To, The coordinator School of Management Studies Indira Gandhi National Open University (IGNOU) Maidan Garhi New

Delhi 68.

Subject:- Submission of Project Report MS 100

PP No. 72721 Dear Sir/ Madam, Please find enclosed with this letter following documents:-

Certificate of Originality duly signed and verified by the project guide and myself.( bound in Project Report) Original Copy of approval letter of Project proposal (M.S 100) (bound in project Report). Bio- Data of the Project supervisor verified by him. duly signed and

Remuneration bill of the supervision duly signed verified by him.

Thanking You in anticipation for your kind consideration and early response. Yours Faithfully R.S Rathore Enrollment No. 032081763

EVALUTION OF FINANCIAL INCLUSION OF SOCIETY BY PUBLIC SECTOR BANKS:

A CASE STUDY OF PUNJAB NATIONAL BANK IN UTTARAKHAND Project Report (MS 100) (P.P. No. 72721) To be Submitted to IGNOU in fulfillment of the requirement for the award of Degree of Master in Business Administration (MBA) (Banking & Finance) By RAJENDRA SINGH RATHORE (Chief Manager Punjab National Bank) En. No. 032081763

UNDER THE SUPERVISION OF

Dr. K. R. JAIN, D. Litt.

Associate Professor
Faculty of Commerce D.A.V (P.G) COLLEGE DEHRADUN (UTTARAKHAND)

SCHOOL OF MANAGEMENT STUDIES INDIRA GANDHI NATIONAL OPEN UNIVERISTY MAIDAN GARHI NEW DELHI

CONTENTS
Sl. No. Page No.

Abstract Certificate of Originality Acknowledgement Copy of Approved Synopsis Scope and Plan of the Research Work CHAPTER ONE An Introduction of Banking 1. 2. 3. History of Banking Indian Banking Scenario An overview Punjab National Bank CHAPTER TWO Concept of Financial Inclusion 1. 2. 3. 4. Background Who need to be included? Financial Inclusion Committee on Financial Inclusion

(i) (ii) (iii) (iv) (v)

1-21

22-35

CHAPTER THREE Data Analysis and Interpretation 1. 2. 3. 4. 5. Introduction Selection Branches Collection of Data Analysis of Data Questionnaire and Response 36-57

CHAPTER FOUR

58-63

Evaluation of Financial Inclusion of Society by Punjab National Bank in Dehradun District CHAPTER FIVE . 1. 2 3 4 Observations Suggestions for Banks, Governments and Society Summary of Observations and Recommendation Conclusion Annexure I II III IV Summary of Questions and Response Questionnaire Bibliography Supervisors Resume Concluding Observations & Suggestions 64-73

ABSTRACT
In an Organized Society Economic Development is considered to be most important Indicator of human Development. The country like India where disparities in wealth and Economic Development are more visible the Government can not remain silent spectator to such Discrimination. The vast majority of people in India are reported to have no access to formal source of credit. National Sample Survey Organization has conducted a survey (2003) and reported that 51.4% of Farmer and 78.2% non farmer house holds did not have access to credit from formal sources. These sections are termed as financially excluded people. The severity of this magnitude has prompted Government to take some affirmative action. A committee on Financial Inclusion was set up under the Chairmanship of Dr. C. Rangrajan (Economi\Advisor to Prime Minister of India) which had submitted various recommendations and the same have been accepted by the Government. Reserve Bank of India in line with Policies of Government has taken up the agenda of Financial Inclusion. A wide spread exercise throughout the country, at grass root level, has been undertaken by the banks for this purpose. Punjab National Bank has very strong footings in the Indo Gengatic Belt. The bank has taken up Financial Inclusion agenda in the Northern States including the state of Uttarakhand. Dehradun is the lead District of the bank in the State. The Financial Inclusion project is under implementation in the District. The study conducted is an attempt to evaluate the progress made by the bank using the questionnaire and survey of respondents from the project area.

CERTIFICATE OF ORIGINALITY
This is to certify that this project work entitled EVALUATION
OF FINANCIAL INCLUSION OF SOCIETY BY PUBLIC SECTOR BANKS A CASE STUDY OF PUNJAB NATIONAL BANK IN UTTARAKHAND is an original work of RAJENDRA SINGH RATHORE and is being submitted for partial fulfillment of MBA (Banking & Finance) Degree to INDIRA GANDHI NATIONAL OPEN UNIVERSITY New Delhi. This research project has not been submitted

to INDIRA GANDHI NATIONAL OPEN UNIVERSITY New Delhi or any other University/Institute for the fulfillment of the requirement of course of study.

Signature of Project Guide Dr. K. R. Jain, D. Litt. Associate Professor Department of Commerce D.A.V (P.G) College, Dehradun, Uttarakhand Date: 20-05-2011 Place: Dehradun

Signature of Student Rajendra Singh Rathore (Chief Manager) (Punjab National Bank) En. No. 032081763

ACKNOWLEDGEMENT
The present study entitled Evaluation of Financial Inclusion of Society by Public Sector Banks : A Case Study of Punjab national Bank in Uttarakahd is aimed at making an evaluation of Financial inclusion project undertaken by Punjab National Bank in Dehradun District . The study has been mainly conducted through Questionnaire and data collected through respondents with the help of various branches of Punjab National Bank working in the District I have been extremely fortunate to received unstained cooperation from Punjab National Bank staff and guidance from the Higher Management . I sincerely acknowledge the contribution of my guide Dr. K.R Jain Associate Professor in Deptt. Of Commerce, D.A.V (PG) college, Dehradun who helped me with his critical insights into my study. His help was always available to render valuable advice and needful suggestions I also express my heartfelt gratitude to my parents, family members (Sanghmitra, Aditya ) friends (H.K Ghai ) and colleagues for providing me moral support to accomplish this project in time. I also take this opportunity to express my sincere feelings to my wife Smt Krishna Shekhawat for her active support at home and making the environment conducive to carry out this study. I take this opportunity to convey my thanks to all those who have contributed and helped me in the present work. I acknowledge the inspiration and guidance that I received from bank employees and faculty members of IGNOU in pursuit of this study

Date :20-05-2011
Place: Dehradun 032081763

Rajendra Singh Rathore

Enrollment No.

COPY OF APPROVE D

SYNOPSI S

EVALUATION OF FINACIAL INCLUSION OF SOCIETY BY

PUBLIC SECTOR BANKS A CASE STUDY OF PNB IN UTTARAKHAND

PROJECT MS 100

Submitted to the Indira Gandhi National Open University for partial fulfillment of the award of the

Master Degree in Business Administration Specialized in Banking Sector & Finance

Feb 2011

By Rajendra Singh Rathore Enrollment No. 032081763

Under

Dr. K.R JAIN, D.Litt. (Associate Professor , Department of Commerce DAV (PG ) College , Dehradun , Uttarakhand )

School of Management Programme Studey Indira Gandhi national Open University Maidan Garhi ,New Delhi -100 068 ,INDIA | www. ignou.ac.in

CONTENTS
S.No NO. 1. 2. 3. 4. 5. 6. TOPIC An Introduction of Indian Banking Sector An Overview of Punjab National Bank The Concept of Financial Inclusion Objectives of Project work Research Methodology of Project Work Hypothesis of Project Work 6.1 6.2 7. 8. H0 (Null Hypothesis) HA (Accepted Hypothesis) 11-12 12-13 PAGE 1-4 4-7 7-9 9 9-10 11

Scope and Plan of The Project Work Need and Expected Contribution of the Project Work 8.1 8.2 Need of the Project Work Expected contribution

8.2.1 Contribution to the Government 8.2.2 Contribution for the Bank 8.2.3 Contribution for the Society

9. 10 11

Limitations of The Project Work Bibliography of the Project Work Annexure (Resume of Supervisor)

13 14 1

EVALUATION OF FINACIAL INCLUSION OF SOCIETY BY PUBLIC SECTOR BANKSA CASE STUDY OF PNB IN UTTARAKHAND
1. AN INRODUCTION OF INDIAN BANKING SECTOR

1.1 General Definition

Bank is a Greek word which is derived from Banca. Bank as per oxford English dictionary is a place where money is deposited, withdrawn and loans are given. This simple definition describes bank in a crude form. The Purpose of bank is to mobilize savings effectively and allocate the same efficiently among the ultimate users of Funds i.e investors. The Banking Sector brings together the savers and investors. 1.2 Functions of The Bank Traditionally Banks are supposed to perform the following functions . - Accepting the Deposits from the person who have surplus of it. - Lending the money to the person /entities who are in need of money. - Providing payment and remittance services. - Providing services like safe deposit vaults, safe custody of articles. - Providing services of payments of utility Bills like telephone, Electricity etc. 1.3 The Composition Of Indian Banking System.

In India Banks can be broadly classified into following categories :Public Sector Banks Public sector Banks are those Banks which are owned and controlled by Govt. of India and where majority share holding is with GOI. Presently the limit prescribe for any bank to be classified as public sector bank is minimum 51% share holding of Govt. of India. This sector includes Nationalized banks state bank Group and Regional Rural Banks. Private Sector Banks Private sector Banks are those banks where more then 50% share holding is with Indian Nationals/Corporate Entities.

