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A Project Report On
Penetration and Extent of Use of Branchless Banking in India: A
Case Study of Axis Bank
Under The Supervision Of: Submitted By:
Mr. Manoj KR Gupta Ansar Hussain
College Mentor: (PGDM 15-17)
Dr. Sanjay Rastogi IBA, Greater Noida
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I hereby declare that the Project report titled “Branchless Banking’s Development as a
means of extending financial services in the new era of Banking” is my original work and
has not been published or submitted for any degree, diploma or other similar titles elsewhere.
This has been undertaken for the purpose of partial fulfillment of POST GRADUTE
DIPLOMA IN MANAGEMENT at Indus Business Academy, Greater Noida.
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I wish to express my gratitude to AXIS BANK for giving me an opportunity to be a part of
their esteemed organization and enhance my knowledge by granting permission to do
summer training project under their guidance.
I am deeply indebted to my guide, Mr. MANOJ KR GUPTA, AVP, Branch Manager, AXIS
Bank, for his valuable and enlightened guidance. He provided me with the opportunity to
learn in the bank and spared his valuable time to help me.
My special thanks to Mr. SHAGUN AGARWAL, Operation HEAD, Mr. SURESH
PANDEY, BSM, AXIS Bank, for providing great support and help whenever was required.
A special thanks to my faculty guide, Dr. SANJAY RASTOGI for being the chief
facilitator of this project and helped me enhance my knowledge in the field of banking sector.
This project has been possible due to the support of several wonderful individuals. I would
like to thank many unknown individuals, with whom I interacted. All of them with their due
cooperation and motivation made the completion of this project successful. I would like to
thank them all.
Last but not the least I am highly obliged to my friends and colleagues for their help and
support. The learning during the project was immense and valuable.
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3. Introduction / Company Overview
4. Company Profile
5. Literature Review
6. Introduction of Branchless Banking
8. Need of Branchless Banking
9. Branchless Banking in India
10. Indicators of Financial Inclusion
11. Role of Technology
12. Role of Government of India
13. Role of RBI
14. Bank Initiated Enabler for Branchless Banking
15. Challenges Faced by Business Correspondents
16. Benefits of Branchless Banking in India
17. Benefits of Branchless Banking in Other Countries and their adoption in India
18. Objective and Scope of the Study
19. Research Methodology
20. Method of Research
21. Types of Research
22. Types of Data
23. Data Collection Tools
24. Sampling frame, unit, size, method.
25. Data Analysis : Results and Analysis
26. Data Classification
27. Data analysis and Interpretation of Results of Branchless Banking
28. Data Analysis and Results of Case Study on Axis Bank customer Preference
29. Interpretations of Results
30. Research Findings and Conclusion
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32. Suggestions and Recommendations
34. Bibliography List Of References
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I decided to choose Axis Bank for summer internship, where I selected a project by the name
of "Branchless Banking’s Development as a means of extending financial services in the
era of Banking".
In this project, I learnt about different type of Branchless Banking Services offered by
Axis Bank and then I come to know about the importance of Branchless Banking in future
and how much is important to banking sector
I collected data from websites of respective selected banks. Even I took help from other
banking and finance related websites. I also got data from respective branch. I also prepared
questionnaire for primary research, through which I came to know about customers'
perspective regarding Branchless Banking Services offered by banks. Then I did analysis
on that basis and tried to make conclusions out of that.
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BANKING IN INDIA
Without a sound and effective banking system in India it cannot have a healthy economy. The
banking system of India should not only be hassle free but it should be able to meet new
challenges posed by the technology and any other external and internal factors. For the past
three decades India's banking system has several outstanding achievements to its credit. The
most striking is its extensive reach. It is no longer confined to only metropolitans or
cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners
of the country. This is one of the main reasons of India's growth process.
The first bank in India, though conservative, was established in 1786. From 1786 till today,
the journey of Indian Banking System can be segregated into three distinct phases. They are
as mentioned below:
· PHASE I - Early phase from 1786 to 1969 of Indian Banks
· PHASE II - Nationalization of Indian Banks and up to 1991
· PHASE III - Indian Financial & Banking Sector Reforms after 1991.
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The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and
The East India Company established
Bank of Bengal (1809),
Bank of Bombay(1840) and
Bank of Madras (1843) as independent units and called it Presidency Banks.
These three banks were amalgamated in 1920 and Imperial Bank of India was
established which started as private shareholders banks, mostly Europeans shareholders.
During the first phase the growth was very slow and banks also experienced periodic failures
between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline
the functioning and activities of commercial banks, the Government of India came up with
The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949
as per amending Act of 1965 (Act No.23 of 1965). Reserve Bank of India was vested with
extensive powers for the supervision of banking in India as the Central Banking Authority.
During those day’s public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to the traders.
Government took major steps in this Indian Banking Sector Reform after independence. In
1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale
especially in rural and semi-urban areas. Second phase of nationalization Indian Banking
Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the
banking segment in India under Government ownership.
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The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:
· 1949: Enactment of Banking Regulation Act.
· 1955: Nationalization of State Bank of India.
· 1959: Nationalization of SBI subsidiaries.
· 1961: Insurance cover extended to deposits.
· 1969: Nationalization of 14 major banks.
· 1971: Creation of credit guarantee corporation.
· 1975: Creation of regional rural banks.
· 1980: Nationalization of seven banks with deposits over 200 crores.
After the nationalization of banks, the branches of the public sector bank India raised to
approximately 800% in deposits and advances took a huge jump by 11,000%.Banking in the
sunshine of Government ownership gave the public implicit faith and immense confidence
about the sustainability of these institutions.
This phase has introduced many more products and facilities in the banking sector in its
reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up
by his name which worked for the liberalization of banking practices.
The country is flooded with foreign banks and their ATM stations. Efforts are being put to
give a satisfactory service to customers. Phone banking and net banking is introduced. The
entire system became more convenient and swift. The financial system of India has shown a
great deal of resilience. It is sheltered from any crisis triggered by any external
macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible
exchange rate regime, the Foreign Reserves are high, the capital account is not yet fully
convertible, and banks and their customers have limited foreign exchange exposure.
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1.2 NATIONALIZED BANKS IN INDIA
Banking System in India is dominated by nationalized banks. The nationalization of banks in
India took place in 1969 by Mrs. Indira Gandhi the then prime minister. The major objective
behind nationalization was to spread banking infrastructure in rural areas and make available
cheap finance to Indian farmers. Fourteen banks were nationalized in 1969.
Before 1969, State of India (SBI) was only public sector bank in India. SBI was nationalized
in 1955 under the SBI Act of 1955. The second phase of nationalization of Indian banks took
place in the year 1980. Seven more banks were nationalized with deposits over 200 crores
1.3 PRIVATE BANKS
All the banks in India were earlier private banks. They were founded in the pre-independence
era to cater to the banking needs of the people. But after nationalization of banks in 1969
public sector banks came to occupy dominant role in the banking structure. Private sector
banking in India received a fillip in 1994 when Reserve Bank of India encouraged setting up
to private banks as part of its policy of liberalization of the Indian Banking Industry. Housing
Development Finance Corporation Limited (HDFC) was amongst the first to receive an ‘In
principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private
Private Banks have played a major role in the development of Indian banking industry. They
have made banking more efficient and customer friendly. In the process they have jolted
public sector banks out of complacency and forced them to become more competitive.
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Axis Bank India, the first bank to begin operations as new private banks in 1994 after the
Government of India allowed new private banks to be established. Axis Bank was jointly
promoted by the Administrator of the specified undertaking of the
Unit Trust of India (UTI-I)
Life Insurance Corporation of India (LIC)
General Insurance Corporation Ltd.
Also with associates viz. National Insurance Company Ltd., the New India Assurance
Company, The Oriental Insurance Corporation and United Insurance Company Ltd.
UTI was established in 1964 by an Act of Parliament; neither did the Government of India
own it nor contributes any capital. The RBI was asked to contribute one-half of its initial
capital of Rs 5 crore, and given the mandate of running the UTI in the interest of the unit-
holders. The State Bank of India and the Life Insurance Corporation contributed 15 per cent
of the capital each, and the rest was contributed by scheduled commercial banks which were
not nationalized then. This kind of structure for a unit trust is not found anywhere else in the
world. Again, unlike other unit trusts and mutual funds, the UTI was not created to earn
In the course of nearly four decades of its existence, it (the UTI) has succeeded phenomenally
in achieving its objective and has the largest share anywhere in the world of the domestic
mutual fund industry. '' The emergence of a "foreign expert" during the setting up of the UTI
makes an interesting story. The announcement by the then Finance Minister that the
Government of India was contemplating the establishment of a unit trust caught the eye of
Mr. George Woods, the then President of the World Bank. Mr. Woods took a great deal of
interest in the Indian financial system, as he was one of the principal architects of the ICICI,
in which his bank, First Boston Corporation Bank, had a sizeable shareholding. Mr. Woods
offered, through Mr. B.K. Nehru, who was India's Executive Director on the World Bank, the
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services of an expert. The Centre jumped at the offer, and asked the RBI to hold up the
finalization of the unit trust
Proposals till the expert visited India. The only point Mr. Sullivan made was that the
provision to limit the ownership of units to individuals might result in unnecessarily
restricting the market for units. While making this point, he had in mind the practice in the
US, where small pension funds are an important class of customers for the unit trusts. The
Centre accepted the foreign expert's suggestion, and the necessary amendments were made in
the draft Bill. Thus, began corporate investment in the UTI, which received a boost from the
tax concession given by the government in the 1990-91 Budget. According to this
concession, the dividends received by a company from investments in other companies,
including the UTI, were completely exempt from corporate income tax, and provided the
dividends declared by the investing company were higher than the dividends received.
