...Swiss Agency for Development and Cooperation Micro-Credit Ratings International Limited Table of Contents Section Background Executive Summary 1 2 3 4 Introduction The Importance of Rural Banks Recent Performance of the Rural Banking System Reforms and the Rural Banks 4.1 A huge effort to reform the cooperative system 4.2 Sensible proposals for reorienting the Regional Rural Banks but… 5 Will Reforms Enable Inclusion? 5.1 Cooperative reform – is it good money after bad? 5.2 RRB reform – has the inclusion objective been sidelined? 6 Conclusion Page v vii 1 3 7 8 8 12 15 15 17 18 M-CRIL Review of Rural Banking in India Background This study follows from the discussion of issues in the performance of Regional Rural Banks (RRBs) written by Sanjay Sinha, Managing Director, M-CRIL and published in The Economic Times (newspaper) on 17 March 2007. In relation to financial inclusion, many of the issues raised there affect the performance of cooperative banks as well as the RRBs. These issues include • The effect of government ownership of RRBs on their ability to operate efficiently and effectively to fulfil the financial inclusion mandate; the domination of (district) cooperative bank managements by government functionaries and by landed elites with (usually) little interest in financial inclusion. Social control of interest rates on small value loans (less than Rs2 lakhs); the restriction on interest rates that can be charged by commercial banks on small value loans means...
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...residents are out of the banking system and unable to prove their identity on account of poor financial back ground and belong to Below Poverty Line (BPL) segment. Ø 60% of farmers do not have access to credit from Banks. Ø Poor pay usurious interest at 40% to 50% to Money Lenders. Even Micro Finance Institutions charge 20-30% interest. Ø More than 40% of the government’s subsidy and social spending is being siphoned off, mostly by “ghosts” and undeserving recipients. Ø In spite of best efforts, the various welfare/employment generated programs aimed at poor households with huge budget allocations (NREGS, JSY and PDS) are going into unscrupulous hands and leading to widespread leakage of public money. http://www.allbankingsolutions.com/Articles/Articles-NSNR-Financial-Inculsion-Role-of-IT.shtml Financial Inclusion: How India can achieve it? “Inclusive growth” was one of the important objectives of eleventh five year plan in India. Inclusion of each and every section of the society in the process of economic development and achieving growth with equity is the basic objective of “inclusive growth”. Financial inclusion is conceived as a major driving force to achieve self-sustained inclusive economic growth. Financial inclusion can be defined as the process of ensuring access to financial services and timely availability of adequate credit where needed by vulnerable Groups such...
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...Reddy K. Sriharsha (2011), “A Study on Extent of Financial Inclusion among Small Borrowers in Andhrapradesh”, International Journal of Research in Management, Science and Technology, Vol-1 Motivation/Rationale Financial inclusion is both a crucial link and a substantial first step towards achieving inclusive growth. Therefore the govt. and the Reserve Bank of India, have taken several initiatives for the promotion of financial inclusion. It has become a policy priority in many countries including India. Along with the importance of financial inclusion which is now widely recognized there is also the need of assessing the extent or magnitude of financial inclusion among different sections of the society specifically among the weaker and marginalized sections so that the shortcomings or gaps in the effort to promote financial inclusion can be identified and corrective measures could be taken in that direction. Keeping this in view the author has evaluated the extent of financial inclusion in Andhrapradesh based on the penetration of credit to small borrowers. Objective The objective of the study was to enumerate the flow of credit to small borrowers and to evaluate the extent of financial Inclusion based on credit to small borrowers with special reference to agricultural credit in Andhrapradesh. Methodology To assess the extent of financial inclusion the author has conducted a time series analysis and used different measures such as population per branch, credit per population...