Co operative Banks These banks are in co-operative sector and managed by different cooperatives spread all over the length and breadth if India Governed by cooperative acts of different states and union territories. Foreign Banks These Banks are either incorporated outside India and /or where majority holding is with foreign nationals /bodies. In India the Banking System may be represented in Diagrammatic from as under Role of Bank:

Reserve Bank of India (Regulatory and Monetary Authority)

Central Bank Central Bank

Commercial Banks Banks

Regional Rural Banks Banks

Co-operative Banks Banks

Developmental Banks Banks

Public Sector Banks Banks

Private Sector Banks Banks

State Co-operative Banks Banks

District Co-operative Banks Banks Nationalized Banks Bank Banks State Bank Group Group Indian Foreign Primary Credit Society Society

National Bank for Agriculture & Rural Development (NABARD ) - Refinance to Banks for Agriculture & Rural Development activities Small Industries Development Bank (SIDIBI) Refinance for SSI to Bank Export Import
Bank (EXIM) Bank Refinance for Export Import to Bank

State Bank of India Of India

Associate Banks Banks

National Housing Bank (NHB) Refinance for Housing to Bank

Role Of Banks Now a days Bank have assumed very vital role in Indian Economy and these are back bone of the financial system of the nation. They not only provide safe and secure place to deposit the surplus money of the customer but the much needed financial support to the Individuals firms corporate entities and public sector corporations is provided by the Banking system.
1.4

Banks also provide a secure and reliable payment /Remittance system which is essential for a stable economy. Indian Financial sector is dominated by Nationalized banks followed by. Private and foreign Banks these banks are supporting Agriculture, manufacturing and services sectors. We can say that all three sectors of Indian Economy namely primary Secondary and Territory Sectors are heavily dependent upon banks. So far these have been adequately supported by these institutions (Particularly Public Sectors banks have been proven to be effective change agents for the eradication of poverty in our country. All the poverty alleviation programmes such as Swarn Jayanti Gram Swarojgar Yojna (SGSRY) and Swarn Jayanti Sahari Rojgar Yojna (SJSRY) for Rural and Urban areas respectively. Prime Ministers Employment Generation programme (PMEGP) (For Rural & Urban areas) are being implemented by the Banks Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) is also being implemented successfully with the help of Banks. In the post liberalization Era (After implementation of Narshimam Committee I&II) public Sector Bank have shown a remarkable change. They are being highly customer focused and adopting fast track approach. They have become futuristic with large scale implementation of Information technology solutions and knowledge upgradation of existing work force. These Banks are reorienting their strategies to stay competitive in the era of stiff competition. The center of focus is customer understanding their needs and launching product according to their choice for their delight. All these initiatives have helped public sector Bank to remarkably improve their bottom line. Healthy growth in the size of their balance sheet with lesser amount of Non performing Assets (NPAs) are their strong areas. 2. AN OVERVIEW OF PUNJAB NATIONAL BANK
2.1 Historical Background and Present State:-

Punjab National Bank (PNB) is the largest nationalized bank and second largest bank in India In terms of total Business figures as on 31-032010 Total Deposits Rs 249330 crores and total advances as Rs 186601 crores taking total Business to Rs 435931 crores with year on year Growth (Y.O.Y) of 22.30 % .As on 31-12-2010 the deposit have crossed Rs 300,000 crores mark and total business of the bank has crossed whopping sum of Rs 5,00,000 crore plus. It is the only largest commercial bank in India which has never been under control of any Business/Industrial House. It was founded by the Great

Freedom fighters for the furtherance of cause of freedom. It was The Bank of the Indians By the Indians and For The Indians with 100% Deshi Capital. It was founded on 13th April 1895 (Baisakhi) with its Head Quarter at Lahore. Punjab Keshri Lala Lajpat Rai was its founding member. After partition its head office was shifted from Lahore to Delhi. The Bank has BANKING FOR THE UNBANKED as its Mission. 2.2 Operational Structure of PNB:The present structure may be depicted in Diagrammatic form

(7- Bhikhaiji Cama Place New Delhi) New Delhi

Head Office

Formulation of Policies and overall Administrative Control through Different Divisions

Circle Offices
65 offices across all over India

Guiding and Controlling the branches for implementation of the Policies formed by Head office

5200 plus spread all over the length & Breadth of country with Concentration in Indogengitic Belt

Branches

As discussed above head office is the apex policy making Authority for the Bank and it forms policies according to Reserve Bank of India and Govt. of India policy Guidelines. The Bank has following Division at Head office for smooth implementation of polices Formed by Board of Directors. According to their role these have been categorized following categories .

Business Divisions Compliance Division Corporate Marketing Division Credit Administration Division Credit Card Division Financial Inclusion Division Government Business Division (GBD) International Banking Division (IBD ) Micro Small and Medium Enterprises Division (MSME) Priority Sector and lead Bank Division ( PSLB) Resources Mobilization Division

Retail Assets Division

Treasury Division Support Divisions Board and Coordination Division General Administration Division Human Resources Division Personnel Administration Division Information Technology Division Law Division Management Advisory Service Division Management Information System Division Organizational & Strategic Planning Division (OSPD )

Pension and Provident Funds Division Printing and Stationary Division Strategic Planning an d Business Process Reengineering Division Control Divisions Credit Audit and Review Division Finance Division Inspection and Audit Division Risk Management Division Management Audit and Review Division

2.3Functional Hierarchy Each Division at Head office is headed by General Manager and assisted by Deputy General Manger, Assttt. Gen. Manger, Chief Manger , Senior Manger etc. Similarly circles are Headed by General Manager/ Dy General Manger and assisted by Asstt. General Manger /Chief Manger , Sr. Manger, Managers and Officers. Head office Division monitor and guide the circle offices in their respective field. Similarly at circle level different department are created which co- ordinate with concerned Head Office Division and in turn guide the branches and Monitor their progress in the respective segment. 3 THE CONCEPT OF FINANCIAL INCLUSION The term Financial Inclusion is popular in Indian Financial Circles. This is Especially after the Reserve Bank of India announced a series of measures. In its credit policy for 2006-2007 it has directed banks to include the excluded population in the banking net. Extending the reach of formal financial institutions among the poorest of poor should mean taking them out of the clutches of money lenders. If we define Financial Inclusion we may say that this is a process of ensuing access to financial services and timely and adequate credit, where needed by vulnerable groups such as weaker section and low income groups at an affordable cost.

Thus by Financial Inclusion (FI) we mean delivery of banking services and credit at an affordable cost to vast section of disadvantaged and low income groups, The various financial services includes savings, loans, payments, remittances and financial counseling / advisory services by formal financial system. The term Financial Inclusion is perceived in different way in different context. One view is that access to credit may be treated as Financial Inclusion where as fl where as other view includes the services extended by the Financial Institutions. This means that it is all about finance and money but the ultimate object is to abolish the state of social exclusions in the economy. The concept may be understood in a simple diagrammatic from as under This is an ideal situation where an individual belonging to lowest strata of society is provided with above types of services then we can say that the real objective are fulfilled with In the letter and spirit. To begin with this may be started from opening of no-frill bank account with some amount of overdraft facility inbuilt in system. For which no documentation is required to be fulfilled by the beneficiary except for the opening of account with known your customer (KYC) compliance.

Bank A/c Insuranc e Saving s

Financial Inclusion Inclusion

Payment and Remittances Affordable Credit credit

Financial

Financia l Advice

The term Financial Inclusion has gained momentum in the recent past

world over as we see that benefits of economic development have not percolated to the lowest start a of society and without this economic development is meaningless.

In India nearly 29 percent of our population (292 millions) is living below poverty line .To make of our economic development sustainable it is very important that vast pool of human resources is brought in to main stream of economic activities. That is why Financial Inclusion has got special role to play . This concept has found mention in our National Planning during Eleventh Five Year plan for the first time Now a days it has become a common agenda for all the banks operating in rural and semi urban areas in particular. Separate Divisions/Department have been created at apex level of every Bank. RBI has also accorded top priority to this agenda. A Deputy Governer is entrusted to monitor the pace of implementation of project by Commercial Banks. RBI is assisted by National Bank for Rural Development (NABARD) which is monitoring the pace of implementation by Regional Rural Bank and cooperative Banks. 4. OBJECTIVES OF THE PROJECT WORK The main objective of the study is to analyze the Financial Inclusion of the society by the Public Sector Banks in Uttarakhand particularly in case of Punjab National Bank . To achieve the main objective of the project work, there will be some secondary objectives which are as under To study the over all position of PNB in Financial Inclusion. To study the changing trends and progress of Banking system with reference to Financial Inclusion. To identify the major challenger faced by banks in Financial Inclusion in Uttarakhand. To suggest measures regarding effective use of Financial Inclusion by Banking Sector in Uttarakhand To suggest measures to government and Banks to sustain the benefits of Financial Inclusion for the Society .

RESEARCH METHOD OLOGY OF THE PROJECT WORK

5.1Research Design

Descriptive Research Design is used as the characteristics of the customers of PNB and their perception about Benefits of Financial Inclusion project. How the project is beneficial to them in particular and society in General is determined and described. 5.2 Collection of Data The Project work will be based on Primary & Secondary Data. Primary Data The primary data shall be collected through Questionnaire/,Survey in the project area , Interviews & discussion with beneficiaries, Bank officials and govt. officials working in different Government department in the area. Secondary Data The secondary data shall be collected from following sources: Annual report of PNB News Bulletin Monthly Review Report published by PNB Books Research papers, Articles in magazines News paper Internet sites Proceedings of Meetings etc. 5.3 Sampling Design
Judgmental sampling will be used in the study as the sample will be selected on the individual judgment of the Researcher out of the entire target group. 5.4 Study Area The Area of Dehradun District being served by PNB branches shall be covered 5.5 Sample size- Around 50 persons including NGOs, Govt. Officers shall

be contacted and information will be collected. 5.6 Data Analysis and Interpretation The data will be analyzed will be appropriate graphical representation of the data such as tables, figures and charts etc. would be appropriately used as an where required. 5.7 Tool and technique :-- Following tools and techniques are supposed to be used in data analysis an interpretation

-Questionnaires -Bar graphs -Pie chart

HYPOTHESIS OF THE PROJECT WORK

6.1

Ho (Null Hypothesis ) Financial Inclusion project is not good for the society. The commitment of Banks to cover the entire population under bank net is not there. Financial Inclusion is neither viable nor beneficial for the bank. The financial information, results found are not helpful

6.2

HA (Accepted Hypothesis) Financial Inclusion project is good for the society There is strong commitment of the banks to cover the entire population under Bank net Financial Inclusion project is viable and feasible for all the stake holders. The financial information, results found are very helpful.

SCOPE AND PLAN OF THE PROJECT WORK

7.1

Scope of the Project Work

The study could give the project scenario for a new successful strategy with proper implementation of the plan. The features of scope are as under: The study could give an idea of net work expansion of banks in Rural area for the better implementation of the Financial Inclusion Project. The study could give insight in to the Financial Inclusion Model and its impact on the target group. The study is expected to give feed back about the approach of different stake holders, their roles and responsibilities in the implementation of the project. 7.2 Plan of the Project Work

The plan of project work will be divide in the following five chapters Chapter-I An Introduction of Banking Chapter-II Concept of Financial Inclusion Chapter-III Data Analysis and Interpretation Chapter-IV Evaluation of Financial Inclusion of society by PNB in Dehraun Distt. Chapter-V Concluding Observations and Suggestions 8. NEED AND EXPECTED CONTRIBUTION OF THE PROJECT WORK: The discussion has revealed that banking has grown leaps and Bounds so has the economy but still 290 Million of people are living below poverty line. This high levels of poverty is a big question mark on our economic development. To make this development sustainable the growth should be inclusive therefore this project is of vital importance for Central & State Governments and public at large. 8.1 Expected contribution The study is expected to contribute to all the three stake holders central and state governments, society and banks. 8.2.1 Contribution to the Central & State Governments

The study will bring to the fore issues which require direct intervention from central & state Government in the field of framing policies for such other project and their dovetailing (integration of financial inclusion with Unique Identity project (UID) ) Taking corrective action in the schemes aimed at improving the living standard of the down trodden strata of society Deciding the level of govt. intervention in co-ordination of financial inclusion project amongst Bank Development Agencies and people at large. In Judging the performance of banks in this particular field. Contribution to the Bank The bank had launched the project in Dec. 2008 with much fun fare. The study is expected to bring to the knowledge of bank that. Upto what extent its object of 100% Financial Inclusion in the project area has been achieved. What are the critical constraining factors in the successful implementation of the project ? What kind of support is needed from the Govt agencies /Department for 100% success of the project. ? Which types of scheme are to be framed at bank level to make the project result oriented? Contribution to the Society The object of the project to bring to the fore the importance of financial inclusion. For the overall well being of the society at large and to use the vast pool of human Resource as a tool of the economic Development so that society will come to know. Whether this project has brought some perceptible charge in the locality?

