Risk Management for Financial Inclusion with special reference to Banks

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Presentation related to Financial Inclusion.

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Risk Management for Financial Inclusion with special reference to Banks

  1. 1. Risk Management For Financial Inclusion With Special Reference To Banks
  2. 2. SUMMARY Introduction Operational Risk Credit Risk Conclusion
  3. 3. The possibility of suffering harm or loss; danger The variability of returns from an investment. The chance of nonpayment of a debt.
  4. 4. HOW MANAGEMENT IS ATTACHED TO IT? Every business faces risks that could present threats to its success. Risk management focuses on identifying what could go wrong, evaluating which risks should be dealt with and implementing strategies to deal with those risks. Businesses that have identified the risks will be better prepared and have a more costeffective way of dealing with them.
  5. 5. OPERATIONAL RISK Fraud. Employment Practices and Workplace Safety. The risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. Clients, Products and Business Practices. Damage to Physical Assets. Business Disruption and System Failures. Execution, Delivery and Process Management.
  6. 6. CREDIT RISK Risk due to an uncertainty in a counterparty’s ability to meet its obligations in accordance with agreed upon terms. • Loans. • Acceptances. • Interbank transactions. • Market risk • Forex transactions • Futures contracts • Swaps • Equities
  7. 7. OTHER KEYS OF SUCCESS A positive corporate culture. Effective use of technology. Actively observed policies and procedures. Respect the regulations from the Financial Services Community
  8. 8. FINANCIAL INCLUSION a. Financial Inclusion is defined as “the process of ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and low income groups at an affordable cost in a fair and transparent manner by mainstream institutional players.” RBI CIRCULAR 12.08.2011 b. Approach is based on the fundamental principle of 5A’s of ensuring i. Adequacy and ii. Availability of financial services to all sections of the society through the formal financial system covering savings, credit, remittance, insurance, etc. and, at the same time, iii. increasing Awareness of such services and iv. ensuring Affordability and v. Accessibility of the appropriate financial products • through a combination of conventional and alternative delivery channels and technology enabled services and processes.
  9. 9. WHY FINANCIAL INCLUSION? a. Out of total 1065 million population, 514 million are female. b. Out of 6,00,000 rural habitations across the country, only 30,000 rural habitations have commercial Bank Branches c. 60% of the population do not have Bank Accounts and life insurance cover is less than 10% d. 51.4% of the farmer households are financially excluded from both formal and informal sources e. Out of the total farmer households, a. 27% access formal sources of credit b. 73% of the farmer households access funds from informal sources like local money lenders
  10. 10. FINANCIAL INCLUSION CONCEPT RELATED OR INTERELATED TO EACH OTHER
  11. 11. AN EXAMPLE OF ORIENTAL BANK OF COMMERCE
  12. 12. Financial Inclusion – Who are these People? Underprivileged section in rural and urban areas like, Farmers, small vendors, etc. Agricultural and Industrial Labourers People engaged in un-organised sectors Unemployed Women Children Old people Physically challenged people
  13. 13. Financial Inclusion – Steps Taken         Co-operative Movement Setting up of State Bank of India Nationalisation of banks Lead Bank Scheme RRBs Service Area Approach Microfinance Institutions Self Help Groups
  14. 14. Financial Inclusion – Why Have We Failed? Absence of Technology High incidence of Illiteracy Absence of reach and coverage Delivery Mechanism Not having a Business model Rich have no compassion for poor
  15. 15. There is NO in the Team

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