fi presentation (b 04 and b 03)

7/29/2019 FI Presentation (B 04 and B 03)

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A PRESENTATION ON

STUDY OF PROGRESS & DEVELOPMENT

OF FINANCIAL INCLUSION BY BANKING

SECTORA DETAIL STUDY FOR

GANDHINAGAR REGION.

Presented By:

Sachin Patel (B-03): 117690592013.

Sumit Kumar (B-04): 117690592011.

SJPI (NICM) GANDHINAGAR


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Finacial Inclusion

Financial inclusion may be defined as 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.

Electronic Benefit Transfer (EBT)

A system that allows state governments to provide and track benefits to

authorized recipients via a plastic debit card. Common benefits provided via

EBT are Food Stamps and Cash benefits.

The process of ensuring access to financial services and timely and adequate

credit where needed by vulnerable groups such as weaker sections andlow income groups at an affordable cost

- The Committee on Financial Inclusion

(Chairman: Dr. C. Rangarajan, 2008)



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LITERATURE REVIEW

The future lies with those companies who see the poor as their customers.

-C.K.Prahalad

Electronic Benefit Transfer (EBT) for servicing low value accounts and extending bankinginfrastructure to underserved low income areas has been implemented in the states of

Andhra Pradesh, Haryana, Karnataka, Orissa, Chhattisgarh, Himachal Pradesh,

Uttarakhand, Bihar, Punjab, etc. on pilot basis in select districts under the "One District

One Bank" Model. Difficulties have been expressed by stake holders in scaling the model.

The Reserve Bank, therefore, as part of its Financial Inclusion initiative encouragedgovernments to disburse social security payments through the banking channel leveraging

Electronic Benefit Transfers for financial intermediation. EBT is one of the products

offered under Financial Inclusion, which facilitates payments to reach the intended

beneficiaries through bank accounts, as now paying to NREGA &MNREGA workers. This

relieves State Government functionaries of cost and time involved.

In administering the high volume small value payments. Provision of door step banking

services in remote areas entails a cost on the banks. The payment of commission by the

State Governments for EBT transactions makes the model economically viable and also

helps banks to extend their penetration to remote villages. It also provides banks with a

business opportunity of linking credit products to the payments.

- August 12, 2011, RBI/201112/153, www.rbi.org.in



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CONT

Currently, local banks have a long way to go in bringing the unbanked areas within the banking

fold. As competitive intensity hoot up and ripples from international competition touch the

Indian shores in search of virgin markets, banks will have to revisit their cost models. Some

estimates indicate that the lack of financial inclusion from the banking system reduces potential

GDP by nearly 1.5 per cent.

Financial inclusion is one of the viable routes through which banks can maintain their

development and also survive the current financial crisis. But in order to do that there should be

extensive efforts both from the governments side as well as the banks themselves. According tothe Boston Consulting Groups 2007 report, The Next Billion Banking Customers the most

effective marketing campaigns will have to include equal parts of education and sales pitch. To

include their next customers, bank will have to access them, and be accessible. (Business world

Issue (18-24 Nov 2008)

In recent times financial inclusion has appeared as a major global agendum. At aggregate level,the common measure of financial inclusion are the number of bank account per adult,

geographic branch penetration, demographic branch penetration, geographic ATM penetration,

demographic ATM penetration, demographic deposit penetration, demographic credit

penetration, deposit income ratio, credit income ratio and cash deposit ratio (Beck, et al. 2006,

Peachy, et al., 2006 Conrad, et al., 2008 cited in Chattopadhyay (2011).



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Objective of the Study

To study the relative importance of Financial Inclusion.

Financial Inclusion a new scope for market penetration by

Banks.

To understand the operation of banking towards Financial

Inclusion and its Progress.

To check the awareness about Financial Inclusion among

urban and rural people.



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Significance of the Study

This study will help to understand;

The Banking operation towards Financial Inclusion.

To study and analyse customers need from banking services.