Whether the people of commend area are feeling involved in national main stream of economy. Whether the financial Inclusion project can help the people to shun the violence so that socio economic fabric can be strengthened.

9 LIMITATIONS OF THE PROJECT WORK An study in any field is small step and it can not be ultimate. It always leaves room for improvement. The limitation of one study serve as a basis for the further research in that direction. Every researcher has the Endeavour to ensure that TRUE picture is brought out but there may be some limitations related to the study these are enumerated as under :The study is limited to little available relevant literature. Bank do not divulge informations ( due to concept of secrecy ) Questionnaire are not responded timely as the researcher has no authority to compel respondent to give answer. Assistance of clerical support staff is not made available timely.

Thus it can be concluded that despite of above limitations of the project a sincere effort will be made to minimize them and to make work more useful for the Banks , Financial Institutions and other stakeholders.

SCOPE & PLAN OF THE RESEARCH WORK

Chapter I

INTRODUCTION OF BANKING
1- HISTORY OF BANKING 2- INDIAN BANKING SCENARIO
3- AN OVERVIEW OF PUNJAB NATIONAL BANK

Chapter I

INTRODUCTION OF BANKING
1- History of Banking The word bank was borrowed from high German banc, bank (Meaning Bench, counter) To Banca as old Italian word. This word was borrowed by French as baque and this was borrowed by Middle English as Bank. The Earliest evidence of money changing activity was depicted on a silver Greek drachem coin from ancient Hellenic colony presented in the British museum in London. The coin snows a Bankers table (Trapeza) laden with coins, a pun on the name of the city. In Modern Greek word the Trapeza means the same old Bank and table. Banking in modern form can be traced to medieval Italy. The rich cities in the northern Italy, like Florence, Venice and Genoa. Were the first to have banks. The earliest known state Deposit Bank Banco di san Giorgio (Bank of sant Geoge) was founded in 1407 at Genoa Italy. Bank as per oxford English dictionary is a place where money is deposited, withdrawn and loans are given. This simple definition describes bank in a crude form. The Purpose of bank is to mobilize saving effectively and allocate the same efficiently among the ultimate users of Funds i.e. investors. The Banking Sector brings together the savers and investors.

2. Indian Banking Scenario

Globally Banks have become

Backbone of Economies. Indian Economy is not exception to it.

2.1 History

Established in 1786 the General Banks of India was first

Bank to be established in India followed by Bank of Hindustan (1790) both these banks are non-existent now. The State Bank of India is Oldest Bank in existence in India. It was named as State Banks of India after Independence of our Nation. Earlier it was known as Imperial Bank of India. The Imperial Bank was formed in 1921 after amalgamation of three Presidency Banks i.e. The Bank of Madras, Bank of Bombay and Bank of Bengal (it was oldest amongst three and was formed in June 1806 as Bank of Calcutta) In 1838 Union Bank was established by merchants of Calcutta but it failed in 1848. Allahabad Bank is the oldest joint stock bank which started its functioning in 1865. Prior to this the bank of Upper India was established in 1863 but it failed in 1913. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire dEscompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1860; branches in Madras and Puducherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center. The first entirely Indian joint stock bank was the Oudh Commercial Bank (1881) but it failed in 1958. The next was the Punjab National Bank established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian Joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments. The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. The fervor of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara (South Kanara) district. Four nationalized

banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as Cradle of Indian Banking. During the First World War (1914-1918) through the end of the second World War (1939-1945), and two years thereafter until the independence of India were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table: Years 1913 1914 1915 1916 1917 1918 2.2 Number of banks Authorized that failed 12 42 11 13 9 7 (Rs. Lakhs) 274 710 56 231 76 209 capital Paid-up (Rs. Lakhs) 35 109 5 4 25 1 Capital

Post-Independence
The partition of India in 1947 adversely impacted the economies of Punjab

and West Bengal, paralyzing banking activities for months. Indias independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into

greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: The Reserve Bank of India, Indias central banking authority, was nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) to regulate, control, and inspect the banks in India. The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.

2.3 Nationalization
Despite the provisions, control and regulations of reserve Bank of India, banks in India except the State Bank of India (SBI), continued to be owned and operated by private persons. By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the nationalization of the banking industry. The Government of India issued ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969. Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill. And it received the presidential approval on 9 August 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the Government of India controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalized banks from 20 to 19.

2.4 Liberalization
The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks nay be given voting rights which could exceed the present cap of 10%, at present it has gone up to 74% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Currently banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and

transparent balance sheets relative to other banks in comparable economies in its region; The Reserve Bank of India is an autonomous body, with minimal pressure form the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. The banking sector in India may be depicted in diagrammatic form as under.

Reserve Bank of India (Regulatory and Monetary Authority) Central Bank

Commerci al Banks

Regional Rural Banks

Co-operative Banks

Developmental Banks

Public Sector Banks

Private Sector Banks

State Cooperative Banks

District Cooperative Banks Nationaliz ed Banks State Bank Group India n Foreig n Primary Credit Society

National Bank for Agriculture & Rural Development (NABARD) Refinance to Banks for Agriculture & Rural Development activities Loans Development activities

State Bank of India

Associat e Banks

Small Industries Development Bank of India (SIDBI) Refinance for SSI to Bank

Export Import Bank (EXIM) Bank Refinance for Export Import to Banks

National Housing Bank (NHB) Refinance for Housing to Banks

3. An Overview of Punjab National Bank

PNB was founded in the year 1895 at Lahore (presently in Pakistan) as an offshoot of the Swadeshi Movement. Among the inspired founders were Sardar Dayal Singh Majithia, Lala HarKishan Lal, Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C. Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, Lala Dholan Dass. Sardar Dayal Singh Majithia was the founder Chairman. With a common missionary zeal they set about establishing a national bank; the first one with Indian capital owned, managed and operated by the Indians for the benefit of the Indians. The Lion of Punjab, Lala Lajpat Rai, was actively associated with the management of the Bank in its formative years. The first Board of 7 Directors comprised of Sardar Dayal Singh Majithia, who was also the founder of Dayal Singh College and the Tribune; Lala Lalchand one of the founders of DAV College and President of its Management Society: Kali Prosanna Roy, eminent Bengali pleader who was also the Chairman of the Reception committee of the Indian National Congress at its Lahore session in 1900; Lala Harkishan Lal who became widely known as the first industrialist of Punjab; EC Jessawala, a well known Parsi merchant and partner of Jamshedji & Co. of Lahore; Lala Prabhu Dayal, a leading Rais, merchant and philanthropist of Multan; Bakshi Jaishi Ram, an eminent Civil Lawyer of Lahore; and Lala Dholan Dass, a great banker, merchant and rais of Amritsar. Thus a Bengali, Parsi, a Sikh and a few Hindus joined hands in a purely national and cosmopolitan spirit to found this Bank which opened its doors to the public on 12 th of April 1895. They went about it

with a Missionary Zeal. Lala Harkishan Lal, the first secretary to the Board and Shri Bulaki Ram Shastri barrister at Lahore, was appointed Manager. A Maiden Dividend of 4% was declared after only 7 months of operation. Lala Lajpat Rai was the first to open an account with the bank which was housed in the building opposite the Arya Samaj Mandir in Anarkali in Lahor. His younger brother joined the Bank as a Manager. Authorised total capital of the Bank was Rs. 2 lakhs, the working capital was Rs. 20000. It had total staff strength of nine and the total monthly salary amounted to Rs. 320. The first branch outside Lahore was opened in Rawalpindi in 1900. the Bank made slow, but steady progress in the first decade of its existence. Lala Lajpat Rai joined the Board of Directors soon after, in 1913, the banking industry in India was hit by a severe crisis following the failure of the peoples Bank of India founded by Lala Hakishan Lal. As many as 78 banks failed during this crisis. Punjab national Bank survived. Mr. JH Maynard, the then Financial Commissioner, Punjab, remarked... Your Bank survived no doubt due to good management. It spoke volumes for the measure of confidence reposed by the public in the Banks management. The years 1926 to 1936 were turbulent and loss ridden ones for the banking industry the world over. The 1929 Wall Street crash plunged the world into a severe economic crisis. It was during this period that the Jalianwala Bagh Committee account was opened in the Bank, which in the decade that followed, was operated by

Mahatma Gandhi and Pandit Jawaharlal Nehru. The five years from 1941 to 1946 were ones of unprecedented growth. From a modest base of 71, the number of branches increased to 278. Deposits grew from Rs. 10 crores to Rs. 62 crores. On March 31. 1947, the Bank officials decided to leave Lahore and transfer the registered office of the Bank to Delhi and permission for transfer was obtained from the Lahore High Court on June 20, 1947. PNB was then housed in the precincts of Sreeniwas in the salubrious Civil Lines, Delhi. Many a staff member fell victim to the widespread riots in the discharge of their duties. The conditions deteriorated further. The Bank was forced to close 92 offices in West Pakistan constituting 33 percent of the total number and having 40% of the total deposits. The Bank, however, continued to maintain a few caretaker branches. The Bank then embarked on its task of rehabilitating the displaced account holders. The migrants from Pakistan were repaid their deposits based upon whatever evidence they could produce. Such gestures cemented their trusts in the bank and PNB became a symbol of Trust and a name you can bank upon. In 1951, the Bank took over the assets and liabilities of Bharat Bank Ltd. And became the second largest bank in the private sector. In 1962, it amalgamated the Indo-Commercial Bank with it. From its dwindled deposits of Rs. 43 crores in 1949 it rose to cross the Rs. 355 crores mark by the July 1969. Its number of offices had increased to 569 and advances from Rs. 19 crores in 1949 to Rs. 243 crores by July 1969 when it was nationalized.

