WELCOME TO
PRESENTATION ON
FINANCIAL INCLUSION
NABARD
RAJASTHAN REGIONALOFFICE
JAIPUR
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
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
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)
Financial Inclusion means
Basic “no frills” bank account
receiving payments /savings / deposits
Small loan/overdraft facilities
Money transfer facilities
Insurance (life / non-life) services
Financial advisory services
for
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 .
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’
Why Financial Inclusion
Directive Principles – equal
opportunities
Inclusive growth
Economic development
Social development
and

Business opportunity
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
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 don’t have a bank branch
within 5 km radius
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 )
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
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
inappropriate products
but
using
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 -”.
National Rural Financial
Inclusion Plan (NRFIP)
Provide comprehensive financial services
to atleast 50% (55.77 million) of the
excluded rural cultivator and noncultivator households across different
states by 2012 through rural / semiurban 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
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
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
outreach–Business
Facilitators
/
Business Correspondents
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
Financial Inclusion – how to
go about it
New approach
Leveraging on technology based
solutions
Public Private Partnership mode –
take new players on board
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
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
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)
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
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
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
FINANCIAL
INCLUSION
TOGETHER WE CAN
AND
WE WILL - - -!