The result was a phenomenal increase in corporate investment which accounted for 57 per
cent of the total capital under US-64 scheme. Because of high liquidity the corporate sector
used the UTI to park its liquid funds. This added to the volatility of the UTI funds. The
corporate lobby which perhaps subtly opposed the establishment of the UTI in the public
sector made use of it for its own benefits later. The Government-RBI power game started
with the finalization of the UTI charter itself. The RBI draft of the UTI charter stipulated that
the Chairman will be nominated by it, and one more nominee would be on the Board of
Trustees. While finalizing the draft Bill, the Centre changed this stipulation. The Chairman
was to be nominated by the Government, albeit in Consultation with RBI. Although the
appointment was to be made in consultation with the Reserve Bank, the Government could
appoint a person of its choice as Chairman even if the Bank did not approve of him.
Later on in 2002 the UTI was renamed to Axis Bank.
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The Bank's principal activities are to provide commercial banking services which include
merchant banking, direct finance, infrastructure finance, venture capital fund, advisory,
trusteeship, forex, treasury and other related financial services.
Axis Bank is the third largest private sector bank in India. Axis Bank offers the entire
spectrum of financial services to customer segments covering Large and Mid-Corporates,
SME, Agriculture and Retail Businesses.
The Bank has a large footprint of 2589 domestic branches (including extension counters) and
12355 ATMs spread across 1,139 centers in the country as on 31st March 2015. The Bank
also has 7 overseas branches / offices in Singapore, Hong Kong, Shanghai, Colombo, Dubai,
DIFC - Dubai and Abu Dhabi.
Axis Bank is one of the first new generation private sector banks to have begun operations in
1994. The Bank was promoted in 1993, jointly by Specified Undertaking of Unit Trust of
India (SUUTI) (then known as Unit Trust of India),Life Insurance Corporation of India
(LIC), General Insurance Corporation of India (GIC), National Insurance Company Ltd., The
New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India
Insurance Company Ltd. The shareholding of Unit Trust of India was subsequently
transferred to SUUTI, an entity established in 2003.
With a balance sheet size of Rs. 461,932.39 crores as on 31st March 2015, Axis Bank is
ranked 9th amongst all Indian scheduled banks. Axis Bank has achieved consistent growth
and stable asset quality with a 5 year CAGR (2010-11 to 2014-15) of 21% in Total Assets,
18% in Total Deposits, 22% in Total Advances and 24% in Net Profit.
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The Corporate Office of Axis Bank is located at Axis House Mumbai. Axis House has
received the ‘Platinum’ rating awarded by the US Green Building Council for its
environment friendly facilities and reduction of carbon emission.
The Bank has set up nine wholly-owned subsidiaries:
Axis Capital Ltd.
Axis Private Equity Ltd.
Axis Trustee Services Ltd.
Axis Asset Management Company Ltd.
Axis Mutual Fund Trustee Ltd.
Axis U.K. Ltd.
Axis Securities Ltd.
Axis Finance Ltd.
Axis Securities Europe Ltd.
UTI Bank Ltd. has been promoted by the largest and the best Financial Institution of the
country, UTI. The Bank was set up IN 1993 with a capital of Rs. 115 crore, with
UTI contributing Rs. 100 crore,
LIC - Rs. 7.5 crore
GIC and its four subsidiaries contributing Rs. 1.5 crore each.
Axis Bank is today one of the most competitive and profitable banking franchise in India.
Which can be clearly seen by an analysis of its comprehensive portfolio of banking services
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including Corporate Credit, Retail Banking, and Business Banking, Capital Markets,
Treasury and International Banking.
The Bank has authorized share capital of Rs. 850 Crores comprising 4,250,000,000 equity
shares of Rs.2/- each. As on 31st March, 2015 the Bank has issued, subscribed and paid-up
equity capital of Rs. 474.10 crores, constituting 2,370,522,199 shares of Rs. 2/- each. The
Bank’s shares are listed on the National Stock Exchange and the Bombay Stock Exchange.
The GDRs issued by the Bank are listed on the London Stock Exchange (LSE). The bonds
issued under the MTN programme are listed on the Singapore Stock Exchange
The Bank has a network of 2402 domestic branches (including extension counters) and
12,922 ATMs across the country, as on 31st March 2014.The overseas operations of the Bank
are spread over the seven international office with branches at Singapore, Hong Kong, DIFC
(Dubai, International Financial Centre), Colombo, and Shanghai and representative Offices at
Dubai and Abu Dhabi During the year, the Bank Overseas Subsidiary namely Axis Bank UK
Ltd. commenced banking operations.
An overview of various business segments
The Bank pursues an effective customer segmentation strategy, the success of which
is reflected in the fact that Savings Bank deposits grew at a Compounded Annual
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Growth Rate (CAGR) of 26.13% over the last five years. During the year, Savings
Bank deposits grew 23.44% to Rs. 63,778 crores from Rs. 51,668 crores last year. On
a daily average basis, Savings Bank deposits grew 20.26% to Rs. 52,243 crores. The
Bank has also maintained its approach in increasing the proportion of Retail Term
Deposits. On the 31st March 2013, retail term deposits grew 24.37% year-on-year to
Rs. 59,531 crores, constituting 42.37% of total term deposits, compared to 37.20%
last year. Likewise, the Bank continued to focus on increasing its share of retail loans
in total advances. The retail loans of the Bank grew 43.62% to Rs. 53,960 crores as on
31st March 2013 from Rs. 37,570 crores last year. Retail loans constituted 27.40% of
the Bank’s total advances as on 31st March 2013, compared to 22.13% last year of
which secured loans accounted for 87%.
During the year, the Bank added 325 branches spread across 279 centers. The Bank
added 1,321 ATMs during the year to reach a network size of 11,245 as on 31st
March 2013 compared to 9,924 ATMs last year. The Bank has deployed 550
Automated Deposit Machines (for cash deposits into customer accounts) and has
extended this facility 24X7 in certain branches which have integrated self-service
lobbies. Besides the ATM network, internet banking, mobile banking and phone
banking have developed as important alternate channels of the Bank.
As on 31st March 2013, balances in current accounts increased by 21.55% and stood
at Rs. 48,322 crores compared to Rs. 39,754 crores last year. On a daily average basis,
current accounts balances grew by 4.73% to Rs. 28,698 crores compared to Rs.
27,403 crores last year.
The Bank is one of the top CMS providers in the country. The Bank acts as an agency
bank for transacting government business offering services to various Central
Government Ministries / Departments and other State Governments and Union
Territories. The number of CMS clients has grown to 15,818 from 11,548 last year.
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The corporate credit portfolio of the Bank comprising advances to large and mid-
corporates including infrastructure) grew 7.89% to Rs. 98,239 crores from Rs. 91,053
crores last year. This includes advances at overseas branches amounting to Rs. 29,972
crores (equivalent to USD 5.52 billion) comprising mainly the portfolio of Indian
corporates and their subsidiaries as also trade finance. The advances at overseas
branches accounted for 15.22% of total advance
The Bank has an integrated Treasury, covering both domestic and global markets,
which manages the Bank’s funds across geographies. The Bank’s treasury business
has grown substantially over the years, gaining market share and continuing to be
among the top five banks in terms of forex revenues. The Treasury plays an important
role in the sovereign debt markets and participates in the primary auctions held by
RBI. It also actively participates in the secondary government securities and corporate
debt market. The foreign exchange and money markets desk is an active participant in
the inter-bank/ FI space. The Bank has been exploring various cross-border markets to
augment resources and support customer cross-border trade. The Bank has emerged as
one of the leading providers of foreign exchange and trade finance services. It
provides a gamut of products for exports and imports as well as retail services. Its
cutting edge technology provides comprehensive and timely customer services.