Since inception in 1895, PNB has always been a Peoples bank serving millions of people throughout the country and also had the proud distinction of serving great national leaders like Sheri Mahatma Gandhi, Sarvshiri Jawahar Lal Nehru, Gobind Ballabh Pant, Lal Bahadur Shastri, Rafi Ahmed Kidwai, Smt. Indira Gandhi etc. amongst other who banked with it. PNB has always responded enthusiastically to the nations needs. It has been earnestly engaged in the task of national development. In the process, the bank has emerged as a major nationalized bank.

3.1 Journey of Progress

1895: PNB established in Lahore. 1904: PNB established branches in Karachi and Peshawar. 1939: PNB acquired Bhagwan Dass Bank Limited. 1947: Partition of India and Pakistan at Independence. PNB lost its premises in Lahore, but continued to operate in Pakistan. 1960: PNB amalgamated Indo-Commercial Bank Limited (Established in 1933) in a rescue. 1961: PNB acquired Universal Bank of India. 1963: The Government of Burma nationalized PNBs branch in Rangoon (Yangon). 1965: After the Indo-Pak war the government of Pakistan seized all the offices in Pakistan of Indian banks, including PNBs head office, which may have moved to Karachi. PNB also had branches in East Pakistan (Bangladesh).

1969: The Government of India nationalized PNB and 13 other major banks on 19th July, 1969. 1978: PNB opened a branch in London. 1988: PNB acquired Hindustan Commercial Bank Limited in a rescue. 1993: PNB acquired New Bank of India, which the Government of India had nationalized in 1980. 1997 : Joint venture in Everest Bank Ltd, Kathmandu, Nepal. 1998: PNB set up a representative office in Almatty, Kazakhstan. 2003: PNB took over Nedungadi Bank (established in 1899), the oldest private sector bank in Kerala. It was incorporated in 1913 and in 1965 had acquired selected assets and deposits of the Coimbatore National Bank. At the time of the merger with PNB, Nedungadi Banks shares had zero value, with the result that its shareholders received no payment for their shares. 2006 : A wholly owned UK subsidiary of PNB established in London on 13 April 2006 as Punjab National Bank (International) Ltd. (PNBIL). 2010: On 27th January, 2010 a joint venture in Bhutan as DRUK PNB Bank Ltd. 2010: The bank has acquired 63.64% Stake in JSC Dana Bank, Kazakhstan on 13th December 2010. The bank has its presence in Dubai, Alamatty, (Kazakhstan) Singapore, Oslo (Norway), Kabul, and United States of America, China etc.

3.2 The Present State

Punjab National Bank (PNB) is the largest nationalized bank and second largest bank in India In terms of total Business figures as on 31-03-2011 Total

Deposits are over Rs. 313000 Crores and total advances over Rs. 243000 Crores taking total Business to over Rs. 556000 Crores. The Bank has BANKING FOR THE UNBANKED as its mission. The Business growth of the Bank for last five year has been tremendous which is evident from the figures mentioned below: Year
(Ending 31

2007 140000 97000 236000 1540

2008 166000 120000 286000 2049

2009 210000 155000 365000 3091

2010 249000 187000 436000 3905

2011 312899 242106 555005 4433

March) (Rs. in Crores)

Deposits Advances Total Business Net Profit

The data shown above clearly indicates that in the last five year bank has increased its deposits by over to 223% where has the advances have grown by over 250% and the growth in total business reported is over 237% similarly the profit has grown by more then 286%.

3.3 Operational Structure of PNB:The present structure may be depicted in Diagrammatic form

Head Office (7-Bhikhaiji Cama Place New Delhi

Formulation of Policies and overall Administrative Control through Different Divisions

Circle Offices 65 offices across all over India

Guiding and controlling the branches for implementation of the Policies formed by Head office

Branches 5200 plus spread all over the length & Breadth of country with Concentration in Indogengitic Belt

As discussed above head office is the apex policy making Authority for the Bank and it forms policies according to Reserve Bank of India and Govt. of India policy Guidelines. The Bank has following Divisions which are responsible for implementation of the policies framed by Board of Directors. According to their role these have been categorized as under.

3.3. 1- Business Divisions

Compliance Division Corporate Marketing Division

 Credit Administration Division (CAD) Financial Inclusion Division (FID) Government Business Division (GBD) International Banking Division (IBD) Micro Small and Medium Enterprises Division (MSMED) Priority Sector and lead Bank Division (PSLBD) Resources Mobilization Division (RMD) Retail Assets Division (RAD) Treasury Division

3.3. 2-Support Divisions

Board and Coordination Division General Administration Division (GAD) Human Resources Division (HRD) Personnel Administration Division (PAD) Information Technology Division (ITD) Law Division Management Advisory Service Division (MASD) Management Information System Division (MISD) Organizational & Strategic Planning Division (OSPD) Pension and Provident Funds Division Strategic Planning and Business process Reengineering Division

3.3. 3- Control Divisions

Credit Audit and Review Division (CARD) Finance Division (FD) Inspection and Audit Division (IAD) Integrated Risk Management Division (IRMD) Management Audit and Review Division (MARD)

3.4 Functional Hierarchy

Each Division at Head office is headed by General Manager and assisted by Deputy General Manager, Asstt. Gen. Manager, Chief Manager, Senior Manager etc. Similarly circles are Headed by General Manager/ Dy. General Manager and assisted by Asstt. General Manager/ Chief Manager, Sr. Manager, Managers and Officers. Head office Division monitor and guide the circle offices in their respective field. Similarly at circle level different department are created which co-ordinate with concerned Head Office Division and in turn guide the branches and Monitor their progress in there respective segment.

4- Functions of Banks
Traditionally Banks are supposed to perform the following functions. - Accepting the Deposits from the person who have surplus of it. - Lending the money to the person/entities that are in need of money. - Providing payment and remittance services.

- Providing services of payments of utility Bills like telephone, Electricity etc. - Off-late Banks have made there in EPFTOS (Electronic Funds transfer at point of sales) Sphere and related areas now a days banks are providing wide range of services and a Bank account is considered in dispensable by most individuals, Businesses and even Governments.

5- Channels Of Services By Banks

The services of banks are available through various channels the most important few are Brick and Mortar Bank (Traditional Branch with fixed place. ATM (Automated Teller Machine) That dispenses cash (and some times receives it also) without human intervention. Some ATMs provide additional services also. Online Banking/Internet Banking Customers perform their transfer banking operations from their Home/Business Place by using Internet. Mobile Banking Use of ones Mobile to conduct Banking transition. Mail Banking Banks accept E-mails from their costumers and provide them required services. Call-Centers- Banks have setup 24x7x365 call-centers to help their costumers.

 Video Banking It is mainly used for professional consultations via remote video/audio connection. 7Relationship Banking In case of high net worth account holders Banks designate individual Officer as relationship manager to cater to the Banking needs of the respective account holder.

6- Categorization Of Banks
Banks may be categorized on the basis of ownership or the business module adopted. (A) Ownership Categorization - According to ownership we may classify Banks in to following three broad categories (i) Private Banks These Banks are generally owned by share holders as a joint stoke company. Profit is the supreme objective of such Banks. These Banks are mainly present in developed and developing Countries. (ii) Co-operative Banks Ownership of Such Banks is with co-operatives and only share holder members of co-operatives can avail benefits of services of these Banks. Such Banks are present mainly in communist countries and in the countries which have adopted the model of mixed economy. (iii) Government Banks These Banks are owned by the Government of the particular country with or without some private share holding. Central Bank of each country is owned by Government of that Country. India is amongst the top countries where economy is dominated by the presence of Government Banks.

Categorization on the Basis of Business Modules - According to this criterion the Banks may be Categorize as under. (i) (ii) (iii) (iv)
(i)

Central Banks/Regulators Commercial Banks (Retail/Corporate) Development Banks Investment Banks

Central Banks/Regulators These Banks are Bankers to

the Governments and Banks. Regulatory and supervisory functions along with monetary policy formulation are their basic job. Example of such banks is Reserve Bank of India, Federal Reserve of America etc.

(ii)

Commercial Banks (Retail/Corporate) Most of the

Banks functioning in the world fall under this category. The whole range of services required by individuals, Businesses, Industries, Governments etc are fulfilled by these Banks through general Banking Services Branches, Specialize branches like Large/Mid Corporate branches (which cater to the needs are Large/Mid Corporate segment of economy), Retail assets/Business branches (Their focus is on Retail Business segment of Economy) Similarly special Agricultural Finance branch (Focus on Agriculture Sector), Serve the respective segment with greater focus.

(iii)

Development Banks These Banks are established to cater

to the needs of specified sector of economy/Society i.e. Housing, Industry, Rural Development, Infrastructure, etc. e.g. (National

Banks for Agricultural and Rural Development (NABARD), for Agricultural and Rural Development, Small Scale Industries Development Bank (SIDBI) for Small Scale Industries, National Housing Bank (NHB) for Development of Housing Sector are example of such Banks in our Country.
(iv)

Investment Banks These Banks are basically active in

providing consultancy to Large Business Groups and Providing/arranging credit for their business requirements, advice on their portfolio and its management etc. In this chapter the origin and History of banking in General and

Indian Banking in particular has been Discussed. Punjab National Bank is the second largest bank in India. Present study has been conducted about the progress made by the bank under Financial Inclusion programme by the branches of the bank in Dehradun District. A summarized view of Punjab National Bank its History, Functional Structure and present Business level have been discussed separately. In the next chapter the concept of Financial Inclusion will be discussed.

CHAPTER TWO

Concept of Financial Inclusion

1. Background 2. Who need to be included? 3. Financial Inclusion 4. Committee on Financial Inclusion

Chapter-II CONCEPT OF FINANCIAL INCLUSION

1- Background
Access to finance, especially by the poor and vulnerable groups is a prerequisite for employment, economic growth, poverty reduction and social cohesion. Further, access to finance will empower the vulnerable groups by giving them an opportunity to have a bank account, to save and invest, to insure their homes or to credit, thereby facilitating them to break the chain of poverty. In its landmark research work titled Building Inclusive Financial Sectors for Development (2006), more popularly known as the Blue Book, the United Nations (UN) had raised the basic question: why are so many bankable people unbaked? An inclusive financial sector, the Blue Book says, would provide access to credit for all bankable people and firms, to insurance for all insurable people and firms and to savings and payment services for everyone. Financial inclusion, thus, has become an issue of worldwide concern, relevant equally in economies of the under-developed, developing and developed bringing to the fore the need for development strategies that touch all lives, instead of a select few.

