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ICT in Financial Inclusion- Leveraging Technology- Balkrishna Sharma, Finance, SiS
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  • 1. 7th e-India – ICT Event eindia.eletsonline.com
  • 2. The Scenario • Post 1991 reforms paved the way for Economic Transformation of the country. • Phenomenal growth in all sectors. • India inching towards becoming a Asian Power. • GDP Growth rate at an Impressive level • Telecommunication & Banking sectors bring about a complete change in the way we live.7th e-India – ICT Event eindia.eletsonline.com
  • 3. The Agenda • Benefit of development to reach all sections of society. • Real Empowerment to every single citizen of the country. • Social Identity for every common man • Transforming the journey from Financial Exclusion to Financial Inclusion.7th e-India – ICT Event eindia.eletsonline.com
  • 4. Financial Exclusion - Meaning • No Savings • No Insurance • No Access to Money • No Affordable Credit • No Bank Account • No Assets7th e-India – ICT Event eindia.eletsonline.com
  • 5. Types of Financial Exclusion A. No access at all to regulated financial system B. Limited access to banks & other financial services. C. Individuals who have inappropriate products.7th e-India – ICT Event eindia.eletsonline.com
  • 6. What leads to Financial Exclusion ? Social Factors • Lack of Information • Insufficient Documentation • Lack of Awareness • High Transection Charges • Lack of Access & Literacy7th e-India – ICT Event eindia.eletsonline.com
  • 7. What leads to Financial Exclusion ? Financial Factors • Large cost to banks in extending services • High Maintenance cost for such accounts • Small ticket size for each transaction • Localization of Services • Large scale converge7th e-India – ICT Event eindia.eletsonline.com
  • 8. Who are Excluded? • Landless labors • Unorganized sector • Urban slum dwellers • Migrants • Socially excluded groups • Marginal farmers • Ethnic minorities7th e-India – ICT Event eindia.eletsonline.com
  • 9. The Journey …...7th e-India – ICT Event eindia.eletsonline.com
  • 10. What is Financial Inclusion ? “Financial inclusion is 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”Indian Contexts:- “Ensuring a bare minimum access to a savings bank account without frills, to all”International Contexts:- customers who are actively and persistently courted by the financial services industry, and who have at their disposal a wide range of financial services and products. eindia.eletsonline.com
  • 11. Need for Financial Inclusion • Expansion of bank branches from 8700 at the time of bank nationalization in 1969 to 85,300 presently. • Only 38% of bank branches are in rural areas, even while 70 % of India is in rural areas. • Only 40 % of Indians have access to Banking facilities. • More than 73,000 habitations having a population of over 2,000 needs Banking Services7th e-India – ICT Event eindia.eletsonline.com
  • 12. Bridging the Gap – Why through ICT ? Herculean task to cover entire population: • Limitations of physical Infrastructure • Physical distance • High Cost of maintaining setup Need for Efficient, Transparent & Effective mechanism ICT will be Secure, Reliable, Supportive, Cost Effective & above all Empowering the individual. Hence the need for ICT7th e-India – ICT Event eindia.eletsonline.com
  • 13. Role of ICT • Smooth flow of Information • One time & minimum Documentation • Customer education and counseling through most popular media – Mobile • Low transection cost because of Virtual delivery model • 100% mobile penetration to ensure access7th e-India – ICT Event eindia.eletsonline.com
  • 14. Financial Inclusion: How To Financial Existing Exclusion Financial Of poor Structure More People to Banking Channel Financial Inclusion7th e-India – ICT Event eindia.eletsonline.com
  • 15. How ICT will facilitate Financial Inclusion Very difficult to access, Costly Customers who Banks which & Time Consuming provide needs financial financial service serviceUses Technology to access Low cost & easy to access the data from the Banks ICT which enables Financial Inclusion7th e-India – ICT Event eindia.eletsonline.com
  • 16. How ICT will facilitate Financial Inclusion • Facilitate unique Identification • Multiple channels of delivery • Offer multiple financial products (Banking, Insurance, Capital Market) • Ensuring consumer protection • Micro finance • Affordable & Appropriate products tailored to local needs and segments • Multi –lingual (Information and Advice)7th e-India – ICT Event eindia.eletsonline.com
