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Outline :
Definition of Financial Inclusion Why it needed ? Extent of Financial Exclusion Global (not Local) International Monetary Fund (IMF) Report FI in INDIA FI Steps Taken in the Past FI Why did We Fail ? Why FI Now ? Approach adopted by RBI FIPs Performance Analysis
Why it needed ?
Extent of Financial Exclusion Global (not Local) : Not an India specific problem but a global one
2.5 billion adults, just over half of worlds adult population do not use formal financial services to save or borrow..
Unbanked
Banked
RBI set up the Khan Commission in 2004 to look into FI . In the report RBI exhorted the banks to make available a basic "no-frills" banking account. In India, financial inclusion first featured in 2005, when it was introduced by K C Chakraborthy, the RBI Deputy Governor. Mangalam Village became the first village in India where all households were provided banking facilities.
Continue.
General credit cards (GCCs) were issued to the poor and the disadvantaged with a view to help them access easy credit. In January 2006, the Reserve Bank permitted commercial banks to make use of the services of nongovernmental organizations (NGOs/SHGs), microfinance institutions, and other civil society organizations as intermediaries for providing financial and banking services.
Nationalisation of banks
Lead Bank Scheme (1969) RRBs (Regional Rural Bank) Service Area Approach (SAA,1989) Self Help Groups
Absence of BankingTechnology
Absence of Reach and Coverage Absence of Viable Delivery Mechanism Not having a Business Model Rich have no compassion for poor
Identification of borrower Collection and verification of primary information Processing and submission of application to banks Monitoring and Follow-up Educating about savings, other products, debt counseling
All activities of BF + Collection of small value deposits Enabling withdrawals Sale of other financial products Receipt and delivery of remittances / payment instruments Disbursal of small value credit and recovery of principal and interest in a limited way 16
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Financial Inclusion
Supply Side
Financial Literacy & Credit Counseling Centers Knowledge of products Need for total products & services
Financial Markets ,Banks & Services 13 Appropriate Design of products & services
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Continue..
160 remote unbanked villages selected by RBI for transformation into Model Villages characterized by 100% Financial Inclusion through ICT initiatives, leveraging on BCs and BFs. Project Financial Literacy- Publication of Comic Books, Setting up Multi-lingual Financial Education Website, Release of a Book titled I can do Financial Planning on Financial Education, Essay Writing Competition and other events. Organizing Town Hall Events and release of films on Financial Literacy.
Achievements
Achievements cannot be ignored - Nearly 100 Million no frills accounts have been opened by banks so far. When we started, we were all saying people have no bank accounts, now with bank accounts being opened we are complaining that there are no transactions in these accounts. Banks need to be given time for making these NFAs active.
Particulars
No. of BCs/BC Agents Deployed Banking Outlets through Branches Banking Outlets through BCs Banking Outlets-Through other Modes Total Banking Outlets No Frill A/Cs (No. in Millions) Overdraft- No Frill A/Cs (No. in Millions) BC- ICT Based A/Cs (No. in Millions) EBT A/Cs-through BCs (No. in Millions) KCC(No. in Millions) GCC(No. in Millions)
References :
http://egov.eletsonline.com/2012/01/working-to-furtherfinancial-inclusion/ http://www.imf.org/external/index.htm http://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.as px?Id=2718 http://www.rbidocs.rbi.org.in/rdocs/Speeches/PDFs/FIC0 60911DG.pdf rbidocs.rbi.org.in/rdocs/content/ppts/FIC060911DG.ppt http://www.rbi.org.in/scripts/AnnualPublications.aspx?he ad=Basic%20Statistical%20Returns
Thank you.
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