The international operations of the Bank have generally catered to Indian corporates
who have expanded their business overseas. The overseas network of the Bank
currently spans the major financial hubs in Asia. The Bank now has a foreign network
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of four branches at Singapore, Hong Kong, DIFC-Dubai and Colombo (Sri Lanka),
and three representative offices at Shanghai, Dubai and Abu Dhabi, besides strategic
alliances with banks and exchange houses in the Gulf Co-operation Council (GCC)
countries. While branches at Singapore, Hong Kong, DIFC-Dubai and Colombo
enable the Bank to partner with Indian corporates doing business globally and
primarily offer corporate banking, trade finance, treasury and risk management
solutions, the Bank also offers retail liability products from its branches at Hong Kong
SMALL AND MEDIUM ENTERPRISES
The Small and Medium Enterprises (SME) segment is a thrust area of the Bank. The
business approach towards this segment, which is expected to contribute significantly
to economic growth in future, is to build relationships and nurture the entrepreneurial
talent available. The relationship based approach enables the Bank to deliver value
through the entire life cycle of SMEs. The Bank has segmented its SME business in
three groups: Small Enterprises, Medium Enterprises and Supply Chain Finance. The
Bank extends working capital, project finance as well as trade finance facilities to
SMEs. The Bank has launched ‘Business Gaurav SME Awards’ in association with
Dun & Bradstreet to recognize and award achievers in the SME space.
As of 31st March 2013, the agriculture business is operated through 759 branches
attached to 93 agricultural clusters, which are controlled by 20 ABCs. To achieve the
objectives of increasing the business reach, consistent growth of portfolio and
maintaining quality of assets, business, credit, operations and collections functions in
this business are handled independently.As on 31st March 2013, the Bank’s
outstanding loans in the agricultural sector was Rs. 14,845 crores, constituting 7.54%
of the Bank’s total advances
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The Bank regards financial inclusion not merely as a corporate social responsibility
initiative but as an integral component of its rural strategy. The financial inclusion
initiatives of the Bank are aimed at enabling customers in rural markets to use formal
banking channels for their banking needs such as savings, payments, credit and
insurance. Apart from savings, payments are the major requirement of such customers
due to migration of workforce. The Bank offers no-frills accounts, tailor-made fixed
deposits and recurring deposit products to meet the savings requirements of
customers. As on 31st March 2013, the Bank had opened 61.61 lac no-frills accounts
covering 42,338 villages.
The Bank has been in the forefront of several innovations in this space. It has tied-up
with leading telecom companies to provide savings and remittance facilities using the
mobile phone and their distribution outlets in key domestic payment corridors. The
Bank is also a leading player in the remittance market, enabling migrant workers in
urban areas remit money to their families in the hinterland. The Bank endeavors to
meet the entire set of financial needs of its customers, including micro-lending,
‘Chhota-deposits’ and micro-insurance (under life and general insurance categories).
The Bank also actively participates in electronic/direct benefit transfer for disbursal of
benefits under various government schemes using smart cards and biometric
authentication technology. The Bank has made significant investments in technology,
and is integrated with the Aadhar platform through NPCI to enable transfer of Aadhar
based social welfare benefits. The Bank has launched several programs to deliver
micro-loans to rural customers through its business correspondents in Tamil Nadu,
Bihar and Madhya Pradesh. It has also tied up with leading corporates to deliver
credit to their end consumers through their rural supply chain partners.
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Board of Directors
Sanjeev Mishra Non-Executive Chairman
V Srinivasan Deputy Managing Director
Prasad R Menon Director
Som Mittal Director
Usha Sangwan Director
Rakesh Makhija Addnl. Independent Director
B Babu Rao Addnl. Non-Executive Director
Rajesh Dahiya Executive Director
Shikha Sharma Managing Director & CEO
V R Kaundinya Director
Samir K Barua Director
Rohit Bhagat Director
S Vishvanathan Director
Ketaki Bhagwati Addnl. Independent Director
Rajiv Anand Additional Director
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Customer service and product innovation tuned to diverse needs of individual and
Continuous technology up gradating while maintaining human values.
Progressive globalization and achieving international standards.
Efficiency and effectiveness built on ethical practices.
Customer Satisfaction through providing quality service effectively and efficiently.
VISION AND VALUES
To be the preferred financial solutions provider excelling in customer delivery through
insight, empowered employees and smart use of technology
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UNIT: AXIS BANK LIMITED
Jeevan Prakash Building
Tel: 0172- 5062917
‘Trishul’, 3rd Floor, Opp. Samartheshwar Temple, Law Garden,
Ahmedabad – 380 006. Tel No. : 079 – 2640 9322 Fax No. : 079 – 2640 9321
Web site: www.axisbank.com
The Corporate Office
Axis Bank Limited,
Bombay Dyeing Mills Compound,
Pandurang Budhkar Marg,
Worli, Mumbai - 400 025
Tel: (022) 2425 2525
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AXIS BANK OFFERS ITS SERVICES MAJORLY IN FOUR PARTS:
D. Priority banking
I) Saving Account
(1) Easy Access Saving Account
(2) Prime Plus Saving Account
(3) Prime Saving Account
(4) Women’s Saving Account
(5) Senior Privilege Account
(6) Future Star Saving Account
(7) Pension Saving Account
(8) Trust/NGO Saving Account
(9) Insurance Saving Account
(10) Youth Saving Account
(11) Basic Saving Account
(12) Small Basic Saving Account
I) Salary Account
(1) Easy Access Salary Account
(2) Prime Salary Account
(3) Priority Salary Account
(4) Wealth Salary Account
(5) Defense Salary Account
(6) Employee Salary Account
II) Current Account
(1) Normal Current Account
(2) Local Current Account
(3) Business Advantage Current Account
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(4) Business Select Current Account
(5) Business Classic Current Account
(6) Sweeps Current Account
(7) Safe Deposit Current Account
(8) Pension Reimbursement Current Account
(9) New Pension System
I) Fixed Deposit
II) Recurring Deposit
III) Tax Saver Deposit
IV) Fixed Deposit Plus
V) En Cash 24 Flexi Deposit
I) Credit Cards
(1) Insta Easy Credit Card
(2) Miles And More Credit Card
(3) My Business Credit Card
(4) My Choice Credit Card
(5) My Wings Credit Card
(6) My Zone Credit Card
(7) Neo Credit Card
(8) Platinum Credit Card
(9) Pride Platinum Credit Card
(10) Pride Signature Credit Card
(11) Privilege With Unlimited Travel Benefits Credit Card
(12) Signature With Lifestyle Benefits
II) Debit Cards
(1) Burgundy World Debit Card
(2) Priority Debit Card
(3) Titanium Debit Card
(4) Secure + Debit Card
(5) Display Debit Card
(6) Youth Debit Card
(7) Ladies First Debit Card
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(8) Power Salute Debit Card
(9) NRI Debit Card
(10) Titanium Debit Card
(11) Titanium Prime Plus
(12) Visa Classic Debit Card
(13) Smart Privilege Debit Card
III) Pre-Paid Cards
(1) Rewards Pre-Paid Card
(2) Axis Bank Suvidha Pre-Paid Card
(3) Smart Pay Pre-Paid Card
(4) Meal Pre-Paid Card
(5) Gift Pre-Paid Card
IV) Commercial Credit Cards
(1) CCC With Corporate Liability
(2) CCC With Individual Liability
(3) CCC With Joint And Several Liability
(4) Central Travel CCC
(5) Purchase CCC
(6) Purchase Control CCC
(7) My Business CCC
V) Commercial Debit Cards
(1) Master Card Business CDC
(2) Business Titanium Rewards CDC
(3) Business Titanium CDC
I) Home Loans
(1) Axis Bank Home Loan
(2) Asha Home Loan
(3) Empower Home Loan
(4) Happy Ending Home Loan
(5) Super Saver Home Loan
II) Personal Loan
III) Car Loans
(1) New Car Loan
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(2) Pre-Owned Car Loan
(3) Loan Against Car
IV) Loan Against Property
V) Gold Loan
VI) Loan Against Securities
VII) Loan Against Shares
VIII) Commercial Vehicle & Construction Loan
IX) Educational Loan
(2) Travel Currency
(4) India Travel
(5) International Fund Transfer
(6) Foreign Currency Cash
(7) Foreign Currency Demand Draft
(8) Foreign Currency Travel Cheques
(1) Gold Mohur
(2) Silver Mohur
(3) Axis Direct
(4) Mutual Fund
(5) Demat Account
(6) 8% Savings Bonds
(7) IPO Smart
(8) Alternate Investments + Products
(9) Public Provident Fund
(10) Atal Pension Yojna
(1) Life Insurance
(2) Health Insurance
(3) Home Insurance
(4) Travel Insurance
(5) Motor Insurance
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(6) Business Guard
(7) Pradhan Mantri Suraksha Bima Yojna
(8) Max Life Pradhan Mantri Jeevan Jyoti Bima Yojna
(9) Bima Uphar Yojna
(1) Inaam NRI Personal
(2) NRE Savings
(3) NRE Prime Savings
(4) NRO Savings
(5) Resident Foreign Currency
(6) NRE Salary
(1) Resident Foreign Currency
(2) NRE FD
(4) NRI-Pro Fc
(5) NRO Rupee
(6) NRE Rupee
(7) NRO Rd
(8) NRI Pro Rupee
(1) NRI Home Loans
(2) Top Up Loans
(3) Home Loan For Self-Employed NRI
(1) General Insurance
(1) NRI Mutual Fund
(2) Portfolio Investments Scheme
(3) Gold Mohur
(4) 4 In 1 NRI Investment
F) Send Money To India
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(1) Middle East
(1) Krishi Saving Account
(2) Krishi Current Account
(1) Kisan Credit Card
(2) Gold Loan
(3) Loan For Horticulture
(4) Loan For Rural Project
(5) Tractor Loans
(6) Contract Farming
(7) Warehouse Receipt Loans
C) Rural Banking
D) Financial Inclusion
4) Burgundy Banking
A) Burgundy For Resident
B) Burgundy For Non-Resident
5) Priority Banking
A) Priority For Resident
B) Priority For Non-Resident
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Overview of Branchless Banking:
Branchless banking is a type of banking that takes place where the banking customer does not
need to visit a branch or central location of the bank physically. Financial institution business
may be completed through technological services, such as online Banking transactions, over
the Mobile phone, or through an ATM (Automated Teller Machine) Now a day’s Branchless
banking is very common activity, and many people are able to complete all their banking
online without ever having to visit the bank. There are many benefits to branchless banking to
the customers. There is no need for the human to take time out of the day to physically visit
the bank in order to withdraw or deposit money these activities customer can do through
branchless banking easily
Examples of branchless banking technologies are the Technology, Internet, automated teller
machines (ATMs), Point of sale POS devices, and mobile phones etc. Each of these
technologies serves to deliver a set of branchless banking services to the customers
International Background of the Branchless Banking:
The concept of branchless banking first introduced by United Kingdom after that a Midland
bank has started this concept in with more futures. At that time Midland Bank was one of the
Big Four banking groups in the United Kingdom for most of the 20th century. It is now part
of HSBC. HSBC is a British multinational banking and financial services company and the
headquartered in London United Kingdom. It is the world's second largest bank providing
financial services to the customers. It was founded in London in 1991 by the Hong Kong and
Shanghai Banking Corporation to act as a new group holding company
National Background of the Branchless Banking:
India has been declared as a ground innovation in branchless banking and has been successful
in developing a variety of business models involving a wide range of players many banks has
played a role in activities of branchless banking, including mobile network operators
(MNOs), technology companies and even courier businesses etc. According to history
Branchless banking concept was first introduced in India in April 2006 under the regulation
of Reserve Bank of India has provided clear guidance to the financial institutions.
Customer Satisfaction with Branchless Banking:
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In this world all knows that customers place great importance on the value and Convenience
offered by financial institutions (Lewis and Soureli, 2006) and that customer satisfaction
(which is affecting on the service quality perceptions) Many Research create confusion and
gaps in understanding the nature of online service quality process, and how it operates within
the financial institution it depends upon customer lack of specific knowledge as to how the
quality of Branchless Banking web sites impacts on customers mentality it all depends upon
customer satisfaction with their bank (Carmel and Scott, 2009).
Automated transaction of services has the potential to make customers enthusiastic about
their financial institution. And to tell other potential customers about its advantages. After
that, automated service users would be more likely to comment positively about their bank to
other potential customers, recommending the bank encouraging and motivating others to do
business with it (Joseph and Stone, 2003) Vol. 1 | No. 2 | August 2012
Reliability involves consistency of performance and dependability of silk bank branchless
banking activities. It means that the silk bank performs the service right the first time to their
customers. It also means that the silk bank honors its promises with in India. Indian Gov.
involves accuracy in billing in all departments, keeping records correctly and performing the
service at proper time. Customers should be specifically influenced by the reliability of
advance technology because they might be associated with risks such as the technology
Fees and Charges:
Fees and charges of every online transaction impacts on Service quality in branchless
banking financial institution are important when human internet interaction is the main
service delivery and communication strategy with their potential customers. After introducing
branchless banking Silk bank offering high quality services to satisfy potential consumers but
it needs, that at lower costs, because it is competitive advantage of financial institutions
Online banking has successfully reduced operating administrative costs and other costs In this
world every person want to save money when a bank provides a lower cost services as
compared to other financial institution in India result customers prefer a lower cost bank
easily it shows that Cost savings have helped online based banks offering lower or no service
fees it’s an advantage for the financial institution for diverting customers expectation to the
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online banks, it means it is hypothesized that fees and charges have positive impact on
Response means Customers are particularly interested in the speed with which a service is
offered or delivered to their potential customers (TheWall Street Journal, 1990). Most
researcheshave indicated that few customers overrate the processing time of a services
especially in India According to employees of many bank on certain occasion customers has
a strong liking to carry out the service by them. This activity is particularly justified by the
willingness of the customers to up the speed of delivery it is mandatory for the bank to
upgrade system and manage delivery time and follow advance mood of technology. Because
slow service delivery has a negative effect onfew customers if customers are expecting a
fastservice delivery it is clear that customers using the service more positively. That time was
an important factor for each individual in using a new service or advance technology in
banks. In this fast moving world timesavings were essential for each individual who use
online banking and online shopping.
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Almost 4 billion people are unbanked—more than two-thirds of the population in the world’s
low-and middle-income countries. They are the huge unserved majority today. In recent
years, there has been growing effort and interest in measuring financial inclusion, but as yet
we have no globally consistent datasets that can give us a clear sense of how this proportion
has changed over the past decade. However, evidence from countries like Brazil, South
Africa, India, and Kenya strongly suggests that there has been an upward trend (Fin Mark
Trust 2003 and 2008; FSD Kenya 2009a; Kumar 2005; World Bank 2008a). Technology has
played a role in this expansion, though we should not overstate its role to date. Information
technology has primarily helped to enable expansion through more conventional banking
channels, such as branch and ATM. For example, in growing from 0 to 8 million deposit
customers in five years, Mexico’s Banco Azteca used a robust electronic banking system to
connect a large network of mini-branches in stores of its parent Elektra, a large seller of
consumer durables, and other retail chains (Rhyme 2009). The task of financial inclusion in a
country like ours with large population and geographical spread is, indeed, challenging. The
data released from the recent census of India indicates that only 58.7% of households in India
avail of banking services with the figure being 54.4% for rural areas and 67.8% for urban
areas. The opening of bank accounts is only the first stage and the focus now is not just on
improving access but also on better use of the financial infrastructure.
Overview on Branchless Banking
Branchless banking systems are becoming prevalent in the developing regions of the world as
a mechanism to extend financial services to the economically deprived populations. Instead
of setting up formal bank branches, these systems use a network of human agents to facilitate
banking transactions, thereby reducing the cost of banking for people with small cash
holdings. Today, over 50 million people in the developing world rely on branchless banking
services to meet their financial needs and together they transact more than $100 million on a
Criteria for constitute branchless banking
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Non-bank retail outlets are used as customer touch-points, at least for cashing in or
out of the accounts.
Technology, such as payment cards or mobile phones, is used to identify customers
and authorize transactions electronically and, in some cases, to allow customers to
initiate transactions on their own.
Transactions can be processed against an electronic store of value (although cash-
based services for non-customers may also be offered in addition)
Accounts are issued by institutions recognized and explicitly or implicitly authorized
by the banking regulator, although they may not be formally licensed and regulated
This represents a fairly expansive definition of branchless banking, since it may
involve three types of “outsourcing” of activities typically conducted by banks to non-
bank players: the customer interface, where customers at the very least cash in and
cash out from their electronic accounts; the operation of the accounts; and the
issuance of the accounts and the investment of the float.
Drivers of branchless banking
The retail network, composed of the collection of retail outlets where transactions are
The payment network, which aggregates the transactions from the collection of retail
outlets and routes them to the appropriate issuer
The account platform, which manages the service logic by authorizing individual
transactions and maintaining the value of accounts Each of these elements has very
different economics, and each presents key tradeoffs that providers need to face. An
understanding of the economic drivers helps establish the roles of the value chain and
the types of partnerships that are most likely to achieve the necessary scale, and
ensures that the service can be delivered at an end-to-end transaction cost that poor
customers can afford.