  • 17. Financial Inclusion : A huge opportunity for ICT 80 700,000,000 70 600,000,000 60 500,000,000 50 400,000,000 Mobile 40 Mobile % 300,000,000 Subscriber in Bank Accounts % 30 Million 200,000,000 20 100,000,000 10 0 2006 2008 2009 2010 0 World India Source:- www.indexmundi.com Source: The Hindu7th e-India – ICT Event eindia.eletsonline.com
  • 18. Financial Inclusion : A huge opportunity for ICT • Out of the 6.9 billion people on the planet, just 2.1 billion (30 %) have bank accounts • 5.2 billion people (75 %) have mobile phones. • In India, only 200 million (17%) people have bank account while 811 million (68%) have a mobile phones. - The Hindu • 121 million internet users in India in 2011- (IAMAI) and IMRB • Mobile VAS in India to Grow to Rs. 48,200 Crores by 2015 • Mobile Subscribers growing with CAGR 40% - Deloitte Report7th e-India – ICT Event eindia.eletsonline.com
  • 19. Recent Initiatives • Formulating a sub-committee of State Level Bankers Committee (SLBC) to identify unbanked areas and formulate an action plan for providing banking facilities in the next 3 years. • Government has identified 60,000 areas with population of more than 2000 lacking banking facilities • One-time grant-in-aid of Rs.100 Crore for 2010-11 as to ensure provision of at least one centre or point of sales for banking services in all unbanked blocks in the country. • Standalone and Mobile ATMs – Act as a mobile branch of the bank. Connecting every village having a population of 2000 with at least once a week.7th e-India – ICT Event eindia.eletsonline.com
  • 20. Recent Initiatives S.B.I Bank –K.D.F.S • State Bank of India with K.D.F.S (Kalanjiam Development Financial Services) • Acts as financial linkage institution to meet the needs of the poor wherever there is no commercial bank in the place of operation of the locations. Objectives • Credit facilities to poor individuals joined together as „self-help groups‟ • Liaise with government, resource institutions for establishing financial and other linkages • To promote, develop, finance rural and urban industries for interest of the poor7th e-India – ICT Event eindia.eletsonline.com
  • 21. Recent Initiatives L.I.C- Jeevan Madhur • A micro-insurance policy that is providing social security to under-privileged people at a minimum premium of 25 rupees payable on a weekly basis for a life cover ranging from 5,000 rupees up to 30,000 rupees PNB in Tineri - Bihar A financial literacy project, in association with Panjab National Bank with Panchayat representatives Aim:- Spreading awareness about benefits of banking. Result:- in 100% financial inclusion of the village7th e-India – ICT Event eindia.eletsonline.com
  • 22. Measures taken by R.B.I •No Frill account •Easier credit facility •Simpler KYC norms •Use of Information Technology - Smart Card •EBT (Electronic Benefit Transfer) through banks •OTS (One Time Settlement Scheme) for Small Borrowers and •Bank Branch and ATM Expansion Liberalized •Project Financial Literacy • Financial Literacy and Credit Counselling • Business Correspondent Model7th e-India – ICT Event eindia.eletsonline.com
  • 23. “Swabhimaan”: A unique financial inclusion initiative • A path-breaking initiative - by the Government and the Indian Banks‟ • Association to cover economic distance between rural and urban India. • Launched:- February, 2011 • Aim:- “To Bring the deprived sections of the society in banking network to ensure that the benefits of economic growth reach everyone at all levels” • Scope:- • Basic banking services to 73,000 unbanked villages with a population of 2,000 • 5 Crore new accounts will be opened • Facilities like- • Savings Bank, Recurring Deposits, • Fixed deposits, Remittances, Overdraft facility, • Kisan Credit Card (KCCs), General Credit Cards (GCC)7th e-India – ICT Event eindia.eletsonline.com
  • 24. Bank Account – A Passport to Progress A bank account does not merely store your money but acts as a Power House of your Identity, Self- esteem & Self – Respect. It empowers you in the real sense7th e-India – ICT Event eindia.eletsonline.com
  • 25. 7th e-India – ICT Event eindia.eletsonline.com
  • 26. 7th e-India – ICT Event eindia.eletsonline.com