Extensive study of EBT with convergence to Financial Inclusion

The awareness for the perception towards banking by society at large,

especially financially excluded.

The overall scenario of market need by banks and its prospective

customer.

The discovery of the best possible way to cover financially excluded

people and maximise customers.



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Research Methodology

Objective:

To study the customer awareness with respect to banking services.

To check whether the awareness level of customers differs on account of

their education background.

Data Collection Method Primary Data.

Data Collection Tool Questionnaire.

Sampling Technique Convenience Sampling.

Sampling Unit Account holders & Non A/C holders.

Sample Size 390 respondents.

HYPOTHESES

Ho = Gender and owning an account are independent.

Ho = Income and owning an account are independent.



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Important Milestones on Road to Financial

Inclusion in India

1969 Nationalization of 14 major Commercial Banks.

1975 Setting up of Regional Rural Banks.

1990s Self Help Group

2005 RBI advised banks to open no frill accounts.

2006 RBI allowed BC/BF to act as agents of bank.

Sept. 2010 RBI allowed for - profit companies (excluding

NBFC) to act as Business Correspondent.

2008 Proposed Financial Inclusion with convergence toElectronic Benefit Transfer (EBT.)

2011 National Payment Corporation of India (NPCI)

launched Interbank Mobile Payment System.



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Financial Inclusion - Scope

Financial Inclusion should include access to financial products andservices like;

Bank accounts

check in account Immediate Credit

Savings products

Remittances & Payment services

Insurance - Healthcare

MortgageFinancial advisory services

Entrepreneurial credit

Underprivileged section in rural and urban areas like, Farmers,small vendors, etc.

Agricultural and Industrial Labourers People engaged in un-organised sectors Unemployed Women Children Old people

Physically challenged peopleSJPI (NICM) GANDHINAGAR


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Extent of Financial Exclusion

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%

1. Geographical coverage

- 5.2% villages are having a bank branch

2. Farmers out of coverage-- Out of 119 million farmers, small and marginal farmers are 97.7

million (82.1 %)



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Reasons of financial Exclusion WhyHaveWe Failed?

Absence of Technology

Absence of reach and coverage

Delivery Mechanism

Not having a Business model

Rich have no compassion for poor

Focus on Inclusive Growth

Banking Technology has arrived

Realization that Poor is bankable



12/17SJPI (NICM) GANDHINAGAR


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Financial Inclusion Models Adopted by theBanks

FinancialInclusion

Branch basedModel

(Brick andMortar)

BranchlessModel

(ICT Model)

ICT (Information & Communication Technology)

Model

Base Branch acts as a focal point for Business

Correspondents (BCs)

BCs are engaged by the Bank/technologyproviders

BC Agents (BCAs) contact the customers for

enrollment and issue biometric smart cards.

BCAs use laptops and POS in Off Line mode.

Relaxed KYC norms

Brick & Mortar Model- Opening -No frill accounts (Zero balance

accounts) with relaxed KYC norms

- Launched ATM card; withdrawal limit : upto

Rs. 5,000 per day.



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Web Camera for Photograph

Biometric scanner forFingerprints

Pad for Signature capturing

Battery Power back-up for undisruptedenrolment

Customer Enrollment Process

14


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FI Intermediaryserver

Vendor

Intermediary

server

Data conversion

Back Office 1

Back Office 3Back Office n

Back Office 2

Validation of

Data

External

FirewallExternal

Firewall

FINCBS Server at DC

FI Vendor

Cardpersonalization

centre

Card distributioncentre

ENROLLMENT

PROCESS



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Machine is used to

capture Transactions

HHT application

supports all products

Secured transactionWith BCA card &

Customer card

Transactions are

Recorded in customer

& BCA card

Banks security key

embedded in SAM-

smart chip component

of HHT

Transaction Process

Transaction at the village carried out by BCA with

Hand Held Terminal (HHT)

16SJPI (NICM) GANDHINAGAR


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THANK YOU !


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