financial inclusion group : bhagwan sahay bairwas-13 devender singh pals-19 dipanwita dattas-21 hari...
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FINANCIAL INCLUSIONFINANCIAL INCLUSION
Group :Bhagwan Sahay Bairwa S-13Devender Singh Pal S-19Dipanwita Datta S-21Hari Kumar S-24Pushpendra Kumar S-42Sravan Bagaria S-59
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“The future lies with those companies who see the poor as their customers”
~C.K.Prahalad
The Potential of the The Potential of the UnreachedUnreached
FINANCIAL EXCLUSIONFINANCIAL EXCLUSION
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Financial Exclusion
NoSavings
No Insurance
Noassets
No bank account
No access tomoney adviceNo affordable
credit
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Financial Inclusion - ScopeFinancial Inclusion - Scope
Financial Inclusion should include access to financial products and services like,
Bank accounts – check in accountImmediate Credit Savings productsRemittances & Payment servicesInsurance - HealthcareMortgageFinancial advisory servicesEntrepreneurial credit
Extent of Financial Exclusion Only 5% of villages have a
Bank branch.
81% villages do not have a bank branch in 2 km radius
Number of deposit accounts per adult population is only 59%.
Who are Financially Excluded:
1. Poor2. Socially under-privileged.3. Disabled.4. Old as well as children.5. Women.6. Ethnic Minorities.7. Uneducated.8. Mobile population. 9. underprivileged section in
rural and urban areas like, Farmers, small vendors, etc.
10.Agricultural and Industrial Labourers
11.People engaged in un-organised sectors
12.Unemployed
FINANCIAL EXCLUSIONFINANCIAL EXCLUSION
Financial Exclusion is Financial Exclusion is universaluniversal
Financial exclusion is an issue even in developed economies
As per Census 2001, in India only 36% of the people use any kind of banking services
Country/locationCountry/location % of population% of populationwith an accountwith an account
DenmarkDenmark 99.099.0
United StatesUnited States 91.091.0
EuropeEurope 89.689.6
BotswanaBotswana 47.047.0
Brazil (urban)Brazil (urban) 43.043.0
SwazilandSwaziland 35.335.3
South AfricaSouth Africa 31.731.7
NamibiaNamibia 28.428.4
DjiboutiDjibouti 24.824.8
Mexico CityMexico City 21.321.3
LesothoLesotho 17.017.0
TanzaniaTanzania 6.46.4
Drivers of Financial Drivers of Financial ExclusionExclusion
Drivers of financial exclusionDrivers of financial exclusion: ◦ Most frequent: Low income, Nil or low
savings, Lack of assets, Unemployment, Use of inappropriate products
◦ Less Frequent: Psychological/disability issues, Feeling of being excluded, Indigenous/ethnic issues, Geographical remoteness, Lack of PC/Internet Access
Personal and social factorsPersonal and social factors: Cultural norms, Gender, Age,
Legal identity
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Financial Inclusion - Financial Inclusion - DefinitionDefinition
“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”
- The Committee on Financial Inclusion (Chairman: Dr. C. Rangarajan, 2008)
“The process of ensuring access to appropriate financial products 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 mainstream Institutional players.”
Steps of Rural DevelopmentSteps of Rural Development
Enthusiasm
Skills
Implemen-tations
Networking
*Threats*Opportunities
*Basics*Programmes*Technology
*New work cultures
*Cooperation*Purchasing *Production*Marketing*Selling Will
*Commit-ment
Modernisation
*Cooperation*Contents*Benefits
Financial Inclusion – Financial Inclusion – What exist s n lackingWhat exist s n lacking
Steps TakenSteps Taken Co-operative
Movement Nationalization
of banks Lead Bank
Scheme RRBs Service Area
Approach Self Help Grou
ps13
What was lackingWhat was lackingAbsence of mod
TechnologyInadequate reach and
coverageDelivery MechanismWell defined Business
ModelRich have no
compassion for poor
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Why Are we Talking of Why Are we Talking of Financial Inclusion Now?Financial Inclusion Now?
Focus on Inclusive Growth
Banking Technology has arrived
Realisation that Poor is bankable
Technology- An Technology- An EnablerEnabler
For Simplification of process Cost reduction to make it
affordable to masses Product design to suit the
requirements of the Rural masses
Innovation does not become technology till it reaches the
masses.
Technological Banking to the Common Technological Banking to the Common ManMan
Opportunities
Coverage
Access to Diversified Financial Products and Services
Delivery Model- Day to day transactions
Availability of infrastructure
Dedicated software
Door Step Banking & no. of touch points to be increased
Technology is costly ….Technology is costly ….
