(As defined by
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
Delivery of financial services at an affordable cost to vast sections
of disadvantaged and low income groups.
Urban slum developers
Social excluded groups
• Financial Inclusion and Financial Literacy are twin pillars. While
Financial Inclusion acts from supply side providing the financial
market/services what people demand, Financial Literacy stimulates
the demand side – making people aware of what they can demand.
Demand Side & Supply Side
Financial Literacy -
Fair & Appropriateness
Financial Inclusion -
• Developing Economies face the problem of low level of literacy, poor
accessibility and low demand. Therefore it is necessary for developing
an Index for measuring both Access as well as the level of Literacy.
Demographic Spread – How to provide banking services to villages
with low population –Viability?
Evolving of an Appropriate Business Model & an Efficient Delivery
Financial Literacy – How to increase financial awareness mainly
amongst the excluded masses
How to have a National Level Coordination of all stakeholders like
Banks,Governments, Civil Societies, NGOs etc. required to
achieve the objective of financial inclusion & literacy.
• Financial education, financial inclusion and financial stability are three
elements of an integral strategy.
• Financial inclusion works from supply side of providing access to various
• Financial Stability Development Council (FSDC) has explicit mandate
to focus on financial inclusion and financial literacy simultaneously.
• Financial education feeds the demand side by promoting awareness
among the people regarding the needs and benefits of financial services
offered by banks and other institutions.
Public and private sector banks had been advised to submit board
approved three year Financial Inclusion Plan (FIP) starting from
These policies aim at keeping self-set targets in respect of rural
brick and mortar branches opened, BCs employed, coverage of
un-banked villages with population above 2000 and as well as
below 2000, BSBD accounts opened, KCCs, GCCs issued and
others. RBI has been monitoring these plans on a monthly basis.
Banks have been advised that their FIPs should be disaggregated
and percolated down up to the branch level.This would ensure the
involvement of all stakeholders in the financial inclusion efforts
51.4% farm household do not have access to formal credit sources.
27% of total farm households are indebted to formal sources.
Farm households not accessing credit from formal sources as a
proportion to total farm households is especially high at 95.91%,
81.26% and 77.59% in the North Eastern, Eastern and Central
Thus, apart from the fact that exclusion in general is large, it also
varies widely across regions, social groups and asset holdings.The
poorer the group, the greater is the exclusion.
The report of the RangarajanCommittee is summarized as -
Report on Financial
The attempt to lift the poor from one level to another so that
they come out of poverty.
The Committee feels that the task of financial inclusion must be
taken up in a mission mode as a financial inclusion plan at the
A National Mission on Financial Inclusion (NaMFI) comprising
representatives from all stakeholders may be constituted to aim at
achieving universal financial inclusion within a specific time frame.
The Mission should be responsible for suggesting the overall
policy changes required for achieving the desired level of financial
inclusion, and for supporting a range of stakeholders – in the
domain of public, private and NGO sectors - in undertaking
NRFIP may be launched with a clear target to provide access to
comprehensive financial services, including credit, to at least 50%
of financially excluded households, say 55.77 million by 2012
through rural/semi-urban branches of Commercial Banks and
Regional Rural Banks.
The remaining households, with such shifts as may occur in the
rural/urban population, have to be covered by 2015.
Semi-urban and rural branches of commercial banks and RRBs
may set for themselves a minimum target of covering 250 new
cultivator and non-cultivator households per branch per annum,
with an emphasis on financing marginal farmers and poor non-
The RangarajanCommittee recommended that extending
outreach on a scale envisaged under NRFIP would be possible only
by leveraging technology to open up channels beyond branch
Adoption of appropriate technology would enable the branches to
go where the customer is present instead of the other way round.
This, however, is in addition to extending traditional mode of
banking by targeted branch expansion in identified districts.
The Business Facilitator/BusinessCorrespondent (BF/BC) models
riding on appropriate technology can deliver this outreach and
should form the core of the strategy for extending financial
The Committee has made some recommendations for relaxation
of norms for expanding the coverage of BF/BC. Ultimately, banks
should endeavour to have a BC touch point in each of the 6,
00,000 villages in the country.
Procedural Changes like simplifying mortgage requirements,
exemption from Stamp Duty for loans to small and marginal
farmers and providing agricultural / business development
services in the farm and non-farm sectors respectively will help in
extending financial inclusion.
RBI has adopted a bank-led model for achieving financial inclusion
and removed all regulatory bottle necks in achieving greater
financial inclusion in the country.
Further, for achieving the targeted goals, RBI has created
conducive regulatory environment and provided institutional
support for banks in accelerating their financial inclusion efforts.
Basic Saving Bank Deposit (BSBD)
Relaxed and simplified KYC norms
Simplified BranchAuthorization Policy
Compulsory Requirement of Opening Branches in Un-banked
Financial LiteracyCentres (FLCs)
Licensing of New Banks
A few large private corporate have undertaken projects such as E-
Choupal/E- Sagar(ITC), Haryali Kisan Bazaar (DCM), Project
Reportedly, these pioneering projects have brought about vast
improvement in the lives of the participants and set the tone for
economic development in their command areas; which is a pre-
requisite for Financial Inclusion efforts to be undertaken by the
Due to RBI’s concerted efforts since 2005, the number of branches
of Scheduled Commercial Banks increased manifold from 68,681
in March 2006 to 1,02,343 in March 2013.
As compared with rural areas, number of branches in semi-urban
areas increased more rapidly.
Banks have been advised to issue KCCs to small farmers for
meeting their credit requirements. Up to March 2013, the total
number of KCCs issued to farmers remained at 33.79 million with a
total outstanding credit of Rs.2622.98 billion
Banks have been advised to introduce General Credit Card facility
up to Rs. 25,000/- at their rural and semi-urban branches. Up to
March 2013, banks had provided credit aggregating to Rs.76.34
billion in 3.63 million GCC accounts
The total number of ATMs in rural India witnessed a CAGR of
30.6% during March 2010 to March 2013.The number of rural
ATMs increased from 5,196 in March 2010 to 11,564 in March 2013
With the improvement of connectivity, online transaction model
to be implemented.
Web based kiosk/ mobile based model to be made available at
Introduction of combo card (smart chip with magnetic stripe) to
enable payments through ATMs.
Integration with UIDAI project