Experience has shown that in the initial phase of real and financial sector reforms, there is need to build in adequate provisions ensuring that the economically weak segment of population have increased participation in the process of economic growth and social development. Reforms in financial systems, therefore, need to be complemented by measures that encourage the institutions, instruments, relationships and financing arrangements to be properly geared for providing sound, responsive financial services to the majority of the people who do not have such access.

2- Who Needs to be Included?

The essence of financial inclusion is in trying to ensure that a range of appropriate financial services is available to every individual and enabling them to understand and access those services. Apart from the regular form of financial intermediation, it may include a basic no frills banking account for making and receiving payments, a savings product suited to the pattern of cash flows of a poor household, money transfer facilities, small loans and overdrafts for productive, personal and other purposes, etc. However, inclusive finance does not require that everyone who is eligible uses each of these services, but they should be able to choose to use them, if they so desired. To this end, strategies for building inclusive financial sectors have to be creative, flexible, and appropriate to the national situation and if necessary, nationally owned.

For promoting financial inclusion, we have to address the issue of exclusion of people who desire the use of financial services, but are denied access to the same. In countries with a large rural population like India, financial exclusion has a geographic dimension as well. Inaccessibility, distances and lack of proper infrastructure hinder financial inclusion. Vast majorities of population living in rural areas of the country have serious issues in accessing formal financial services.

3- Financial Inclusion
A diagrammatic view may be depicted as under

Savings Bank Accounts Financial Inclusion

Insurance

Financial Advice

Payment and Remittance

Affordable Credit However, the term financial inclusion is perceived in different ways under different contexts. There is a view that only access to credit is treated as

financial inclusion whereas the other view includes all the services extended by the financial institutions. That apart, financial inclusion by the banks and other institutions must target, apart from personal / private investment requirements of individuals and groups, the universal public investment requirements necessary for development of infrastructure, social sector services, public utilities and productive forces / capacity building efforts, etc. Thus, financial inclusion may well be all about money and finance, but with the ultimate objective of directly abolishing the state of social exclusion in the economy. The segregation between institutional and non-institutional sources of credit was recognized, as indebtedness to the moneylender cannot be a sign of financial inclusion. Rather it has to be seen as a sign of exclusion as a major part of this segment would have been denied access to institutional credit. Viewed form the angle of indebtedness, nearly 49% of the farmer households in the country was indebted of which, 27% to formal sources and 22% to informal sources. Can this be interpreted to mean that this 22% were in need of bank credit, but denied? Of the remaining 51% of farm households who are not indebted at all, 78% were small and marginal farmers who would, definitely, welcome access to credit on reasonable terms. Only the remaining segment may not require any form of external support.

4- Financial Inclusion Working Definition

Based on the above discussion, the following working definition of Financial Inclusion may be given as under. 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. Holding a bank account itself confers a sense of identity, status and empowerment and provides access to the national payment system. Therefore, having a bank account becomes a very important aspect of financial inclusion. Further, financial inclusion, apart from opening and providing easy access to a No Frills account, should also provide access to credit, perhaps in the form of a General Credit Card (GCC) or limited OD against the no frills account. It should encompass access to affordable insurance and remittance facilities. It should also include credit counseling and financial education / literacy. While financial inclusion, in the narrow sense, may be achieved to some extent by offering any one of these services, the objective of comprehensive financial inclusion would be to provide a holistic set of services encompassing all of the above. A Survey was conducted by National Sample Survey Organization (NSSO) in the year 2003 to assess situation of Indebtedness of farmer households. The out come of survey is depicted as under.

Non-indebted State / Region farmer HHs @ Number in Lacs 53.21 9.11 6.03 6.43 6.38 1.15 28.36 1.15 20.51 1.61 2.44 2.44 0.51 1.19 126.39 47.42 22.34 22.09 % 48.7 46.9 66.6 68.2 34.6 94.1 80.4 94.1 81.9 75.2 95.9 95.9 63.5 50.8 60.0 67.0 79.1 52.2 State / Region

Non-indebted farmer HHs @ Number in Lacs 34.53 158.29 16.50 31.09 102.38 8.32 47.92 18.20 29.72 44.11 10.84 15.52 7.82 9.93 0.99 459.26 % 49.9 58.4 59.8 49.2 59.7 92.8 46.3 48.1 45.2 27.3 18.0 38.4 35.6 25.5 66.9 51.4

Northern Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan North Eastern Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Tripura Eastern Bihar Jharkhand Orissa

West Bengal Central Chhatisgarh Madhya Pradesh Uttar Pradesh Uttaranchal Western Gujarat Maharashtra Southern Andhra Pradesh Karnataka Kerala Tamil Nadu Group of UTs All India

As per NSSO data, 45.9 million farmer households in the country (51.4%), out of a total of 89.3 million households do not access credit, either form institutional or non-institutional sources. Only 27% of total farm households are indebted to formal sources (of which one-third also borrow from informal sources.) In other words, 73% of farm households do not have access to formal credit sources. For purposes of this analysis, financially excluded households will be defined as those not having any debt to formal credit sources.

Level of Non-indebtedness: Across Marginal / Small Farmer Households It can be seen from the table below that 87% of all non-indebted farm households belong to the marginal (70.6%) and small (17.1%) farmer categories. The NSSO estimates of the year 2003 show that only around 45% of marginal farmer households (viz., up to 1 ha.) had access to both institutional and non-institutional credit. There are no data to show the position of finance extended exclusively to marginal farmers who account for 66% of all farm holdings remain by and large excluded from the formal financial system and by rough approximation, only around 20% of these households access credit from formal banking sources.

Incidence of NonCategory farmer HH of Size class of Total (Ha) (no. lakh) indebted (no. lakh) exclusion by Proportion both formal of formal sources (%) nonnon indebted HHs. (%)

land owned farmer HHs farmer HHs and

Marginal Small Semi-medium Medium

<1.00 1.01-2.00 2.01-4.00 4.01-10.00

589.06 160.60 93.50 42.58

324.04 78.68 39.10 14.84

55.0 49.0 41.8 34.9

70.6 17.1 8.5 3.2

Large All sizes

10.00+

7.76 893.50

2.60 459.26

33.6 51.4

0.6 100.0

Incidence of financial exclusion among all non-cultivator households was estimated at 78.2% which comprises of 78.8% of agricultural laborer households, 71.4% of artisans and 79.7% of other rural households. Out of 5.96 crore non-cultivator households about 4.66 crore were estimated to be financially excluded. Exclusion was the highest for others category (2.44 crore), followed by agricultural laborer households (1.67 crore) and artisans (0.55 crore) as detailed below:

Households

Agricul-tural

Artisans 0.77 0.55 71.40

Others 3.06 2.44 79.70

Total

non-

laborers Number of households (crore) 2.12 Number of households facing 1.67 financial exclusion (crore) Incidence of financial exclusion 78.80 (%)

cultivators* 5.96 4.66 78.20

Agricultural laborers, artisans, others (as per National Classification of Occupations, 1968) Data based on AIDIS Report on Household Indebtedness in India (59th round), NSSO

According to Basic statistical returns of scheduled Commercial Banks (2005) (including RRBs), there were 77 million credit accounts and 467 million deposit accounts. Of the credit accounts, 98% were extended to individuals (including partnership, proprietary concerns and joint families). Of the deposit accounts 28% were term deposits while 72% were current or savings deposits. Having known the extent of exclusion it is observed that overall development of the society depends upon the extent of benefit reached to the lower strata of the society. This makes financial inclusion project as a vital instrument for sustainable development of our country. A beginning in the Sphere of Financial Inclusion was made first in 1992 by NABARD when it had started the Self Help Group (SHG) linkage programme on a pilot basis. The pilot project was designed as a partnership model between three agencies, viz, the SHGs, banks and NGOs. This was reviewed by a working group in 1995 that led to the evolution of a streamlined set of RBI approved guidelines to banks to enable SHGs to open bank accounts, based on a simple inter-se agreement. This was coupled with a commitment by NABARD to provide refinance and promotional support to banks for the SHG Bank Linkage Programme. Initially there was a slow progress in the programme up to 1999 as only 32,995 groups were credit linked during the period 1992 to 1999. Since then the programme has been growing rapidly and the number of SHGs financed increased from 81,780 in 1999-2000 to more than 6.20 lakh in 2005-2006 and 6.87 lakh in 2006-07. Cumulative progress (in absolute number terms) by

taking total SHGs finance works out to 29.25 lakhs as on 31 March 2007. SGHs are now emerging as an effective credit delivery channel for midsegment clients such as share croppers and tenant farmers as their loan requirements are much larger. The comparative position of progress made my Banks in Financing of SHGs up to financial year 2008-09 is as under.

5- SHG Groups Financed By Banks

Year 2005-06 2006-07 2007-08 12.28 Lacs 2008-09 16.09 Lacs 2009-10 Estimated 21.10 Lacs

No. of Groups 6.20 Lacs 11.05 Financed Lacs

Source Status of Micro Finance in India 2008-09 (NABARD Magazine)

The data reveals that a steady progress has been made by the banks in the period of 4 years but a vast potential is still to be explored. For developing an effective model for share croppers and tenant farmers NABARD had introduced a pilot project for formation and linking of Joint Liability Groups (JLGs). A JLG is an informal group comprising 4 to 10 individuals coming together for the purposes of availing bank loan either singly or through the group mechanism against mutual guarantee. The magnitude of severity of exclusion from the angle of access to credit had prompted Government of India to set up a committee on financial inclusion under the Chairmanship or C. Rangrajan Economic advisor to the Prime Minister of India. The Committee had submitted its report to the government of India. Most of the recommendations of the committee have been accepted by the Government. The major recommendation of the committee includes

(i) Formation of National Rural Financial Inclusion Plan

(NRFIP) The target for NRFIP could be to provide access to comprehensive financial services to at least 50% (55.77 million) of the excluded rural

cultivator and non-cultivator households, across different States by 2012 thru rural/ semi urban branches of Commercial Banks (CBs) and Regional Rural Banks and (RRBs). The remaining households, with such shifts as may occur in the rural/urban population, have to be covered by 2015.

