEE- FOR PRIORIT& SECTOR #EN-IN'The objectives underlying the priority sectorlending relate to ensuring the assistance from the
banking system flows in an increasing measure to those sectors of the economy which
though contributing significant proportion of national product have not received adequate
support of institutional finance in the past. This inter$aliaimplied flow of required funds to
various sectors of the economy in accordance with the national planned priorities. The social
control on banks was imposed as a measure to employ prudently and socially desirable
channels with the objective of achieving economic growth combined with stability and social
justice.
"ven decades after independence& more than A1 percent of borrowing by cultivators was from
informal sector. +ending from commercialbanks was directed towards large industrial houses.
(griculturalsector& smallscaleindustriesand weakersectionswere more neglected because of
both risk factor and urban bias. (lthough co$operative sector was there to serve the needs of
agricultural sector it was unable to meet the credit demand of farm community. There was a
need for ensuring anequitable and purposeful distribution of credit keeping in view relative
priorities of developmental needs.
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T"R$ST AREAS OF PRIORIT& SECTOR #EN-IN' 5;+. 4inancing of loan accounts under priority sector may entail risk of default. *ence a
separate insurance scheme guaranteeing a part of the loan of commercial banks was
introduced in ;2A1 and the 5I%!% of India was established. The provides deposit insurance
to the depositors up to a prescribed limit. The %orporation operates various credit guarantee
schemes relating to guarantee support to eligible credit institutions for their priority sector
advances to small borrowers and small scale industries.
?. riority sector lending implies deliberate diversion of funds of the banks from the other
sectors and that too at lower interest. To mitigate the ill effects of this on bank resources and
on profitability the schemes of refinance were formulated by (3(/5 in particular. Its
advances about ?:Hto ?
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>"& PRIORIT& SECTOR #EN-IN'H
4ocus on /ural 5evelopment by the government
%hannel resources to area that are deemed national priority
Inclusion of poor in economic growth of the country
SynchroniEe the bank lending according to national importance
C"AN'IN' CRITERIA OF PRIORIT& SECTORSIn the post nationaliEation of ;? commercial banks in ;2B2 period the /eserve 3ank of India
was compelled to lay down targets for lending to specified sectors. "ach major bank was
given targets for lending to these sectors. ( more comprehensive definition of priority sector
was adopted in ;2AA. These were mainly in terms of sectors. It was realiEed in the early ;2=1s
that even within priority sectors credit flow was more to the affluent sections. So the concept
of weaker section was adopted within priority sector. It was categorically stated that the
ma#imum benefit should be available to these weaker sections. 3y ;2=1s definition andquantitative targets had fully crystalliEed.
There emerged the political interference to make use of these developments for vote bank
politics for misuse of credit. (s a result neither banking institutions nor the neglected sectors
and sections were benefited. Thus the priority sector lending was effected. 4inancial sector
reform became imperative. Thus the arashimhan %ommittee suggested for bringing down
the priority sector target from ?1 percent to ;1 percent. This was not accepted by the
!overnment.
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T"E PRE AN- POST FOR! PERIO-
4ollowing are some of the major features of priority sector targets and classifications.
Targetsof?1& ;= and;1percentofnetbankcreditfortotalpriority sectorcredit&sub targets
ofagriculturalandweaker sections respectively remain same in both the periods. Targetsof;:percentofe#portcreditand;1percentofSSIcredit have been introduced for the
foreign banks which were not there earlier even for domestic banks. In the pre$reformperiodagriculturalcreditwasearmarkeddirectly forfarmers but majority of
whom& were small and marginal farmers. (gricultural credit was mainlyfor agricultural
purposes& production& storage and transportation of agricultural or allied product. In the post reform period ceiling of short term credit to be considered under priority sector
has been increased to /s. ; lakh. "arlier credit to plantation crop was restricted to only
small and marginal farmers& but it is given irrespective of siEe. In the categoryofdirectadvancestoagriculturenewacquisitionof jeeps& pick up vans&
minibuses& etc. *ave been included. These naturally will not be acquired by small and
marginal farmers. Indirect finance to agriculture was not a part of priority sector target earlier. ow finances
to dealers& commission agents& non$ banking financial companies& state electricity board
and investing in selected bonds and depositing in ape# level are not going to help farmers
directly
Inclusion of food and agro processing in the priority sector will give impetus and boost up
the production of food crops. Scope of small business under prioritysector has been e#panded to include business under
enterprises with original cost price of equipment used for the purpose of business up to
/s.;1lakhs from /s. : lakhs earlier. rofessionals like accountants and solicitors are included in priority sector. These are not
employment generating activities. They do not belong to weaker sections either. Transportand road network are included in priority sector.
*ousing was earlier e#clusively for very poor segments. ow the ceilings upto /s.
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The above changes in the post banker former a have led to the foll