1. Economies of Large Scale Operations
2. Spreading of Risk
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3. Economy in Cash Reserves
4. Diversification on Deposits and Assets
5. Cheap Remittance Facilities
6. Uniform Interest Rates
7. Proper Use of Capital
8. Better Facilities to Customers
9. Banking Facilities in Backward Areas
10. Effective Control
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Financial inclusion is based on the principal of equity and inclusive growth and will be the
catalyst to empower the poor to contribute to the social and economic growth of India. As per
2011 census, about 58.7 percent households had reported availing of banking facilities. Out
of the 24.69 crore households, 14.48 crore reported availing banking services. Nearly 10
crore households were not availing the services; which is a significant percentile of the
The introduction of Branchless banking will usher in banking for the unbanked in India and
will provide a window in financial inclusion for a large segment of the population which are
poor and unbanked. Branchless Banking needs to see as the key enabler of financial inclusion
of the poor in India.
Need of Branchless Banking
These needs fulfilled by Branchless Banking where The two pillars of financial inclusion are
the Bank linked Special Help Groups (SHG) and the Business Correspondent (BC) Model.
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Branchless Banking in India:
Reaching out to a large unbanked population can be achieved by a judicious use of
technology and people on the ground to extend financial services to the unbanked by opening
up channels beyond the currently operational branch network.
The government has set a target of providing financial inclusion for any village with a
population of more than 2000 people, there are about 6,00,000 villages which need to be
supported with banking and other financial services.
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Indicators of Financial Inclusion
These indicators showing how Indian Banking sector developing in the future of banking and
making reach to unbanked people across the country This branchless banking has to be done
in conjunction with other plans and direction provided by the Indian government to opening
more brick and mortar branches in states, districts, talukas and villages, identified by the
government of India.
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Development by financial inclusion in the country where showing progress of financial
inclusion in banks in Table 2.3
Branchless banking is the vehicle to take banking to customer's doorstep rather than the
traditional approach of the customer seeking the banks. Table 2.3gives the growth of
financial inclusion in India in the year 2013.
It can be gleaned from the table that Business Correspondents (BC) have been the key
enablers of financial inclusion ; there were 221,341 BC's servicing 1,20,355 villages in India
as on March 2013.
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Role of Technology
Despite the efforts like nationalization of State Bank of India in 1955, commercial banks in
1969 and 1980; setting up of RRBs; encouraging urban and rural cooperative banks; and
instituting priority-sector lending scheme put in by the GOI and RBI, financial disparity still
remains one of the major issues plaguing the Indian rural population. These efforts have
failed to build the social capital and consequently failed to achieve desired level of financial
Technology has started playing a very important role in financial inclusion. Indian banks are
using all the avenues available to increase their reach and penetration. One of the recent
technologies that has made the banking system much easier is the Automated Teller
Machines (ATMs). The statistics that provides the distribution of ATMs in rural and urban
Branchless Banking through ATM and expansion of ATM’s in Rural-Urban areas
a. Automatic Teller Machines (ATMs)
Automatic Cash dispensing machines are already in place in cities and towns. The machine
identifies the bank user through his card and password. The user can withdraw cash through
these machines, check his account balances and use it for some other small transactions.
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Generally, these ATMs are owned by the banks or bank outsources it to third party to run an
ATM on their behalf.
b. Deposit taking Machines
These are the machines which take cash deposits from customers and update the status of
their deposit in real time. These machines are currently present only in the bank branch
premises of few banks in cities.
c. Hand held devices
These are devices which are used to identify user accounts usually through a card and
biometric identifier. The main purpose of the device is to update the transactions happening
at BC location in the bank servers. These devices update the deposit and withdrawal
information in the servers. The Handheld devices either operate through uses of mobile data
networks or through the Local Area Network (LAN) connection.
d. Computerized transactions in Kiosk
Computers at kiosk can directly connect to banks website and use the website for banking
transactions like deposits, withdrawals, etc.
e. White Label ATMs
White Label ATMs variants of normal ATMs wherein it is operated by a private entity and
different banks can provide the service through this ATM.
f. Internet Banking/ Mobile Banking
Bank account holders can use their accounts using internet banking and mobile banking to
transfer money to different accounts and pay their bills.
Though the technologies are available but effective implementation of the technology to
increase the reach of banking services is yet to happen. The low cost solutions like
computerized kiosk and handheld devices have increased the penetration in last few years but
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they are still prone to network connectivity and maintenance issues. Moreover the low
number of transactions due to limited product suit, lack of interest by people and technology
hiccups has made the business unsustainable for many BCs which is affecting the scaling of
the current models.
Financial inclusion entails not just the availability of financial products – credit, deposit,
insurance, etc. but also the ability to transfer money around in an affordable manner. While
banks have found this transfer unviable the mobile technology platforms came to the fore
offering services like mobile wallet, mobile money, etc.
However, despite the penetration of the mobile channel, this platform has been vastly
underutilized for monetary transactions. One reason is the requirement of the bank as a
partner for the cash out transaction. Thus, the person performing the cash out needs to have a
bank account. Other important issue with the system is that of risk transfer and market
inefficiency. An escrow account is used for the money in these mobile wallets that earns no
interest for the mobile company. Moreover this also exposes the mobile wallet to risk if the
Thus, apart from these operational issues, affordable remittances could lead to overall
development of those who are financially excluded. Currently this is being deterred by high
transaction costs accorded by the banks. Therefore, with the objective of providing low cost
(through high volume) remittance services to the migrant laborers and other entities, RBI
(2014a) has come up with the concept of Payment Banks. Non-Banking Financial Companies
(NBFCs), mobile companies, corporate BCs, public sector entities, current Payment
Protection Insurance (PPI) providers etc. can register and set up payment banks.
Restricted to a maximum of Rs. 100,000 per customer, the payment banks will be allowed to
accept current and saving deposits. While the primary purpose of these accounts is to effect
low cost remittance services, the holder will be eligible for interest income on these accounts.
While the payment banks cannot lend unlike banks they can however act as Business
Correspondent for banks and lend on their behalf. Thus, the primary source of income for
payment banks would be the interest they earn by depositing the customer money in
Government Securities as directed by RBI. They would also have access to interbank call
money market to sort out any liquidity issues. Payment Banks are essentially exposed to
operational and limited market risks (investments are held till maturity) and no credit risks
(no lending allowed), while a minimum CAR of 15 percent and a net worth of Rs. 100 crore
is required to be maintained.
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Given that the payment banks are not allowed to directly lend, the profits would essentially
be derived from transaction fees (which will be small due to competition) and the Net Interest
Margin. While theoretically, this looks an interesting opportunity, how the firms face the
ground level challenges will be important. Firms will need to find answers to challenging
issues of thin profit margins, interoperability, technical limitations and regulations.
The penetration of financial services in India is very low and the problem is predominant in
rural areas. Only 50 percent of Indians today hold a savings account and one in seven
individuals have access to banking credit.3 Without access to formal banking services, the
only means of savings and transferring value is through physical assets like cash, jewelry or
livestock, and this happens often with small time money-lenders at a higher cost. This not
only increases risk exposure, but also perpetually marginalizes this segment of the population
from the formal economy, as it is difficult and costlier for banks, insurance companies and
government agencies to transact with them.
Role of Government of India
The Government of India (GOI) initiated the Financial Inclusion program with the launch of
the “Swabhimaan” campaign in the Union Budget of 2010-2011. Under “Swabhimaan” - the
Financial Inclusion Campaign launched in February 2011, Banks had provided banking
facilities by March, 2012 to over 74,000 habitations having population in excess of 2000
using various models and technologies including branchless banking through Business
Correspondents Agents (BCAs). Further, in terms of Finance Minister's Budget Speech 2012-
13, the “Swabhimaan” campaign has been extended to habitations with population of more
than 1000 in North Eastern and hilly States and to habitations which have crossed population
of 1600 as per census 2001. About 40,000 such habitations have been identified to be covered
under the extended “Swabhimaan” campaign.
The GOI advised Indian banks to open branches in areas which had 5,000 or more population
in under-banked districts and 10,000 or more population in other districts under this
campaign. In two year time ending March 2012, Banking facilities were provided to 74,194
such villages. Further, 62,468 Banking Correspondent Agents (BCAs) were appointed and
about 3.16 FI accounts were opened by end of March, 2012.
The objective of Financial Inclusion (FI) is to extend financial services to the large unbanked
population of the country to unlock its growth potential and to achieve inclusive growth by
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making financing available to the poor and offer banks a business opportunity for receiving
deposits and also lending money.
The GOI efforts have resulted in rural incomes growing rapidly in a short time due to efforts
to provide rural development and employment programs. CRISIL has reported in August
2012 that consumption in rural India is growing faster than in urban areas, between 2009-10
and 2011-12 additional spending by rural India was Rs. 3,750 billion significantly higher than
Rs. 2,994 billion by the urban population in the same period.
In the year 2001 only about 35% of the total number of households availed banking service,
in rural areas it was less than one in three households and in urban areas one in two
household who available banking service services.
With the GOI initiatives in 2011 , 3 out of 5 households in India avail banking services, in
rural areas it is one in two households and in urban areas more than two out of three
households who avail of banking services.