The Solution lies in
Networking
Smart Card -A great technological challenge
Collaboration
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TECHNOLOGY INITIATIVES
“PARAM”By
Ogilvy & Mather
ELECTRONIC KNOWLEDGE
DELIVERYBy
M.S.SwaminathanResearch
foundation
e-CHOUPALBy ITC
-Account Opening-Transactions
Data Captured Through Labtop
& POS/POT
Service provider Intermediate
Server
Activity is Performed by BC - Laptop for A/c opening
POS/POT for transactions
SecurityEquipment
FIN CBS
Server
Service Provider’s (Intermediate ServerFile converted into format of CBS
Data is uploaded into FIN-CBS
Interest Calculation done centrally
and the details sent back to POS and inserted to the
smart card of customer
Villages
Data Flow Block Diagram of Financial Inclusion
RBI ‘s ContributionRBI ‘s Contribution
No-Frill AccountsOverdraft in Saving Bank AccountsBC / BF ModelKCC / GCC GuidelinesLiberalised branch expansionLiberalised policy for ATMIntroducing technology products and services
Pre-Paid cards, Mobile Banking etc.Allowing RRBs’ / Co-operative banks to sell Insurance and
Financial ProductsFinancial Literacy ProgramCreation of Special Funds431 districts identified by the SLBC convenor banks for
100 per cent financial inclusion across various States/UTs and the target in 204 districts of 21 States and 7 UTs has reportedly been achieved
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Basic Challenges of financial Basic Challenges of financial inclusioninclusion
Coverage Access to Diversified Financial Products and Services
Delivery Model - Day to day transactions
Cost-effective technologyCustomer education/financial adviceChange in banker’s mindset
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Problems / DifficultiesProblems / Difficulties
Scaling up of activities Appropriate business model yet to
evolve BC model too restrictive Limitation of cash delivery points Lack of Interest / Involvement of Big
Technology Players
Problems of Financial Exclusion in Problems of Financial Exclusion in IndiaIndia
•Coverage •Cost of Small Value transaction •Infrastructure •Suitable products •Flexibility •Weak Delivery model •Community Enterprise & Financial Management support
Pre-conditions for successPre-conditions for successAttitude and Will power Technology Delivery Mechanism Support Services
◦Infrastructure ◦Community Development Support ◦Product Innovation
Regulatory and Policy Interventions Involvement of all
◦especially Development/Administration at District/Block/Village level
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Pre-requisites For The Pre-requisites For The Success of Financial InclusionSuccess of Financial Inclusion
Appropriate Technology Appropriate and Efficient Delivery
model Mainstream banks’ determination and
involvement Strong Collaboration among Banks,
Technical Service Provider, BC Services Involvement of all
Especially the state administration at grass-root level
Liberalisation of BC model
Initiatives for financial Initiatives for financial inclusioninclusion
1904 Cooperative Societies Act1954Rural Credit Survey Committee1955State Bank fo India created 196919 Commercial Banks Nationalised, All
India Rural Credit Review Committee1970Lead Bank Scheme introduced 1975Regional Rural Bank set up19806 more Commercial Banks nationalised1992SHG - Bank Linkage Programme2001Kisan Credit Card introduced
However, efforts to achieve financial inclusion
have failed
Benefits of globalization Benefits of globalization
Globalization cannot be sustained unless we move towards inclusive growth
Financial inclusion will lead to growth with equity◦This will help empowering the poor to
break out of the vicious circle of poverty and live with dignity
Then only globalization can be considered truly beneficial.
Globalization has changed the Globalization has changed the world economic order world economic order
New global markets in services New global markets in services including banking, insurance, including banking, insurance, transporttransport
Deregulated financial markets with Deregulated financial markets with 24 hour trading24 hour trading
Increased cross-border Mergers & Increased cross-border Mergers & AcquisitionsAcquisitions
Global consumer markets and global Global consumer markets and global consumer brandsconsumer brands
Globalization & its Globalization & its discontentsdiscontents
Although globalization has brought wider choice, free flow of trade and investment, better technology, in most developing economies, financial services are available only to a small minority
More than 3 billion people world-wide are financially excluded
◦Majority of the people in developing countries do not have any banking relationship
◦They seldom get credit, insurance or receive remittances through formal financial institutions
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Global Meltdown - An Opportunity Global Meltdown - An Opportunity
Focus on Inclusive Growth Focus on Domestic Consumption and Investment Focus on increased Social Sector Spending Emphasis on giving benefits to poor clients Global (bigger) players looking Inward Reduction of Cost (?)
Let us Give One Big Push to Financial Inclusion!
CONCLUSION CONCLUSION
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• Financial Inclusion is a win-win situation for the financially excluded, the Corporates, the Govt. and the Banks.
• Bankers can support by financing the Agri products including their preservation and sales.
• Corporates can sell / market their products to the large untapped rural markets.
CONCLUSION CONCLUSION
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• Public-Private partnership can utilise “Common Service Centres”for enabling access to
• Banking Services and products including consumer loans; Micro-finance Services
• Farm Equipment, Home & Construction Loans
• Credit Cards, Debit Cards,etc., Bill Payment – Electricity, Utilities, etc.,Payment Gateway, ATMs
• Multi-purpose “Smart Cards” can simplify the financial inclusion process to reach the unreached.
Bangladesh Grameen Bank - Bangladesh Grameen Bank - MicrofinanceMicrofinance
Founded by Mohamed Yunus in 1974 with $27 own money
Micro-lending scheme for poor in Bangladesh, mostly women
In 30 years bank has 6.6m borrowers including 97% women
Founder Mohamed Yunus got Nobel Peace Prize 2006
Extent of Financial ExclusionExtent of Financial Exclusion
1. Coverage of (Estimates based on various studies and Market Surveys):
Check in accounts - 40% Life Insurance - 10.0% Non-Life Insurance - 0.6% Credit Card - 2% ATM + Debit Card - 13%
2. Geographical coverage- 5.2% villages are having a bank branch
3. Farmers coverage-- Out of 119 million farmers, small and marginal farmers
are 97.7 million (82.1 %)
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