(ii) Constitution of Financial Inclusion Funds

(a) Financial Inclusion Promotion & Development Fund, (corpus Rs. 500 crore) with NABARD, for meeting the cost of developmental and promotional interventions. (b) Financial Inclusion Technology Fund, (corpus Rs. 500 crore) with NABARD to meet the cost of Technology up gradation. (iii) Role of Business Facilitators (BF) / Business Correspondents (BC) The Committee suggested well defined roles for BCs/BFs to achieve 100% financial inclusion in time bound schedule. Similarly the committee had also given its recommendations on the role of Commercial Banks, Regional Rural Banks, Co-operative Banks, Micro Financing Institutions and Micro Insurance Institutions which have been accepted by Government of India / Reserve Bank of India. It is evident that the financial system in India has grown rapidly in the last three decades and more. The functional and geographical coverage of the system is truly impressive. Nevertheless, data do show that there is exclusion and that poorer sections of the society have not been able to access adequately

financial services from the organized financial system. There is an imperative need to modify the credit and financial services delivery system to achieve greater inclusion. The concept of Financial Inclusion has been discussed in this chapter. The Definition extent of exclusion its magnitude in India and importance have also been discussed in detail. In the next chapter the Basis of selection of Research Data their analysis and interpretation will be discussed.

CHAPTER THREE

Data Analysis & Interpretation

1. Introduction 2. Selection Branches 3. Collection of Data 4. Analysis of Data 5. Questionnaire and Response

Chapter III

DATA ANALYSIS AND INTERPRETATION

The term Financial Inclusion has been in vogue since the early nineties. When NABARD first-time introduced the concept of Self Help Group in 1992 on the lines of Bangladesh Gramin Bank Model. This project was basically meant for woman empowerment. Guiding force behind the Self Help Group Movement was helping the Rural Women to help them Selves and to provide an opportunity to them to carry on some economic activities while performing all their family and social responsibilities. This concept has gained momentum in the current century. Financial Inclusion has been given priority by Bankers first time in 2006-07 when Reserve Bank of India had taken it as a major agenda for implementation by the Banks. Performance of Commercial Banks is also evaluated on the basis of there progress under Financial Inclusion. Therefore every bank has started major drive for Financial Inclusion. Punjab National Bank is the second largest bank in India. It has got strong presence in the Indo-Gengetic belt. The bank is lead bank of Dehradun District of the State of Uttarakhand.

A major Financial Inclusion drive was undertaken by the bank in the district on 24th December 2008. On that day a program was organized at Harbatpur in the gracious presence of the than Governor of Uttarakhand H.E. Shri B.C. Joshi. Dr. K.C. Chakraboty was the chairman of the bank at that time and he was also present on that occasion. There are two channels of Financial Inclusion in the Bank.

(i)

Normal Channel It includes opening of no fill accounts, of

individuals and Group accounts of Self Help Groups (SHGs) etc. by the branches through their staff and some times with the help of Government agencies. Presently this system is working well through out the bank.

(ii)

Business Correspondent (BC) Channel In this channel the

Bank appoints a Business correspondent who is responsible for opening of accounts and Disbursal of credit to the beneficiaries, under this model branch is selected by the BC. The representatives of the BC are provided with point of sale machine (POS Machine). They go to the village motivate the villages and open their account by obtaining necessary documents. The process of account opening is done at centralized bank office of the bank. In Punjab National Bank a dedicated server for Financial Inclusion has been installed at there office. The accounts opened by BC are uploaded in this server. The account holder is provided with a Biometric card to conduct is transaction. In this model the branch of the bank is not actively involved as neither the account is opened in the branch non payment is made through it. The payment to customer in this model is made

through POS transaction by Biometric Card of the accountholder and this process is done by representative of BC at the Door step of customer. In our present study we have selected samples from first channel of Financial Inclusion due to following Reasons - The BC model was adopted by the bank in December 2008 so the relative data are not available for more then 2 years. - The BC model is in nascent stage and it has yet to stabilize as the employee turn over of the BC has been found to be very high and representatives have not been able to establish their credentials amongst the villagers. - The BC model has been adopted on a Pilot basis and only limited area of the District is covered under the project. Looking to these constraints the present study has been conducted to evaluate the progress made by bank under Normal Channel.

1. Selection of Branches
The study was conducted during the second half of April 2011 to first half of May 2011. The branches of Punjab National Bank were selected from different Development blocks in such a manner that almost every Geographical Direction of the District is covered. 10 Branches were selected and a uniform sample size of 10 respondents was chosen for the purpose. The Names of Branches are as under:

Name of Branch Size 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Bahuwala Dakpatthar Dhakrani Doiwala Harbartpur (Sahaspur) Mal Devta Nagthat Naya Gaon Prem Nagar Vikas Nagar

Name of the Block Sahaspur Vikasnagar Vikasnagar Doiwala Sahaspur Raipur Kalsi Sahaspur Sahaspur Vikasnagar

Sample 10 10 10 10 10 10 10 10 10 10

2. Collection of Data
The Data was collected through a common questionnaire and personal Response of the Respondents was recorded by the Researcher with the help of staff of the respective Branches. In all 25 questions were asked from the Respondents. (Copy of questionnaire enclosed). The Responses received have been summarized in response sheet. An additional effort has also been made by seeking response from the Incumbents of the selected Branches and Government officials (Cocoordinating the Financial Inclusion agenda from Government side). Summary of their views is being appended here under.

3. Analysis of Data The Analysis of Data as per questionnaire is as

under 78% of the Respondents were Males and remain 22% were females. The Average Age of Respondents is 38.5 years. The Average size of family of Respondents is 5.4 members / family. All respondents were dealing with PNB. 94% of the respondents reported that there was clear lack of support from Non Governmental organizations (NGOs) and Government Agencies. Only 6% have acknowledged some nominal support form them. All the branch incumbents were uniform on there view that this project is bankable provided other stake holders are willing. All the branch incumbents have reported that they have not been provided specific training for such projects. All the branch incumbents have reported that the level of intervention of NGOs is very low where as that of government agencies also require improvement. The government officials have reported that specific duties are not assigned to the employed and there is multiplicity of tasks which dampen there enthusiasm. The government officials have also reported involvement of some politicians in administrative matters which hampers the process of decision making. The government officials have also reported the lack of training input.

Q. 1- What is your occupation? (i) (a) (b) (ii) (iii) Farmer Small / Marginal Other Farmer Small Business / Self employment Others

Occupational distribution of Respondents

22% Farmer Small Business Self Employed Others

56% 22%

Catagory of Respondent Farmers

11%

Small - Marginal Farmers Other Farmers

89%

56% of the Respondents were farmers of which 89% were small / marginal farmers and remaining 11% were amongst the category of other farmers. 22% of the respondents were engaged in small Business and self employment activities. The remaining 22% were earning their livelihood through labor and other activities

Q. 2- What is the educational qualification of Respondent? (a) (b) (c) Ill literate Up to 12th class Above 12th class

Educational Qualifications of Respondent

16%

26% Illlitrate Upto 12th Above 12th class

58%

26% of the respondents were ill literate while 58% were those who have taken formal education and studied up to School level. 16% of Respondents were Educated in Colleges.

Q. 3person? (a) (b)

Are you Below Poverty line (BPL) or Above Poverty Line BPL APL

Economic Status of Respondents A P L B P L

APL-36% BPL-64%

64% of the respondents belong to Below Poverty Line category while 36% were in the income level which is above Poverty Line.

Q. 4(a) (b) (c) (d)

What is the monthly income of Family? up to Rs. 3000 >3000 to Rs. 5000 >5000 to Rs. 10000 > Rs. 10000
Monthly Income of Respondents
80 70 60 50 40 30 20 10 0 Upto Rs. 3000 >3000 to >5000 to More than Rs. 5000 Rs. 10000 Rs.10000 6 14 12 Series1 68

68% of the respondents were earning monthly income up to Rs. 3000/while 6% were getting monthly income between Rs. 3000-5000/-, 14% of the selected group was earning more then Rs. 5000 to 10000 in month and the remain 12% were such people whose income is over Rs. 10000 per month.

Q. 5 a) b)

Is your Home electrified? Yes No

Status of Electrification of Respondents Houses

6%

94%

Electrified - YES

Electrified - NO

It was observed that 94% of the respondent have electrified houses were as 6% of them were living without electricity connection in their homes.

Q. 6 (a) (b) (c)

Your Home is? Hut Semi Pucca Pucca

Type of Respondents' Homes

48

46

S1

HUT

Semi Pucca

Pucca

6% of the respondents were living in Huts. 46% had semi pucca house in their name while remaining 48% belonged to the category where Pucca house was available for their living.

Q. 7

Do you have Animals? Yes No

Animal Holding of Respondents

80 60 40 20 0 Yes

68

32

Yes No S1

No

68% of the respondents were having either Milch or Draft animals where as 32% did not own any animal. Q. 8 which kind of Animal you have? (a) (b) .
Kind of Animal Holding of Respondents'

Milch Animal Draft Animal

Draft Animal Series1 Milch Animal 0 50 100

85% of the respondents who owned animals were keeping milch animals. The remaining 15% owned Draft anim

Q.9- Which kind of account you maintain with Banks? (a) (b) (c) No frill a/c SF a/c Current a/c

Types of Bank Accounts of Respondents

2%

36%

No Frill A/c S/F A/c 62% Current A/c

62% of the respondents were having their relationship with Bank through no frill accounts another 36% were having their saving Bank accounts and 2% account holders were maintaining current accounts.

Q. 10(a) (b) (c)

What is the frequency of transaction in the a/c? Seldom Sometimes Frequently

Frequency of Bank Transactions by Respondents

22

54

Series1

24

24% of the respondents reported that they operate account very few times where as 54% were using it some time remaining 22% have developed the habit of making frequent transactions in the Bank.

Q. 11(a) (b)

Have you availed Bank loan facility? Yes No

Bank Loan availment by Respondents

NO 54%

YES 46%

46% of the respondents have availed one or more doses of loan from bank where as 54% of them have not taken any loan.

Q. 12Loan? (a) (b) (c)

If you have availed loan how did you find the process of Bank Very Good Good Needs improvement

Respondents' views on Bank loan process

26%

52% 22%

Very Good

Good

Needs Improvement

52% of the loan taking respondents rated the process of bank as very good and another 22% found them good where as 26% were of the view that the process of bank loan needs improvement.

Q. 13(a) (b)

Are you member of SHG? Yes No

SHG Membership of Respondents

78

80 70 60 50 40 30 20 10 0 Yes No 22

Series1

The membership of SHG amongst the respondents was very low as only 22% of them were members where as 78% were out of the SHG network.