The growth during the period of 2001-2011, in the number of households availing banking
services overall has increased by 112 % or a CAGR of 7.8 % per annum. In rural areas they
have increased by 8.2 % per annum and in urban areas by 7.2 %per annum n. Table 2 shows
the progress made in financial inclusion as on March 31st
Role of Reserve Bank of India
Reserve Bank of India (RBI) the regulator has clearly identified the need for Financial
Inclusion as s the engine for growth of the Indian economy. The Business Correspondent
(BC) has been the key outsourced resource in achieving the goals set by the GOI for
Financial Inclusion in India.
The RBI has encouraged the use of Information Technology with smart cards with biometric
identification, personal computer operated kiosks and mobile technology to enable Business
Correspondents to deliver Banking Services.
RBI has simplified the Know Your Customer (KYC) norms, allowed the opening of No-Frills
Accounts, issue of General purpose Credit Cards (GCC) and have mandated that the goal is to
have all households in villages with more than 2000 inhabitants should have bank accounts
and banking services.
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RBI has also mandated that financial literacy and credit counseling to be provided to the new
customers of the bank, so that they understand the on how to benefit by the financial
inclusion initiatives offered to them.
Business Correspondents will offer the following Products to the customers ; Savings Bank,
Recurring Deposit, Remittances, Saving Banks cum Over Draft (SBcum- OD), Tiny Card to
Banks have been asked to put in place risk mitigation in the use of Business Correspondents
by obtaining security deposit, due diligence process in selection, a committee approach for
selection of BC partners and to conduct periodical checks on the BC partners and also to
ensure the fidelity insurance is provided by the Business Correspondents.
RBI has mandated that the banks must ensure that the cash management is the responsibility
of the BCs including arranging transit insurance cover and must ensure that they always have
cash available and the customers are given uninterrupted service; and adequate balance is
maintained in the settlement account of the BC. BC's can also be extended overdraft limits to
ensure BCs' get enough physical cash for deployment to their customers at the customer
service points (CSP).
Bank Initiated Enabler for Branchless Banking
Banks are providing loans to BC's for acquiring equipment, machines, furniture to set up
Customer Service Points (CSP) enabled with Point of Sale (POS) Machines, finger print
scanner, computers, mobile phones as term loans.
Banks also provide training in banking operation required by Business Correspondents (BC)
and Customer Service Points (CSP) operators before they begin operations. They are also
taught on how to handle and operate the information technology equipment by the technology
vendors of the banks.
Challenges Faced by Business Correspondents
There are a number of challenges faced by the Business correspondents, most of which are
Social in nature. The first is the resistance to financial inclusion due to illiteracy and lower
economic status, this is being partly overcome by sustained financial literacy training.
Regulatory compliance to KYC (Know your customer) has been relaxed and ceilings have
been put in place to comply with the Anti-Money Laundering (AML) compliance. The
Bank's ability to accept the liability of the BC's is another challenge along with the restricted
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eligibility criteria permitted by RBI to be a Business Correspondent and the restrictions on
the BC engaging a sub agent.
Benefits of Branchless Banking in India.
Branchless Banking in India enables the financial inclusion of Indian rural and semi-rural and
poor urban areas and the benefits are:
i) Economical Support to the Poor:
An opportunity for the lowest strata of society to save money to overcome financial
difficulties which they encounter often and makes them vulnerable. Thus it provides them a
platform to borrow money, receive money and also save their money securely and
confidently in a regulated and reliable banking environment.
ii) Credit Support:
Credit was traditionally sourced from informal channels which made the poor dependent and
vulnerable. With financial inclusion there is an opportunity for the poor to avail of credit at
reasonable terms to fund their aspirations and foster entrepreneurship.
iii) Direct Payment to the Beneficiary
Banking allows a safe and reliable payment channel for Public subsidies and welfare
programmes offered by the GOI for the poor. With financial inclusion the money is delivered
directly to the beneficiary from government subsidies and welfare programmes. Thus leakage
in the system is reduced and the money reaches the poor people who are its recipients without
pilferage. Government of India has already started direct cash transfers to the beneficiaries of
various government schemes and this has been well received by the recipients.
Branchless Banking in Other Countries and their Adaptation in
The experiences in the countries of Brazil, Kenya, Mexico and South Africa are relevant for
India given the challenges being faced by these countries are quite similar to India's
challenges in Financial Inclusion.
Banking is provide through agents called Banking Correspondents (BC); by easing the
restrictions on BC and allowing them to provide a range of services. In 1997, 40 million out
of 62 million Brazilians did not have access to financial services. In a decade 1, 50,000 BCs'
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cover more the 60% of the customer services points and in the period 2000 to 2008 the
number of bank accounts increased from 63.7 million to 125.7 million. Indian financial
inclusion model has borrowed the BC concept which has worked in Brazil and has been
successful in India too.
Kenya has been the front runner in harnessing mobile banking in the world with its M-PESA
implementation. Thus they have done away the need to have a bank account and have
empowered the mobile company to act as a banker for keeping and transacting money. The
mobile phone company acts as the repository of customers' money and allows them to
transact using their mobile phones; but the money stored in the mobile phone does not earn
any interest and is not cash. The M-PESA was launched in 2007 by Safari.com & Vodafone
and the transactions had a cap of $500 and included more than 17,000 agents.
The client base has reached 10 million customers about 40% of the population. In a recent
development there is a deposit facility in a savings account in partnership with a Bank named
as M-KESHO which can be operated from the customer’s mobile phone.
The Reserve Bank of India has allowed use of 'semi closed wallet' by mobile companies,
customers can now can send and spend money through the mobile network, but can't
withdraw cash. Airtel, Vodafone and Idea are offering such services in collaboration with
Indian Banks and RBI approval.
Mexico has used the microfinance route for financial inclusion by providing micro credit and
similar financial products funded by private capital and substantial investment in technology
The microfinance for profit behemoth has 1.5 million clients and is the largest microfinance
institution (MFI) in Latin America and is named as Comparators. The interest rates are
usurious at more than 100 percent per annum, and there are host of compliance issues with
Comparators. But it is a success story of innovation, efficiency and tight cost controls and is
efficient at training and managing a very de-centralized base of loan officers. Comparators
has demonstrated how a MFI can succeed by being extremely profitable for its shareholders.
In India Micro finance companies tried this model before the Malegam Committee appointed
by the RBI recommended that MFI's charge no more than 24% on loans and that their
margins be limited to 10%.
The report has disallowed more than two microfinance companies to lend to one borrower
and to enforce this it had recommended the setting up of a a microfinance credit information
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bureau which is in operational today. It also stipulated a ceiling of Rs. 25,000 to a single
borrower and loans only to families with income less than Rs. 50,000. It also classified
NBFC's with microfinance operations as NBFC-MFI and recommended that loans to these
entities will be treated a priority sector lending.
iv) South Africa
South Africa has taken the no-frills banking approach with negligible minimum deposit and a
given number of free transactions. The Central Bank of South Africa mandated five banks to
launch the no-frills banking with no monthly fees and five free transactions in a month and it
was named as "Mzansi" in 2004.
South Africa is one of the most expensive banking markets and the Government devised the
Mzansi scheme to provide affordable financial inclusion. As per a 2009 report the adoption of
Mzansi has been limited to 6 million in a population of 32 million, only 3.3 million accounts
were active, with an usage rate of only 58 percent used for transfer of money and payment of
bills and remittance of salary.
The downside is that once the five transaction were exhausted the additional transactions
were charged at regular banking rates which were exorbitant for the poor.
India has adopted this no-frill financial inclusion route with limited success, with 25 million
people signed up only 2.77 million are active uses, which is a usage of just 11 percent. The
government is planning to launch direct transfers of subsidies to these accounts and there is a
renewed interest in this no-frills model in India which seems to be a workable model for
disbursement of money from various government schemes created for the poor in India.
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OBJECTIVE AND SCOPE OF THE STUDY
The objectives of the research were:
1. To study the methods of delivery for branchless banking in India.
2. To study the benefit of branchless banking in India.
3. To study the Experience of branchless Banking in India.
4. To study branchless banking implemented in other countries and its adaptation in India.
Scope of the Study
The introduction of mobile banking as well as agent banking can bring a lot of social value
for low‐income individuals in India through the removal of many potential barriers to access.
Removing barriers that are preventing low‐income individuals from using formal services
will make financial services more accessible which could potentially help lift the welfare of
these individuals. In a previous section, the barriers that were found to be most worrying
were the proximity barriers, high cost barriers, information barriers and barriers associated
with documentation requirements. As will be discussed, mobile banking and agent banking
can facilitate the delivery of financial services and effectively reduce all barriers to access
emphasized in study.
A questionnaire was prepared covering questions related to branchless banking and e
The question was presented in one to one interview with each of the respondents.
The questions were presented with Axis bank’s customers.