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...Financial Inclusion ntroduction Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. It is argued that as banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of public policy. The term "financial inclusion" has gained importance since the early 2000s, and is a result of findings about financial exclusion and its direct correlation to poverty. Financial inclusion is now a common objective for many central banks among the developing nations. Financial Inclusion Includes Accessing Of Financial Products And Services Like, Savings Credit Insurance Remittance facilities etc Savings facility Credit and debit cards access Electronic fund transfer All kinds of commercial loans Overdraft facility Cheque facility Payment and remittance services Low cost financial services Insurance (Medical insurance) Financial advice Pension for old age and investment schemes Access to financial markets Micro credit during emergency Entrepreneurial credit The Reserve Bank of India has set up a commission (Khan Commission) in 2004 to look into financial inclusion. In India, Financial Inclusion first featured in 2005. India, being a mostly agrarian economy...
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...ntroduction Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. It is argued that as banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of public policy. The term "financial inclusion" has gained importance since the early 2000s, and is a result of findings about financial exclusion and its direct correlation to poverty. Financial inclusion is now a common objective for many central banks among the developing nations. Financial Inclusion Includes Accessing Of Financial Products And Services Like, Savings Credit Insurance Remittance facilities etc Savings facility Credit and debit cards access Electronic fund transfer All kinds of commercial loans Overdraft facility Cheque facility Payment and remittance services Low cost financial services Insurance (Medical insurance) Financial advice Pension for old age and investment schemes Access to financial markets Micro credit during emergency Entrepreneurial credit The Reserve Bank of India has set up a commission (Khan Commission) in 2004 to look into financial inclusion. In India, Financial Inclusion first featured in 2005. India, being a mostly agrarian economy, hardly has schemes...
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...Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. It is argued that as banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of public policy. The term "financial inclusion" has gained importance since the early 2000s, and is a result of findings about financial inclusion sand its direct correlation to poverty. Financial inclusion is now a common objective for many central banks among the developing nations. Joint Liability Groups (JLGs) of the poor such as landless, share croppers and tenant farmers is another innovative mechanism towards ensuring greater financial inclusion. This mechanism has already been operationalised in a few regions under a Pilot Project of NABARD. Commercial Banks have been actively promoting such groups for effectively purveying credit and other facilities to such clients. In the current budget the govt. has earmarked a sum of Rs 100 Crores for Banks to open branches in un banked and difficult areas. Biometric card based authentication devices, are being used by the bank’s Business Correspondents at the villages. So far, 344 districts have been identified by State Level Bankers Committee for 100 per cent financial inclusion...
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...------------------------------------------------- A Study on Relevance of Financial Inclusion in India and other ------------------------------------------------- Developing Nations Prof. Nilesh PatelAssistant ProfessorSal Institute of ManagementGujarat Technological UniversityEmail id: patelnileshmm@gmail.comContact no: +91-9925937375 | Prof. Saloni SarafAssistant ProfessorSal Institute of ManagementGujarat Technological UniversityEmail id: lohiasaloni31@gmail.comContact no: +91-9510164544 | ABSTRACT: India is one of the largest and fastest growing economies of the world, but what has been the most disturbing fact about its growth has not only been uneven but also discrete. More than 150 million poor people have access to collateral-free loans. However; there are still large sections of the world population that are excluded from financial services market. Financial inclusion is an innovative concept which makes alternative techniques to promote the banking habits of the rural people because, India is considered as largest rural people consist in the world. Financial inclusion is aimed at providing banking and financial services to all people in a fair, transparent and equitable manner at affordable cost. Households with low income often lack access to bank account and have to spend time and money for multiple visits to avail the banking services, be it opening a savings bank account or availing a loan, these families find it more difficult to save and to plan financially...
