WELCOME TO PRESENTATION ON FINANCIAL INCLUSION

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WELCOME TO PRESENTATION ON FINANCIAL INCLUSION

• NABARD
• RAJASTHAN REGIONALOFFICE
• JAIPUR

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Structure of Presentation

• What is Financial Inclusion various definitions
  meaning
• Why Financial Inclusion National and State
  scenario
• How to go about it- Various options
• Support available from NABARD
• Few Initiatives taken by banks

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What is Financial Inclusion

• 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. --- C Rangarajan

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What is Financial Inclusion

• expanding access to financial services, such as
  payments services, savings products, insurance
  products, and inflation-protected pensions..
• Raghuram Committee on
• Financial Sector Reforms (CFSR)

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Financial Inclusion means

• Basic no frills bank account for receiving
  payments /savings / deposits
• Small loan/overdraft facilities
• Money transfer facilities
• Insurance (life / non-life) services
• Financial advisory services

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What is Financial Inclusion

• While financial inclusion, in the narrow
• sense, may be achieved to some extent
• by offering any one of these financial
  services, the objective of Comprehensive
  Financial Inclusion would be to provide a
  holistic set of financial services .

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What is Financial Inclusion few questions

• Basis - whether individual, every adult family
  member/household
• Coverage only rural or urban population is
  also to be included
• What about inclusion of segments like women,
  minorities

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Why Financial Inclusion

• Directive Principles equal opportunities
• Inclusive growth
• Economic development
• Social development
• and
• Business opportunity

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Financial Inclusion Steps taken by Banking
Industry in India

• Nationalisation of Banks
• Introduction of Lead Bank Scheme
• Introduction of Priority Sector Norms
• Introduction of Service Area Concept
• Adoption of Villages by Bank Branches
• Formation of Regional Rural Banks
• Strengthening of Cooperatives

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Banking Network in India

• Rural and Semi-urban Branches
• - Commercial Banks 33,000
• - Regional Rural Banks 14,500
• - Cooperatives 106,000
• Total 153,500
• Avg. No. of villages served per branch 4
• Is the distribution equitable ? ?
• 90 villages dont have a bank branch within 5
  km radius

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Extent of Financial Exclusion - India

• 51.4 of 89.3 million farmer households are
  excluded from both formal/ informal sources
• Only 27 of the total farmer households, access
  formal sources of credit
• 66 marginal farmer households excluded
• (NSSO data 59th round )

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Financial Exclusion in Rajasthan

• 47.6 of farmer households are excluded from both
  formal / informal sources
• Outreach of formal financial institutions is
  around 35 households
• SHG / MFI outreach to about 25 families in
  rural areas but cater to only limited financial
  needs

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Gradation of Financial Exclusion

• Core Exclusion Who operate their financial
  affairs outside the regulated financial system
• Limited Access May have a basic bank account
  but poor financial habits and little advice
• Though Included but using inappropriate products

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Reasons for Financial Exclusion

• Physical distance
• Mutual disbelief poor are not bankable, on
  other side banks and other FIs are not for us
• Lack of appropriate products/services
• Lack of awareness, financial illiteracy
• Processes too tedious and complicated
• and
• AAJ TIME NAHI HAI/STAFF CHHUTTI PAR HAI/
  CLOSING HAI, KAL AANA -.

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National Rural Financial Inclusion Plan (NRFIP)

• Provide comprehensive financial services to
  atleast 50 (55.77 million) of the excluded rural
  cultivator and non-cultivator households across
  different states by 2012 through rural /
  semi-urban branches of CBs RRBs - remaining
  households by 2015
• Semi-urban / rural branches of CBs / RRBs to
  cover 250 new cultivator and non-cultivator per
  branch per annum

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State Rural Financial Inclusion Plan (SRFIP)

• DLCCs at district level to draw block /
  village-wise maps of rural households not having
  access to formal credit sources
• Thereafter, a State Level Financial Inclusion
  Plan to be prepared jointly by NABARD and SLBC to
  cover minimum 50 currently excluded households
  by 2012
• The Plan to be allocated institution-wise among
  CBs RRBs. Cooperative Banks, NBFCs, MFIs to
  take on the self set targets of financial
  inclusion

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Financial Inclusion how to go about it

• Traditional approach
• Improvement in existing system reintroduce
  Service area approach to bring in accountability
  
• Extending network - using existing extension
  setups like Farmers clubs, KVKs
• Evolving new models of effective
  outreachBusiness Facilitators / Business
  Correspondents

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Financial Inclusion how to go about it

• Traditional approach
• Community based approach like SHGs, JLGs
  Improving credit literacy through camps
• Introduce Only Field Work Days (OFDs) in
  rural/semi urban branches
• Target approach as per NRFIP

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Financial Inclusion how to go about it

• New approach
• Leveraging on technology based solutions
• Public Private Partnership mode take new
  players on board

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Efforts initiated for FI in Rajasthan

• Adoption of 6 pilot districts for 100 financial
  inclusion
• Implementation of Bhamashah Yojna by GOR
• SHG- Bank Linkage programme
• Supported MFIs to help them reach out to poor
• Mobile phone based banking

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Financial Inclusion Efforts of NABARD

• Two funds namely Financial Inclusion Promotion
  Fund (FIF) and Financial Inclusion Technology
  Fund (FITF), each having initial corpus of Rs.
  500 crore have been constituted by the GOI and
  placed with NABARD
• Each fund is to be equally contributed by GOI,
  RBI and NABARD with annual accretions
• Eligible organisations to avail the funds for
  greater financial inclusion

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Financial Inclusion Fund (FIF)

• Eligible Purposes
• Funding support for capacity building inputs to
  BCs / BFs
• Providing promotional support to institutions
  such as Resource Centres, Farmers Service
  Centres, RUDSETIs to enable them to provide
  improved technical and financial services
  (including counseling)

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Financial Inclusion Promotion Technology Fund
(FITF)

• Encouraging user friendly technology solutions
• Providing financial support to technological
  solutions aimed at providing affordable financial
  services to the disadvantaged sections of the
  society
• Creating a common technology infrastructure with
  comprehensive credit information
• Funding support to technologies facilitating the
  documentation for processing of loans
• Providing viability gap / pilot project funding
  for unproven but potential technological
  interventions

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Eligible Institutions FIF FITF

• CBs, RRBs and Cooperative Banks
• NGOs, MFIs, SHGs, Farmers Clubs, Local Level
  Associations, etc.
• Training and Research Organisations, Academic
  Institutions, Universities, etc.
• Service providers like Insurance Companies (micro
  insurance), Post Offices, Railways, etc.
• Any other organisation whose objectives are in
  conformity with the overall objectives of FIF

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Financial Inclusion Initiatives by Banks

• Set up 100 centres in agri-lending branches for
  agriculture counseling SBI
• Use of handheld devices and bio-metric cards in
  a village of Tamilnadu IOB, UBI
• Introduce 198 Village Knowledge Centre for
  imparting knowledge to the farmers UBI, Dena
  Bank
• Introduced Union Mitr Scheme (90) for
  providing financial education and debt counseling
  services to rural population, free of cost UBI
• Introduced Dena Bhoomiheen Kisan Credit Card
  Scheme(Rs.25,000) for Tenant farmers, oral
  lessees, share croppers and landless labourers
  Dena Bank

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FINANCIAL INCLUSION

• TOGETHER WE CAN
• AND
• WE WILL - - -!