Proper spread sheet has been prepared on the basis of results came out from
Analysis has been done on the basis of data from spreadsheet and data collected by
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Conclusions had been arrived at using the response of the concerned persons and not
on questionnaire alone.
The research done by me is an exploratory research.
Data Collection Method
The methods used for collected primary data are
1. Questionnaire (Likert Scale)
Sources of secondary data
2. Axis Bank’s documents
The data collected at a random basis from respondents. All the respondents are customers of
Axis Bank Ltd.
The sample size of respondents is 50.
The respondents are met by face to face at branch location of Axis Bank.
Research Methodology may be understood as a science of studying how research is done
scientifically. In it we study the various steps that are generally adopted by a researcher in
studying the research problem along with the logic behind them.
Research in common parlance refer to a search for knowledge. In fact research is art of
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Objectives of Research:
a) To gain familiarity with a phenomenon or to achieve new insists into it
b) To portray accurately the characteristics of a particular individuals situation or a group.
c) To determine the frequency with which something occurs or with which it is associated
with something else.
d) To test a hypothesis of a causal relationship between variables.
Research can be defined as, “A scientific and systematic search for pertinent information on a
A research method refer to the behavior and instruments used in selecting and constructing
research techniques. Research methods may be understood that which method or technique
that are used for conduction of research. Regarding this research/project observational
method has been following the observation.
Sampling method indicates how the sample units are selected. There are various types of
sample designs which can be covered under the two board groups random or probability or
non- random sample.
SOURCE OF DATA:
Data is collected in two types:
1) Primary data
2) Secondary data
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The primary data are those data, which are collected afresh and for the first time. And happen
to be original in character.
Questionnaire – A set of questionnaire is prepared for the cause of collecting different
information related to the pre-determined objectives. The questionnaire prepared is in two
forms & targeted towards the doctors and chemists differently. The format of questionnaire is
structured and non-disguised.
Direct Personal Interview – Under this method of collecting data there is face-to-face
context with the person from whom the information is obtained. The data collected are from
the respective selected doctors and chemists visited regularly. The pattern used is Structured
and Indirect Interview.
Secondary data means data that are already available i.e., they refer the data, which have
already been collected and analyzed by someone else. When the researcher utilizes secondary
data, then he has to look into various sources from where he can obtain them, IN this case he
is certainly not confronted with the problems that are usually associated with the collection of
original data. Secondary data may either be published data or unpublished data. Usually
published data are available in:
Books, magazines and newspapers.
Data provided by the company.
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Data classification is the process of sorting and categorizing data into various types, forms or
any other distinct class. Here I classify data on the basis of Age, Gender, and Use of service,
Customer preferences, and Customer satisfaction.
Data Analysis and Results of Branchless Banking
No of Commercial Banks in India
As here the banking after Independence in India till 2000 was on more focusing on opening
new banks and providing services to serve the country and made financial literate to
unbanked population, but from 2010 to 2013 and till now Indian Banking Sector is fore
focusing providing all quality services and which cater all needs of unbanked population and
using Technology and taking step towards the paperless banking as Branchless Banking.
1 9 6 9 1 9 8 0 1 9 9 1 2 0 0 0 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3
NO. OF COMMERCIAL BANKS
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Total ATM in India
For enhancements in Branchless Banking, Banks came with the ATM now in India mostly
transactions done by ATM and the no of ATM are increasing day by day to strengthen
Total No of Branches
Now come branches what we required, where we required here day by day banks increasing
branches to serve the unbanked population of the country,
1 2 3 4 5 6
TOTAL ATM IN COUNTRY Year ATM
2010 2011 2012 2013
TotalNo. of Branches
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Lack of access to basic financial services is still a major challenge in a country such as India
where more than 65% of the population is classified as “Under Banked or Unbanked”. RBI
allowing banks to provide service at people’s doorstep through the use of third party services.
This model is referred to as “Business Correspondents/Banking correspondents” in short
The no. of BCs is increasing day by day to strengthen Branchless Banking Model.
Internet Banking and Mobile Banking
Mobile banking and Internet Banking seeking towards the paperless banking and developing
the branchless banking model and provide a support as a pillar where user get access and can
do any transfer like RTGS, NEFT and also can make payments.
The penetration of Internet Banking and Mobile Banking is increasing day by day to making
paperless banking in country
2010 2011 2012 2013
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2009 2010
Internet Banking/Mobile Banking
User Population Pentration
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Credit Card and Debit Card Subscriber
Branchless Banking basically providing banking through without basic physical place of
branch here no need to go branch and make payments and transfer
Banks providing Credit Card and Debit Card to the accountholder by them he can make
payments and transfer the money. Now days in India 65% people having the plastics money
as Debit and Credit Card.
No. of Credit Card and Debit Card are both increasing day by day to provide banking facility
without any need to go at physical place of bank they can do whole banking.
2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5
SUBSCRIBER OF CREDIT CARD/DEBIT CARD
Credit Card Debit Card
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Data Analysis and Results of Case Study on Axis Bank Customer Preference
Data analysis and results are on the basis of Questionnaire Results
Here 74% respondents are using Branchless Banking and 26% are not using which means 37
respondents are using and 13 are not using Branchless Banking.
In question no. 2 analyzes about the reason behind not using Branchless Banking there are
four concern as Security, Service, Availability, and Inconvenience.
CustomerWho are using or not using
Reason behind not using Branchless Banking
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Here 66% out of total respondents are saying about the easiness of Branchless Banking and
34% are saying not easy to use.
Chart presenting the reason with perspective percentage why Branchless Banking is not easy
Is Branchless Banking easy to use.?
Reason behind Branchless Banking is not easy
Complication in banking
Use of Technology
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Here customer seeks to use Branchless Banking as per the chart 38% respondents choose
service because they want save time in banking.
In this question I came to know about how often they use branchless banking so here mostly
respondents’ usage daily to services offered by bank.
Why customer choose Branchless Banking
To save time
How often do you use Branchless Banking
· Once a week
· 2-4 times a week
· Less than once a week
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Here in chart I came to know about which service like most and least offered by bank
In this question studied about the how much use to services offered by bank
4 3 5 6
MAKE AN ACCOUNT
MONEY TRANSFER STOPPAYMENTS E-ALERTS BANKSTATEMETS
Which service you like most of branchless
Most Like 1 Like 2 Average 3 Dislike 4 Most Dislike 5
5 7 5 2 7 4
3 2 4 47 6
5 4 63 3 5
PAY BILLS ACCOUNT ENQUIRY TRANSFER OF
PROCESS PAYROLL ORDER
which feature do you use regularly
Most Using 1 Normal Using 2 Average Using 3 Least Using 4 Not Using 5
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Here 54% are satisfied which means more than half who are using branchless banking they
satisfied with the branchless banking.
Here 28% respondents are completely trust upon security of branchless banking and 26% are
doing somewhat trust upon security of branchless banking
Do you visit branch less often since you started
using branchless banking?
· Very satisfied
· Very unsatisfied
Do you trust the security of branchless banking
· Not at all
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Here 34% respondents of project are lying in 24-29 age group which is most in all age ranges.
86% respondents are male means 43 respondents, and 14% are female means 7.3
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Interpretation of Results
Project has total 50 respondents where 37 are using branchless banking and 13 are not
using in respective 74% and 26%.
If customer not using branchless banking, reason behind not is mostly inconvenience
Branchless Banking is easy to use according to the given information by respondents
as 66% respondents are using Branchless Banking has opinion about the easy
If not using branchless banking Here I came to know about the 29% respondents are
saying Bank not providing proper service assistance they face difficulties in banking
and 24% are respective facing problem as use of technology and literacy.
38% respondents are using to save time in banking and 32% are using for to 24X7
Mostly respondents are using daily branchless banking.
Respondents are mostly like to make account enquiry and mostly dislike to stop
Here customer has good experience about the account enquiry, order Chequebook and
transfer amount between the accounts and not good experience or opinion about the
international fund transfer.
More than half respondents are satisfied with the services as branchless banking
provided by bank and not used to go physical place of bank.
More than one fourth are trust completely upon the security of branchless banking and
26% are in case of somewhat they some doubt.
Mostly respondents are young generation and they are seeking more development in
this era of banking.
Here 43 respondents are male and 7 was female.
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Research Findings and Conclusion
Here after deep study of project I came to know Branchless Banking is the future of
banking sector where one can access without physical presence of bank and making
easier to banking services.
As the Digital Campaign by Government of India, all banks going into digital mode
where all banks taking initiative but Axis Bank is one of the best e-services provider
and best websites which facilitating to customer to make easy banking so bank
seeking toward vision 2020.
Banks should start a proper service assistance to branchless banking and should take
needed step for betterment of future of branchless banking which will be helpful in
making competencies in digital banking sector.