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...FIANCIAL INCLUSION IN INDIA Introduction: Financial inclusion is the availability of banking services at an affordable cost to disadvantaged and low-income groups. In India the basic concept of financial inclusion is having a saving or current account with any bank. In reality it includes loans, insurance services and much more. Why We Need Financial Inclusion: * In the path of super power we the Indians will need to achieve the growth of our country with equality. * To remove poverty from the Indian context everybody will be given access to formal financial services. * Inclusive finance will provide banking related financial transactions in an easy and speedy way. * People will have safe savings along with other allied services like insurance cover, entrepreneurial loans, payment and settlement facility etc. * Opportunity for Banks to increase their business. * Boosting up business opportunities will definitely increase GDP and which will be reflected in our national income growth. * Financial access will attract global market players to our country that will result in increasing employment and business opportunities. Steps towards Financial Inclusion: * The Reserve Bank of India set up a commission named as Khan Commission in 2004 to look into financial inclusion. * The recommendations of the commission were incorporated into the mid-term review of the policy (2005–06). * Proposal for "no-frills" banking...
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...Financial Inclusion In Rural India- A Conceptual Analysis Introduction: India is living in rural areas said by father of our nation. But, the peoples who are living in rural areas not really lived and they are constrained to live with some socio-economic factors. Even though, India is fast growing country as compared with rest of world in all respects except economic status of people. Beginning with First Five Year Plan in 1951, resources were deployed on areas like irrigation and energy, agriculture and community development, transport and communications, industrial development, social services, land development and infrastructure. Initially, the growth rates were around 3-4 per cent which gradually touched a peak of over 9 per cent. Despite economic turbulences, financial scams, population growth, natural calamities, wars, political disturbances, India witnessed several achievements in many areas in the last six decades. But still, there are people who are ignored by banks and financial institutions to get financial services and benefits. It is very important issue before the government to make them inclusive. So, the Reserve Bank of India has set up a commission (Khan Commission) in 2004 to look into financial inclusion and the recommendations of the commission were incorporated into the mid-term review of the policy (2005–06). In the report RBI exhorted the banks with a view of achieving greater financial inclusion to make available a basic "no-frills" banking account...
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...Financial inclusion is the availability of banking services at an affordable cost to disadvantaged and low-income groups. In India the basic concept of financial inclusion is having a saving or current account with any bank. In reality it includes loans, insurance services and much more. The first-ever Index of Financial Inclusion to find out the extent of reach of banking services among 100 countries, India has been ranked 50. Only 34% of Indian individuals have access to or receive banking services. In order to increase this number the Reserve Bank of India had the Government of India take innovative steps. One of the reasons for opening new branches of Regional Rural Banks was to make sure that the banking service is accessible to the poor. With the directive from RBI, our banks are now offering “No Frill” Accounts to low income groups. These accounts either have a low minimum or nil balance with some restriction in transactions. The individual bank has the authority to decide whether the account should have zero or minimum balance. With the combined effort of financial institutions, six million new ‘No Frill’ accounts were opened in the period between March 2006-2007. Banks are now considering FI as a business opportunity in an overall environment that facilitates growth. The main reason for financial exclusion is the lack of a regular or substantial income. In most of the cases people with low income do not qualify for a loan. The proximity of the financial service is another...
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...Across the developed world, access to financial services is largely ubiquitous; there is an abundance of cash and credit on demand, from multiple channels, any locations, and 24 hours a day. But, this story is very different in the developing countries which house nearly 90 per cent of the world’s unbanked populations. The situation is worse in least developing countries (LDCs), where more than 90 per cent of the population is excluded from access to the formal financial system. The limited access to finance severely reduces the choices citizens have in, determining the way they work and live. Microfinance has emerged as a potent tool to address this issue, and its ability to do so has grown in recent years with the adoption of new technologies and financial innovations, the increasing sophistication of microfinance institutions, and policy reforms. Finding solutions to encourage greater financial inclusion has not typically been a core activity of central banks or other financial regulators. Also, when a majority of the population is excluded from access to financial services, it can significantly and adversely affect the efficient allocation of financial and physical resources, economic growth, income and non-income inequalities, and the distribution of benefits in an economy. This has opened up space for an increased role of international standard-setting and advisory bodies to promote improved financial access across the globe, which has the potential to improve efficiency...
