Presentation by Shri U'C' Sarangi, Chairman, NABARD

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FINANCIAL INCLUSION IN INDIA
AND
National Bank for Agriculture
and Rural Development
(NABARD)

• Presentation by Shri U.C. Sarangi, Chairman,
  NABARD Shri S.K.Mitra, Executive Director,
  NABARD

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History of strategies for Inclusive Growth/
Livelihood improvement/ Financial Inclusionin
India

• Phase I (1960 1980)
• Social control of Banks (1960)
• Nationalisation of Banks (1969)
• Setting up of Regional Rural Banks (1975)
• Priority sector lending stipulation by RBI -
  (1972)
• Lead Bank scheme (1969)

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History of strategies for Inclusive Growth/
Livelihood improvement/ Financial Inclusionin
India

• Phase II (1980 2005)
• Integrated Rural Development programme/ SGSY
  promoted by Govt. Of India
• Microfinance programme SHG Bank linkage
  facilitated by NABARD
• Phase III (2005 onwards)
• Development of MFIs
• Financial Inclusion in a MISSION mode

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Reserve Bank of India
Formal Bank Network In India

Government of India
NABARD
Public Sector Banks (28)
RRBs (96) LABs (4)
Private Banks (24)
Credit Cooperatives
Rural Semi-urban Urban Metro Total
18,197 11,736 10,247 9,726 49,906
11,444 / 5 2,481 / 14 522 / 11
59 / 0 14,506 / 30
987 2,077 2,102 1,901 7,067
SCB 31 DCCB 367 PACS 108779 SCARDB
20 PCARDB - 727

• 13,104 NBFCs registered with RBI.
• 1853 Urban Co-operative banks with 7217 branches.
• Foreign Banks Urban 43, Semi Urban 2, Metro
  227. (Total 272)

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NSSO 2003 Findings of Survey

• 51 lack access to Financial Services from formal
  system
• Exclusion predominant amongst-- Poor and weaker
  sections-- Resource poor regions

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Largest Financial Inclusion programme in the World

• SHG - Photo

• 58 million poor households provided access to
  banks through 3.48 million SHGs.
• Savings of SHGs with banks 703 million.
• Bank loans availed by SHGs 2473 million
• NABARD Refinance support 1412 million
• NABARD Promotional support 5.5 million

• SHG- Bank Linkage programme in India facilitated
  by NABARD, implemented by Banks, NGOs, Government
  agencies

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Financial Inclusion - Definition

• The process of ensuring access to financial
  services and timely and adequate credit where
  needed by vulnerable groups such as weaker
  sections and low income groups at an affordable
  cost.

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Financial Inclusion eventually to include the
following services

• Savings/ Thrift
• Loans/ Credit
• Remittance / Transfer of Funds
• Micro Insurance Services (Life and Non- Life)
• Mutual Funds/ Annuity Products
• Pension Products

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Creation of Funds with NABARD in 2007 - 08

• Financial Inclusion Fund (FIF) Rs 5000 million
• Financial Inclusion Technology Fund (FITF) Rs
  5000 million
• Govt. of India RBI NABARD (404020)

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Objectives of FIF

• The objectives of the FIF shall be to support
  developmental and promotional activities with a
  view to securing greater financial inclusion,
  particularly among weaker sections, low income
  groups and in backward regions / hitherto
  unbanked areas.

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Objectives of FITF

•   The objectives of the FITF shall be to enhance
  investment in Information Communication
  Technology (ICT) aimed at promoting financial
  inclusion, stimulate the transfer of research and
  technology in financial inclusion, increase the
  technological absorption capacity of financial
  service providers / users and encourage an
  environment of innovation and cooperation among
  stakeholders.

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Technology Solutions being tried in India

• Smart card, hand held terminal, central CPU
• Low cost ATMs
• Mobile Phone Banking
• SMS Banking
• Public Call Office (PCO) Connectivity.

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Way Forward

• Targets fixed for each Branch of Commercial
  Bank/Regional Rural Bank to
• Open 250 accounts every year
• Issue 100 Farmers Credit Card
• Issue 100 General Credit Card
• Distribute 100 micro insurance policies

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Way Forward (contd/-)

• Micro Finance Sector (Development and
  Regulation) Bill, 2007 under consideration.
• Setting up of Rural Credit Information Bureau.
• Ensuring effectiveness of Business
  Facilitator(BF) /Business Correspondent(BC).
• Micro finance Development and Equity Fund
• Micro finance Ombudsman
• Regulatory and developmental power to NABARD

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THANK YOU