Q. 14-

If you are member of SHG is the SHG holding regularly Yes No

Regularity of SHG meetings

80 60 40 Series1 20 0 Yes No 20 S1 80

80% of the groups where respondents were members were holding regular meetings where as 20% groups were not doing so.

Q. 15-

Has the SHG availed Bank loan? Yes No

Credit Availment by SHG

20%

80% Yes No

All the groups which were holding regular meetings (80%) were given Bank loan and remain 20% were yet to get this benefit for want of regularity in meetings etc.

Q. 16(a) (b)

Is the SHG regular in repayment of loan? Yes No

Loan Repayment by SHG

25

No

Yes

75

10

20

30

40

50

60

70

80

75% of the SHGs where respondents were members were repaying their loans regularly where as remaining 25% were not so regular. In this chapter a discussion about the research methodology adopted. Selection of branches for study, questionnaire for respondents has been discussed. The Analysis and interpretation of collected has also been enumerated. Interpretation on the basis of collected data has been given. In the next chapter the evaluation of Financial Inclusion by Punjab National Bank in the Dehradun District will be discussed.

CHAPTER FOUR
Evaluation Of Financial Inclusion of Society by Punjab National Bank in Dehradun District

Chapter IV
EVALUATION OF FINANCIAL INCLUSION OF SOCIETY BY PNB IN DEHRADUN DISTRICT
We have discussed at length that Financial Inclusion is a very vital project of national importance. Punjab National Bank is the largest nationalized bank and a very responsible corporate citizen of India. It has therefore accorded top priority to the project and both the channels of Financial Inclusion have been put to operation in the District of Dehradun. This study has been limited to the normal channel. The date collected from 10 branches of the District has been analyzed. The results of Analysis have been mentioned in the respective chapter. On the basis of analysis of the collected data an attempt is made to evaluate the progress of bank in this field. As evident from the results it has been observed that 50% of the total respondents belonged to Small / Marginal farmers category where as the average size of family is 5.4 members this makes the situation where disguised unemployment is either evident or it is likely to surface in near future. Therefore the bank needs to focus on Diversification of its lending activities and persuade the beneficiaries to take up alternate economic venture. 64% of the respondents have been found to be from Below Poverty Line. They have to be provided with some employment opportunities by way of lending support to viable proposals from such persons so as to help them to cross the Poverty Line and join the economic main stream of our Country.

It has also been observed that 68% of the respondents are owners of animals of which 85% were having milch animals. If we compare it with the monthly income data (64% people earning less then 3000 per month) we come to the conclusion that either the milch animals owned by the respondents ere not of economically viable unit size. The quality of animals may be inferior which may not be giving good milk yield so the bank may form area specific schemes for financing of good quality Dairy ventures to raise the income level. It is a heartening fact to note that all the respondents were dealing with Punjab National Bank was found to be largely satisfied with the services of bank. The first stage of Financial Inclusion is to open a no frill account and thereafter the account holder may graduate to other category of deposits accounts and avail the credit facility. The data reveal that 38% of respondents have moved from no frill to saving and current account facility category where as 62% are maintaining no frill accounts it means they are beginners but the progress could be termed as satisfactory. It is an encouraging sign that 22% of the respondents are using their bank account frequently and another 54% are making use it for some time. It means 76% of account holders are using bank account more than once in a given period this is a good sign of peoples empowerment. Only some amount of motivation may make the 54% respondents as frequent user. The bank needs to focus on this group. Similarly the seldom user group has to be encouraged to come to bank with confidence.

It is a matter of satisfaction that 46% of the respondents have availed credit facility and have reached to the final stage of Financial Inclusion. The bank has to monitor their progress so that their income generating ventures are kept operative. Similarly the 54% of the respondents which have come to Banks fold they should be provided with banking product of their choice. The ultimate object of Financial Inclusion is only fulfilled when 100% population is covered by the bank. It is again a point of great solace that 74% if the loan taking respondents have found the process of bank loan as very good or good. It means the field staff working in the branches is sensitized towards the vulnerable group. Still 26% of respondents have made their opinion for more improvement in the process. The bank needs to look in to this aspect with seriousness as the view of customer is of supreme importance for any service organization. It is a matter of further investigation as there is very low proportion of respondents (only 22%) has become members of Self Help Groups. The bank needs to take help of Government Agencies like District Rural Development Agencies (DRDA), Non Governmental Organizations (NGO) to motivate the individuals to become part of SHGs. We all know that if Self Help Groups are organized well these may become a very vibrant instrument of socio Economic Development. SHGs are potent tool for social empowerment of vulnerable group (at the bottom of the Social Pyramid). This aspect be given further insight.

The study revels that of the little number of Groups linked with bank 80% are holding their meetings regularly and these have been financed. The repayment behavior of SHGs has not been found satisfactory. 75% of the groups are regular in their loan repayment. A close watch is needed on the working of Groups and suitable guidance be provided so that these may not disintegrate. This is a delicate issue and is to be dealt with different angle rather than a mare loan default. A sympathetic attitude of concerned branch officials may prove to be a booster dose for the smooth working of SHGs. Similarly in case of backward forward linkage problem the issue may be taken up to appropriate forum i.e. Block level meetings, District level Review commit (DLRC) meetings etc. To summaries views on evaluation of Financial Inclusion Programme it may be said that the bank is moving in right direction and it has achieved very good results as far as first stage of Financial Inclusion (i.e. opening of no frill Bank accounts) is concerned. The respondents have not only opened account with bank but are making use of it more often. This mare act has given them a sense of empowerment and they feel them selves to be part of main stream of Nation. The bank has to devise ways to make all the account holders an active part of productive sector of Economy. Punjab National Bank in particular has taken lead in this sector by opening Farmers` Training Centers in Different Parts of country where free training is provided to farmers for improved

agricultural practices. The wards and family members of farmers are provided with free vocational Training. The Financial Inclusion project beneficiaries are provided free lodgings and boarding facilities during training programmers at these centers. The bank has also set up financial literacy centre at District Head quarter of Dehradun to guide and educate the customers. These steps taken by the bank are sure to make the road smooth for the successful implementation of the project. An Evaluation of the Financial Inclusion project of Punjab National Bank in Dehradun District of Uttarakhand has been discussed in detail in the chapter. In the final chapter concluding observations made during the study and suggestions for improvement will be discussed.

CHAPTER FIVE
. Concluding Observations

& Suggestions
1. Observations 2 Suggestions for Banks, Governments and Society 3 Summary of Observations and Recommendation 4 Conclusion

Chapter V
CONCLUDING OBSERVATIONS AND SUGGESTIONS

1- Observations
After interpretation of Data (Collected from the field) it is observed that To begin with Concept of financial Inclusion has been received well by all the stake holders i.e. Beneficiaries, Banks and Governments and coverage by Bank account is very encouraging. So far the Financial Inclusion is limited to opening of no fill account with the Bank with occasional over draft facility (only46 % here availed of credit facilities. Extension work on the part of government Agencies and Banks is needed to make the beneficiaries aware of the benefits available to them under this programme.

Involvement of the Non Governmental organizations (NGOs) has been of limited use for implementation of this very vital project they are confined to account opening part only. There is lack of training inputs for Bankers and Governments employees which are very essential for sustainability of this ambitious programme. A more holistic approach is needed to make all the three stack holders understand that this programme is not merely limited to Bank account opening or limited credit disbursal to the excluded strata of society. This should ideally include, Affordable credit, minimum Insurance coverage product, Financial Advice to the beneficiaries, making available the payment and Remittance services affordable for the vulnerable group of society. There is vast pool of Human Recourses to put them to some productive work as only 56 % the respondents are engaged in Agricultural activities and only 11% are other farmers who have sufficient work to put in field remaining 89 % of SF/MF are under employed or their under employment is in the disguised form. The average no of family members are 5.4members\ family and for each number of persons the size of land may not provide sufficient employment generating activities. The average income of respondents family is in the range of Rs.3000/this works out to Rs.555/ capita/ month bringing majority of respondents under Below Poverty Line category.

The lower no. of live stock (58%) / Draft animals (10%) makes it clear that allied activities potential has not been exploited so far. The lower no. of people(22%) belonging to self help Group indicates that Community Development Programmes and other Social welfare Programmes have not been implemented in true spirit and there is a wider scope for such work be implement by Government Agencies and NGOs. The lower level of credit availment by the beneficiaries indicates that viable individual / Group Projects / Activities are either not taken up by the respondents or the same is not supported by Banks. Unless such things are done sustainable Development will remain a word on paper only.

2. Suggestions Basis on the observation of the study following

suggestions are made.

2.1 For the Bank

The bank is required to provide Adequate training input to its staff posted in project area branches so as to sensitize them to the needs of the excluded strata of Society. The Bank needs to pay more attention to the role of intermediary i.e. BUSINESS CORRESPONDENT (BC) where the rate of attrition is higher this has hampered the pace of relationship Building amongst the stake holders. The beneficiaries are suspicious about the longevity of relationship.

The Bank needs to focus more on increasing the financial stake as the plain vanilla financial Inclusion cannot be expected to be a viable Business Proposition and Benefit to Cost Ratio will only improve when Economic activities are encouraged and financed by Banks. Banks will have to work in close coordination with Government Development Agencies / Non Governmental Agencies for Back ward and forward linkages for the Economic activities to be taken up for financing. This is the vital element for long term success of Project. Insurance, Remittance and Payments needs of excluded population needs to be addressed to make financial Inclusion a 360 degree success model.

2.2 For the Governments (Central /State)

The staff deployed for the purpose should possess basic instinct for the job and should be motivated otherwise non willing staff does more harm then the good. Training needs of the staff should be addressed to properly so as to make them aware of the latest happening in the system and around the system. The Government may in consultation with Bankers formulate schemes where community development program assistance is dovetailed with the Bankable schemes like Unique Identification Project (UID) of Government of India.

The Government may pay special attention for creation of infrastructure in the under privilege area and work out a Backward and forward integration program for the economically viable projects undertaken by the poorest of poors. This includes creation of marketing infrastructure and availability of Raw material / Inputs at affordable cost. The Government may promote / Support the commercial initiatives taken by vulnerable group of society by giving preference in Governmental Procurement of products manufacture by such people. Government may implement its welfare schemes like life / Health Insurance Covers. (At very concessional rate of Premium. Like Janshree Bima Yojana of LIC) for the beneficiaries identified under financial Inclusion Project. A beginning has been made by making Payment of wages Mahatma Gandhi National Rural Employment Guarantee Act (MANREGA) through accounts opened by Banks under this project. The Government may encourage intervention of Non Governmental Organizations (NGOs), Social Groups to motivate the people to come forward and Co-ordinate with other stake holders.

