Scribd
Upload
56 views21 pages

Financial Inclusion in India: Key Insights

The document discusses financial inclusion in India, defining it as providing access to basic financial services to underprivileged groups. It outlines various groups considered financially excluded, such as farmers, laborers, unemployed, and women. It describes the Reserve Bank of India's two approaches to financial inclusion as providing basic or expanded financial products. It also discusses various government and RBI initiatives to promote financial inclusion such as no-frills accounts, business correspondents, and the National Rural Financial Inclusion Plan. However, it notes some problems with financial inclusion such as reckless credit expansion and issues with some microfinance programs.

Uploaded by

Rahul Ghosale
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
56 views21 pages

Financial Inclusion in India: Key Insights

The document discusses financial inclusion in India, defining it as providing access to basic financial services to underprivileged groups. It outlines various groups considered financially excluded, such as farmers, laborers, unemployed, and women. It describes the Reserve Bank of India's two approaches to financial inclusion as providing basic or expanded financial products. It also discusses various government and RBI initiatives to promote financial inclusion such as no-frills accounts, business correspondents, and the National Rural Financial Inclusion Plan. However, it notes some problems with financial inclusion such as reckless credit expansion and issues with some microfinance programs.

Uploaded by

Rahul Ghosale
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

In India

Financial Inclusion as defined by RBI

Financial Inclusion Who are these People?


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

Agricultural and Industrial


Labourers

Agricultural and Industrial People engaged in un-organised


sectors
Labourers

Women

Children

Unemployed

Old people

Graphic: The World Bank / Global Findex project

Twin Aspects of Financial Inclusion

Financial Inclusion and Financial Literacy are


twin pillars. While Financial Inclusion acts from
supply side providing the financial market/services
what people demand, Financial Literacy stimulates
the demand side making people aware of what
they can demand.

WHAT limits access to financial services?

Psychological and cultural barriers


Low income
Legal identity-.

Geographical remoteness

Various terms and conditions

Nil or low savings


Lack of awareness/Financial illiteracy
Unemployment/Under Employment
Use of inappropriate products

Large section of population financially excluded!

Why financial Inclusion?


Economic Objective
Mobilisation of Savings
Larger Market for the financial
system
Social Objectives
Sustainable Livelihood
Political Objectives

Chetna yadav

Reserve Bank of India (RBI) adopts two approaches to


achieve Financial Inclusion
The minimalist approachavailability of basic financial products
and services.
The expanded approachavailability of ancillary financial
products such as general insurance, health insurance,micropension,housing finance and mutual fund.
Both the Approaches form a broader context of economic
inclusion

Chetna yadav

RBI and GoI Initiatives and Policy Measures and


Involvement in Financial Inclusion
No-Frill Accounts
Overdraft in Saving Bank Accounts
Simplification of Savings Bank Account Opening FormFinancial Literacy Program
Simplification of Know Your Customer (KYC) Norms and Guidelines
Overcoming language barriers
Kisan Credit Cards (KCCs)
Opening of branches in unbanked rural locations
Rural Infrastructure Development
SHG Bank-Linkage Programme
Business Correspondents (BCs) and Business Facilitators (BFs) Model Creation of Funds for Financial Inclusion-Financial Inclusion Fund and
Financial Inclusion Technology Development Fund
Chetna Yadav

National Rural Financial Inclusion


Plan (NRFIP) :
To provide access to financial services, including credit to at least 50% of
the financially excluded rural households through rural/ semi-urban
branches of commercial banks and RRBs.

Swabhimaan
Swabhimaan was launched in February, 2011 by the Government.
This campaign promises to bring basic banking services to 73,000
unbanked villages with a population of 2,000 and above by March,
2012 and at least 5 crore new accounts will be opened.
The movement will facilitate opening of banks accounts, provide
need-based credit, remittance facilities and help to promote financial
literacy in rural India.
Chetna yadav

World Bank models for Financial Inclusion

Consultative Model

Mandate-based Model

Partnership Model

Antaj

Problems with Financial inclusion

Subprime mortgage crisis


Microfinance crisis
Reckless credit expansion
Politicizing
Proportion of savers is more skewed

Antaj

Antaj

State of Financial Inclusion in India


Financial Inclusion Plan (FIP) is in progress, April 2010
onwards
opening rural brick and mortar branches
opening no-frills accounts through BC-ICT
Opening of New Bank Branches with population below
2,000
Negative gross margin of as high as 41.2 per cent
Significant cross-subsidising
direct cash transfers will translate into a saving of 4-5%

Antaj

Antaj

Financial Inclusion future


Huge increase in no frills accounts
More reach of services (e.g. ATMs, BCs)

Use of intermediaries
Self Help Groups
NGOs and MFIs

Role of Government

AADHAR schemes
State Level Bankers Committee (SLBC)
Entry of Private banks
Proposal to set-up a womens bank
Focus on FI in annual Budget
antaj

Thank You

You might also like