Banks needs to take required step to make awareness of mobile app and importance of
the app to the customer ,through the app customer can do all function which he did
earlier at bank now he can do on his phone so bank needs to take step for mobile app
Some of the limitations of the project are listed as below:
Due to the financial and time constraints a cluster analysis of the population so as to get
better results was not feasible.
It was difficult to break the ice with the common people initially. It was a daunting task
to convince them to fill in the personal details of the questionnaire where they have to
mention the monthly income, occupation etc.
To convince the people for a proper interviewing process is also difficult.
Figures keep on changing from time to time.
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Compilation of data on competitor analysis was difficult due to non-availability of
Suggestions and Recommendations
The government and Reserve Bank of India have been making concerted efforts since
mid1950’s and with renewed vigor since 2005 but success has been rather slow, due to lack
of a strong network, and financial instruments not suited to rural residents. Moreover, lack of
awareness and financial literacy among rural population are primarily responsible for low
penetration of financial services.
More incentives for the BCs, utilizing existing network for banking such as post offices,
creating awareness for the use of banking technologies as well as mobile phones etc. will help
in creating a big difference in the economy. The proposed solutions that target the above
issues and suggest a way forward for sustainable inclusive growth are presented below:
• Preference should be given for a physical branch. The existing network of more than 1,
55,000 post offices and more than 5,00,000 fair price shops, an outlet of public distribution
system with some semblance of government approval, can be explored, especially in rural
• There is a need to have granular schemes, preferably different schemes for rural and urban
areas. Further, distinct schemes can be made on the basis of nature of employment of
different people. For example, daily wage laborers can be allowed to make tiny deposits on
daily basis - a special RD scheme for daily wage laborers can be introduced.
• Methods of financial literacy need to be changed from distributing printed literature to
audio and visual media such as radio and TV programs, especially in local languages.
• Financial literacy needs to be given importance in schools, and student small saving
programs, where bankers visit schools and collect small deposits, need to be revived.
• A BC need to be rebranded as a banker against the existing image of a travelling salesman
which would enhance the acceptability of BCs among general public. This could be achieved
by a contractual arrangement, thereby giving a semi-official status of a bank employee to a
BC. This would reduce the attrition rates of BCs and increase their loyalty towards the
• The rebranding exercise of BCs would also heighten participation of women as BCs. The
status of a bank employee would help them to counter regressive objections of women being
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• The possibility of appointing house-wives as well as people with limited handicap as BCs
could also be considered as that might reduce the attrition rate.
• As opposed to retired personnel, school teachers could be tapped as BCs.
• Allowing BCs to offer additional financial products like insurance and mutual funds would
increase their scope.
• Banks could also look at skill development by conducting regular, structured training
sessions for BCs.
• As each village is different from other the demographic factors like income and propensity
to save and take loans will differ from village to village. So, there is scope for having
differential limits for BCs based on location and customer profiles. Demographic and
historical transaction data can be used to evaluate the risk to define different limits of
transaction with each BC instead of keeping it uniform across BCs.
• Encouraging banking habits amongst the unbanked masses by installing audio-video
enabled ATMs to announce simple instructions in the local language to assist the customer in
the unbanked areas, could be considered.
• In case such ATMs are installed in the premises of post offices, then trained guards could
facilitate withdrawals, deposits and also account opening forms.
• The issue of security can be addressed by installing inbuilt CCTV cameras in the ATM
machine as well as the post office.
As seen above, customers of Axis Bank are quite satisfied with the functioning and
operations, so in this case, I would suggest that bank should try to maintain this kind
of operations and keep on satisfy its customers.
Bank need some development in the new era of branchless banking which can make
more compatible to the user and will make competency in the market.
Basically bank should focus upon the customer satisfaction and services provided by
bank where was making directly impact upon customer mind and using preferences.
The study has been focused only on the performance and service quality aspect of e
The impact of e-banking on profitability has been ignored which can give a good
platform for future research.
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The services are divided into four categories, i.e., internet banking, mobile banking,
phone banking and ATM services. About internet banking services, the most common
services offered by the bank are balance enquiry and statement and transaction
A wide divergence was found in different bank categories in offering e- banking
services. Private sector banks are leading in ‘stop payment request’, ‘re-issue and
upgrade of ATM/ debit card’, ‘Demat holdings’, ‘loans details’, ‘interest rate
updates’, ‘bill payment’, ‘online shopping’, ‘ticket booking’, ‘mobile top up’ and
‘share trading’. This shows how much potential and platform to perform as a leader in
banking that all will make more advanced services of internet banking are offered by
To study the relationship between electronic banking and customer satisfaction and to
ascertain which aspects of e-banking have significant impact on satisfaction, factor
analysis was conducted. The aim was to determine nine dimensions of service quality
and their relative contribution in influencing the overall customer satisfaction.
The study reveals that there is a change in personal development and relations after
adoption of e-banking. Employees perceive that environment after introduction of e
banking has improved a lot.
Banks needs to take required step to make awareness of mobile app and importance of
the app to the customer ,through the app customer can do all function which he did
earlier at bank now he can do on his phone so bank needs to take step for mobile app
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Branchless banking is Virtual banking, branchless banking is the delivery of financial
services outside conventional bank branches using information and communication
technologies. However, with the advent of Internet banking, the industry is characterized by
dramatically aggressive competition. The shift from traditional branch banking to Internet
banking has meant that new strategies to attract new customers and retain existing ones have
become critical called as Branchless Banking. Branchless Banking allows customers to
access banking services 24 hours a day, 7 days a week.
1. Do you use any branchless banking service?
2. If No, what is the reason behind not using branchless banking?
3. Is branchless banking easy to use?
4. If No, why do you think branchless banking is not easy to use?
Complication in banking
Use of Technology
5. What is the reason for choosing branchless banking?
To save time
6. How often do you use branchless banking?
Once a week
2-4 times a week
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Less than once a week
7. Which service you like most of branchless banking?(Rate on 1-5 scale)
Utility bill payments 1 2 3 4 5
Make an account enquiry 1 2 3 4 5
Money transfer 1 2 3 4 5
Stop payments 1 2 3 4 5
E –alerts 1 2 3 4 5
Bank statement 1 2 3 4 5
8. Which feature do you use regularly? (Rate on 1-5 scale)
Pay bills 1 2 3 4 5
Account enquiry 1 2 3 4 5
Transfer of funds between accounts 1 2 3 4 5
International fund transfer request 1 2 3 4 5
Process payroll 1 2 3 4 5
Order check books 1 2 3 4 5
9. Do you visit branch less often since you started using branchless banking?
10. Do you trust the security of branchless banking services?
Not at all
11. Age Range
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14. Contact No.--------------
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Financial Inclusion in India research paper by Aligarh Muslim University
International journal of Innovative Research in Management ISSN 2319–6912 (March 2013,
issue 2 volume 3)
Banking Survey. (2011). Annual survey Results, Harare, Zimbabwe.
Press Information Bureau Government of India Ministry of Finance 05-February-2008
Deloitte banking the unbanked.
News, Magazines, Newspaper
Agarwal, Parul (2014), “Financial Inclusion in India: a Review and Initiatives and
Achievements”, IOSR Journal of Business and Management, Volume 16, Issue 6, June.
Chakrabarty K.C. (2011), Keynote address on Financial Inclusion, Mumbai, September.
Chakrabarty, K.C. (2012), “Financial Inclusion: Issues in Measurement and Analysis”,
Keynote address, BIS-BNM Workshop on Financial Inclusion Indicators, Kuala Lumpur,
CRISIL (2013), “Inclusix Financial Inclusion Index”, June.
Euromonitor International (2010), “Emerging Focus: Emerging market economies drive
global growth in mobile connectivity”, November.
Gupta, Sanjeev Kumar (2011), “Financial Inclusion – IT as an enabler”, RBI Occasional
Paper, Volume 32, No. 2.
Government of India (2008), “Committee on Financial Inclusion” (Chairman: Dr. C.
India Post (2012), “Book of Information”.
India Post (2013), “Annual Report”.
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Joshi, Deepali P. (2014), “Strategy Adopted For Financial Inclusion”, Speech, Workshop of
Government of Madhya Pradesh, New Delhi, January.
K., Divya (2014), “A Study On Impact Of Financial Inclusion With Reference To Daily Wage
Earners”, Journal of Business Management & Social Sciences Research, Volume 2, No. 6,
Kamath, Rajalaxmi (2008) "Ramanagaram Financial Diaries: Loan repayments and cash
patterns of the urban slums", IIMB Working paper 268.
Ministry of Consumer Affairs, Food and Public Distribution (2011), “Number of Ration
Shops in the country”, June.
Planning Commission (2009), “Report on Financial Sector Reforms” (Chairman: Dr.
Raghuram G. Rajan).
Radcliffe, Dan (2012), “A Digital Pathway to Financial Inclusion”, Bill & Melinda Gates
RBI (2005), “Report on Rural Credit and micro finance” (Chairman: H.R. Khan).