2.3 For the Society

If full potential of the Project is utilized the Economic activities in the area will gain momentum.

The Government is planning to parson subsidy benefits on Kerosene, LPG etc. directly to target Group. (As declared by Union Finance Minister in his Budget speech on 28-2-2011) to take advantage of this opportunity without having to put in extra efforts and completion paper formalities the subsidy will be of credited to their accounts opened under this project. Therefore Bank accounts should be opened by all the members of such group. The Development of infrastructure like Roads, Marketing infrastructure will be available only when local people involve them self in the process therefore the target group members should avail the benefits of Bank credit and engage in alternate economic activities so as to augment their income. It has been observed word over that where ever there is Economic Development the incidence of violence are reduced therefore it is suggest that more and more vulnerable people should be encouraged to become active participant in the project.

3. Summary of Observations and Recommendations

S. Observations Recommendations Paper Training may be provided to concerned staff. Government may utilize their services for extension activities. Banks may encourage beneficiation to avail credit for viable activities. The Government agencies NGOs are required to make extra efforts to bring the beneficially in to SHG 5. There is over concentration in farm sector fold. There is a need diversification of activities particularly allied activities and non farm activation Development Agencies needs to 6. motivate farmers. Business correspondent Model is Bank need to take up the matter yet to stabilize as their employee 7. turn over ratio is high Loan Recovery in SHG loan is less then expected. (Expected level in General is minimum 90%) with concerned agency. Proper monitoring of Groups by Banks, Government agencies is required. No. 1. Lack of Training to Government 2. 3. 4. Bank Staff Involvement of NGOs is limited to account opening stage only The availment credit is low Self Help Group membership is low

4. Conclusion
Financial Inclusion is of great importance for Government. A survey conducted by National Sample Survey Organization in 2003 has revealed that of the 893.50 lac farmer house holds 459.26 lac (51.4%) were found to be non indebted (Financially excluded). The extent of exclusion amongst non farmer house holds was at a high of 78.20% this is a situation which warrants attention of Government and Planners. It was felt that the economic development made by the country and growth in Gross Domestic Product (GDP) can only be sustained by making inclusive growth (i.e. benefit of expansion of economy should percolate to the lowest level of pyramid). Reserve Bank of India in consultation with GOI has rightly emphasized the need of Financial Inclusion. The agenda has been accorded high priority since 2006-07 and performance of Banks in critically analyzed by RBI on this parameter. The Goal set to achieve a 100% financial inclusion by 2015. Every Bank has started its Financial Inclusion Project. Punjab National Bank is the second largest Bank of the country. It has got very strong presence in Indogengatic Belt therefore the focus of this project is more in this Belt. The Dehradun District of the state of Uttarakhand is lead District of Punjab National Bank. The Bank has launched a major drive to accomplish the take of Financial Inclusion well before the dead line set (2015) by RBI.

An attempt has been made to evaluate the progress made by the bank so far. The results are encouraging and showing a trend that the bank is moving in right Direction. Though a lot needed to be done to achieve 100% success. The involvement of all the three stake holders i.e. bank, Government and Society is very important for the success of the programme.

Annexure

Summary of Questions and Response

II Questionnaire III Bibliography IV Supervisors Resume

Annexure -I
Summary of questions asked and response there of in Tabular form (100 Respondents)
S.No. of question 3. 5. 7. 8. 11. 13. 14. 15. 16. Are you Below Poverty Line Person Is your home electrified Do you have animal If Yes do you have milch animals Have you a availed bank loan Are you member of SHG If Yes whether you SHG hold regular meeting If SHG holding regular meeting whether it availed bank loan Is the SHG repaying bank loan regularly 64 94 68 58 46 22 18 14 11 Query Response (No. of Respondents Yes No 36 6 32 10 54 78 4 4 3

S. No. of Question 2. 6.

Query What is your Qualification Type of house Illiterate 26 Hut Up to 12 Above 12 58 16 Semi Pucca

9.

Type of account with bank

6 No Frill

Pucca 46 Saving

48 Current a/c 2 Seldom 24 Needs improvement 26

10.

Frequency of transaction in bank a/c

a/c a/c 62 36 Frequently Some times 54 Good 52

12.

22 Rating of Process of bank Very Loan Good 22

S. No. of

Query Farmers S/M F 50 Up to 3000 68 Others 6 > 3000 up to 5000 6 Small Buss./SE 22 >5000 up to 10000 14 Others 22 Over 10000 12

Question 1. Type of occupation

4.

Level of Monthly Income

Annexure - II SURVEY QUESTIONNAIRE ON FINANCIAL INCLUSION

General Information: Name of Respondent:.. Address: 2) Sex: 1) Male 2) Female 3) Age:.. 4) Number of member in family: Specify:. 5) Occupation of respondent: 1) Farmer A) MF/SF B) Other 6) Educational qualification 1) Illiterate 3) Above 12th 7) Indicate your economic level: 1) BPL 2) Up to 12th class 3) Any other 2) SE/SB

2) APL 8) Monthly income: 1) up to Rs 3000 3) 5001-10,000 1) Yes 2) No 10) Which Type of house you have: 1) Hut 3) Pucca 11) Do you have Animal holding: 1) Yes 2) No 12) Which kind of Animal holding go you have: 1) Milch Animal 2) Draft Animal 13) Is there any bank in Village? 1) Yes 2) No 14) Name of the bank you are banking with: .. 15) Which account do you have? 1) No-frill Account 3) Saving Account 16) How many times you make the transactions from the bank: 1) Seldom 2) Sometimes 2) Current Account 2) Semi Pucca 2) 3001-5000 4) above 10,000

9) Dose the respondents House have electricity :

3) Frequently 17) Do you have any loan / credit facility? 1) Yes 2) No 18) How do you find the process of banking? 1) Very Good 3) Good 19) Currently are you member of a self help group? 1) Yes 2) No 20) If Yes: Indicate Name . 21) Is the group holding regular meeting: 1) Yes 1) Yes 23) Which bank does it bank with? Specify 24) Does the Group hold any Loan Facilities? 1) Yes 1) Yes suggest: Thank you for your Co-operation .) 2) No 2) No 25) Is the group regular in repayment of loan? 26) Any suggestions from you to improve the banking services please 2) No 2) No 22) Does the group have a Bank Account? 2) Good

Annexure III
BIBLIOGRAPHY OF THE PROJECT WORK Books Varshney P.N Banking low and Precise Kothari C.R (2001) Research Methodology Rudder Dutt and KPM Sundrem Indian Economy Journals /Magazines/ Reports/News Papers PNB annual report Report of committee on the financial Inclusion headed by Dr ( Chairman economic Advisory committee to the prime Minister of India) Journal of India institute of Banks RBI Annual Report PNB Bulletin News papers Business Standard The Financial Express NABARD Magazine

Web Sites
www. Pnbindia.com www.iba.com

www.rbi.org.com

Under the supervision of (Dr. K.R. Jain) D.Lit Associate Professor Department of Commerce D.A.V (PG ) College Dehradun

Submitted By: (R.S Rathore) Chief Manager PNB Enrollment No. 032081763

Annexure - IV

SUPERVISIORS RESUME
PERONAL INFORMATION Name Fathers Name Date of Joining in D.A.V (PG) College D.Dun Designation Gross Annual Salary Permanent Address : : : : 18-07-86 Associate Professor Rs.10.00000/Residence: 9-B, Sewak Ashram Road Dehradun -248001, Uttarakhand (India) College: Dept. of Commerce : : Dr. K.R.Jain Late Shri D.M Jain

D.A.V. (PG) College, Dehradun-248 001, Uttarakhand (India) Phone No. : Residence (0135) 2742954 College (0135)-2743555 IGNOU Office: : (0135) 2744019 Mobile 09837269039 Email EDUCATIONAL QUALIFICATION: Master of Commerce (Gold Medalist) Master of Arts (Economics) Bachelor of Law (LL.B.) Doctorate of Philosophy (Ph.D) Doctorate of Literature (D.Litt.) YEAR OF AWARD OF DEGREE: Award of Doctorate of Philosophy (Ph.D ) June - 1991 Award of Doctorate of Philosophy (D.Lit ) October 1999 : drkrjain@gmail.com

TITLE OF THESIS: Management of Working Capital in ONGC ( An Analytical Study ) for award of Doctorate of Philosophy ( Ph.D)

 Analysis and Design of Financial Management Information System Through Computerization in ONGE for award of Doctorate of Philosophy ( D.Lit)

WORKING EXPERIENCE: Teaching Experience Research Experience Subjects of Specialization a) Finance & Accounts b) Human Resource Management c) Marketing Management d) Corporate & Business Law Number of Candidates awarded with Ph.D degree under supervision Number of candidate registered for Ph.D degree still under supervision Number of candidates completed Project work under supervision Number of candidates for project work still under supervision candidates candidates candidates candidates years years

SUBJECTS TAUGHT AT UNDER GRADUATE LEVEL :

 Financial Accounting Business Law Public Finance Cost Accounting Management Accounting Company Accounts Money & Banking

SUBJECTS TAUGHT AT POST GRADUATE LEVEL :

Financial Management Income Tax Quantitative Techniques Production Management Marketing Management

SUBJECT TAUGHT AT MBA LEVEL:

Security Analysis and Portfolio Management Working Capital Management Accounting For Managerial Decision Marketing Management

 Human Resource Management Research Methodology

OTHER EXPERIENCE:

Book Writing Following books have been published as co author : Book Keeping & Accountancy Under K.G Publication Modinagar Advanced Accounts and Cost Accounting Under K.G Publication Modinagar Statistical Analysis under Swati Prakashan, Bulandshahr . Management Accounting and Corporate Accounting under Jawahar Publication Agra. Business Finance under Jawahar Publication Agra.

PAPER PRESENTATION AND ATTENDEING NATIONIAL & INTERNATION SEMINARS :

As per Annexure enclosed

EXTRA ACTIVITIES :

Paper Setter at various level

 Examiner of Ph.D Thesis Academic Counselor of Management Programs in IGNOU and different Management Institutions. Doon CAPS Life Membership and Ex- Treasurer. IGNOU : Assistant Coordinator

---------------------------------- DECLARATION --------------------------------

I hereby declare that the information given above is correct and true .

Date :-

Yours Sincerely,

Place : Dehradun

( Dr. K.R Jain )