Prepared by: Sudhir Vasoya Rakesh Nasit Jaydeep Sharma

Introduction
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.

In general sense,

Delivery of financial services at an affordable cost to vast sections of disadvantaged and low income groups.

Products & Services of Financial Inclusion

Savings facility Credit and debit cards access Electronic fund transfer All kinds of commercial loans Overdraft facility Cheque facility Low cost financial services Insurance (Medical insurance) Financial advice Pension for old age and investment schemes Micro credit during emergency Entrepreneurial credit

Why financial exclusion ? (A)Demand Side barriers Low Income

Transaction Cost
Low literacy level Legal Identity Terms & Conditions Physical Distance Lack of awareness, financial illiteracy Mutual disbelief banks and other FIs are not for poors.

(B) Supply Side barriers

Perception of the bank about rural population

Miniscule margin in handling small transactions

KYC requirements Poor credit record Mutual disbelief poor are not bankable Processes too tedious and complicated -AND AAJ TIME NAHI HAI/STAFF CHHUTTI PAR HAI/CLOSING HAI, KAL AANA -.

Consequences for financial inclusion Loosing opportunities to grow Countrys growth will retard Business loss to banks Exclusion from mainstream society All transactions cannot be made in cash Employment barriers Loss due to theft Other allied financial services

Benefits of Financial Inclusion

Growth with equity

Get rid of poverty

Financial Transactions made easy

Safe savings with financial services

Inflating National income

Becoming Global Player

Examples
Dharavi(Maharashtra) Mann Deshi Mahila Bank, Mahaswad(Satara): Business school on Wheels' to enable poor women in rural areas to become entrepreneurs. SBI Tiny Card: Tech. based FI in Aizawl.

PNB: Bhamashah Project for rural women in Rajasthan.

Financial Inclusion Reasons for Failure Absence of Appropriate Technology Absence of reach and coverage Lack of Adequate Supportive Infrastructure Lack of suitable Financial Products Not having a Business model Rich having no compassion for poor

Financial inclusion - some statistics Number of NO-Frills accounts 4.15crore (as on June 30, 2009) Number of rural bank branches 31,727 constituting 39.7% of total bank branches(as on July 31, 2009) Number of ATMs 47,953(as on July 31, 2009) Number of POS 5,22,148 (as on July 31, 2009) Number of card 173 million (as on July 31, 2009) Number of Kishan Credit Cards 76 million (source : CMIE publication 2007-2008)

Number of Mobile phones - 403 million (as on April 30, 2009) out of which 187 million (46%) do not have bank accounts (source: cellular operation association of India)

Target

By 2012: Cover at least 50% (55.77 million) of the excluded.

By 2015: Includethe remaining.

250 new households per branch per annum to be covered by all semi-urban and rural branches of banks and RRBs

Conclusion

It pays to remember
Good ideas are not enough: An idea is only as good as its implementation. Detailed schemes are not enough: Lack of public awareness can bury the best scheme. We can all contribute by generating publicity and ensuring action at the ground level.