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...Financial inclusion is the availability of banking services at an affordable cost to disadvantaged and low-income groups. In India the basic concept of financial inclusion is having a saving or current account with any bank. In reality it includes loans, insurance services and much more. The first-ever Index of Financial Inclusion to find out the extent of reach of banking services among 100 countries, India has been ranked 50. Only 34% of Indian individuals have access to or receive banking services. In order to increase this number the Reserve Bank of India had the Government of India take innovative steps. One of the reasons for opening new branches of Regional Rural Banks was to make sure that the banking service is accessible to the poor. With the directive from RBI, our banks are now offering “No Frill” Accounts to low income groups. These accounts either have a low minimum or nil balance with some restriction in transactions. The individual bank has the authority to decide whether the account should have zero or minimum balance. With the combined effort of financial institutions, six million new ‘No Frill’ accounts were opened in the period between March 2006-2007. Banks are now considering FI as a business opportunity in an overall environment that facilitates growth. The main reason for financial exclusion is the lack of a regular or substantial income. In most of the cases people with low income do not qualify for a loan. The proximity of the financial service...
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...are acquiring companies all over the world, hence benefitting from expansion. This has directly affected the lives of many citizens in our country. For many, there has been a dramatic increase in the disposable income. The savings, consumption and investment patterns have changed in the past few years. This has meant that there has been an increase in demand for many financial services from different financial firms. The market has responded to this soaring demand with making attractive offers and services for the customers at affordable rates. Since the LPG reforms of 1991, there have been progressive reforms in the financial sector allowing for better and easier facilities and options to the consumer. An increasing financially aware middle class have realized the importance of financial services. Banks have streamlined and rationalized themselves to meet with the changing demands of the people. However, not all the reforms in the financial services sector have still been able to bring in the other half of India’s population who are un-banked. There are many reasons that are obvious for this kind of financial exclusion. Most of the un-banked or financially excluded population of India lives in rural areas; nevertheless, there is also a significant amount of the urban population of India who faces the...
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...https://www.nabard.org/english/about_Highlights.aspx Financial Inclusion During the year 2011-12, the disbursements under Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF) were 18.49 crore and 128.05 crore reflecting a growth (over previous year) of 100.8% and 137.1% respectively. With this, the cumulative disbursement since inception touched a level of 36.05 crore under FIF and 183.82 crore under FITF. Support was extended for setting up of Financial Literacy and Credit Counseling Centres (FLCCs) to Lead Banks (111 FLCCs), capacity building programmes by commercial banks and (Regional Rural Banks)RRBs and Financial Literacy awareness camps by RRBs, under FIF. Under FITF, support was extended for implementation of Core Banking Solution (CBS) by weak RRBs (26 out of 28) and Information & Communication Technology (ICT) solution by RRBs (52 out of 82). Financial Inclusion During the year 2012-13, the disbursements under Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF) were 33.31 crore and 17.14 crore respectively. With this, the cumulative disbursement since inception touched a level of 69.77 crore under FIF and 201.30 crore under FITF. Support was extended for setting up of Financial Literacy and Credit Counseling Centers (FLCCs) to Lead Banks in 256 excluded districts and 10 disturbed districts, capacity building programmes by commercial banks and RRBs and Financial Literacy awareness camps by RRBs, under FIF. Under...
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...Internship Project KPMG Strategic and commercial Intelligence Department Inverting the Pyramid: Inclusion in the Financial Services Industry Final Project Report 19/11/2010 Submitted By: Hufriya Kavarana PGP-09-031 S.P. Jain Institute of Management and Research, Mumbai Inverting the Pyramid: Inclusion in the Financial Services Industry 2 | P a g e Table of Contents Preface .............................................................................................................................................. 3 Acknowledgement ............................................................................................................................ 4 Executive summary.......................................................................................................................... 5 Overview .......................................................................................................................................... 7 Components of financial inclusion—what is being measured? ..................................................... 8 Introduction ...................................................................................................................................... 9 Indian Scenario ............................................................................................................................... 13 Magnitude and Spread of Financial Exclusion ............................................................................. 14 ...
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