Branchless banking plays a key role in achieving financial inclusion in India. It provides banking services to the large unbanked population through methods like business correspondents and use of technologies like mobile phones. Studies show over 50% of Indian households do not have access to formal banking. The government and Reserve Bank of India have implemented policies like the National Rural Financial Inclusion Plan to increase access through branchless models. Research found branchless banking has benefited customers by providing convenient, affordable services. However, more financial education is still needed and future models could offer additional products like insurance to further help low-income groups.
This project report has been prepared as per the requirement of the syllabus of
MBA course structure under which the students are the required to undertake
project.
It was a first hand experience for us as that we were exposed to the professional
set-up and were facing the market, which was really a great experience.
During project period, I had very touching experiences. When business is involved,
experiences counts a lot, as we know, experience are an instrument, which leads
towards success.
Studied the objectives,code of bank’s commitment to customers, The micro.small and medium enterprises development act 2006,code of bank’s commitment to MSEs and banking ombudsman
The State of Financial Inclusion – An Overview and AdvancementIJLT EMAS
Financial Inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups. The main focus of financial inclusion in India is to promote sustainable development and generating employment in rural areas for the rural population. In India, few households have access to banking services. There are many factors affecting access to financial services by weaker section of society in India. Several steps have been taken by the Reserve Bank of India and the Government to bring the financially excluded people to the fold of the formal banking services. Financial Access Survey for 2016 released by International Monetary Fund (IMF) shows that in India there only 13 commercial bank branches per 1,00,000 individuals. PM Jan Dhan Yojna (PMJDY) was highly successful in opening bank accounts in which more than 97% of the accounts were opened with the public banks, but around 72% of these accounts show 'zero balances'. More than 1 crore bank accounts have been opened under PMJDY. However, despite the opening of such accounts, access has been lower. Access to banking is an important indicator of the level of financial inclusion in the country. India's urban and semi-urban region performs fairly well, however rural region is still underdeveloped in banking. Digital India campaign recently launched schemes like MUDRA, startup India, PMJDY, initiation of new banks like payment banks, PSL certificates trading etc. are in the right direction. With government moving towards DBT for subsidies financial inclusion becomes very critical. Focus should shift to increase coverage, reach of services and ease of availing credit.
This project report has been prepared as per the requirement of the syllabus of
MBA course structure under which the students are the required to undertake
project.
It was a first hand experience for us as that we were exposed to the professional
set-up and were facing the market, which was really a great experience.
During project period, I had very touching experiences. When business is involved,
experiences counts a lot, as we know, experience are an instrument, which leads
towards success.
Studied the objectives,code of bank’s commitment to customers, The micro.small and medium enterprises development act 2006,code of bank’s commitment to MSEs and banking ombudsman
The State of Financial Inclusion – An Overview and AdvancementIJLT EMAS
Financial Inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups. The main focus of financial inclusion in India is to promote sustainable development and generating employment in rural areas for the rural population. In India, few households have access to banking services. There are many factors affecting access to financial services by weaker section of society in India. Several steps have been taken by the Reserve Bank of India and the Government to bring the financially excluded people to the fold of the formal banking services. Financial Access Survey for 2016 released by International Monetary Fund (IMF) shows that in India there only 13 commercial bank branches per 1,00,000 individuals. PM Jan Dhan Yojna (PMJDY) was highly successful in opening bank accounts in which more than 97% of the accounts were opened with the public banks, but around 72% of these accounts show 'zero balances'. More than 1 crore bank accounts have been opened under PMJDY. However, despite the opening of such accounts, access has been lower. Access to banking is an important indicator of the level of financial inclusion in the country. India's urban and semi-urban region performs fairly well, however rural region is still underdeveloped in banking. Digital India campaign recently launched schemes like MUDRA, startup India, PMJDY, initiation of new banks like payment banks, PSL certificates trading etc. are in the right direction. With government moving towards DBT for subsidies financial inclusion becomes very critical. Focus should shift to increase coverage, reach of services and ease of availing credit.
Research Inventy : International Journal of Engineering and Scienceresearchinventy
Research Inventy : International Journal of Engineering and Science is published by the group of young academic and industrial researchers with 12 Issues per year. It is an online as well as print version open access journal that provides rapid publication (monthly) of articles in all areas of the subject such as: civil, mechanical, chemical, electronic and computer engineering as well as production and information technology. The Journal welcomes the submission of manuscripts that meet the general criteria of significance and scientific excellence. Papers will be published by rapid process within 20 days after acceptance and peer review process takes only 7 days. All articles published in Research Inventy will be peer-reviewed.
Financial inclusion for sustainable developmentTapasya123
For any developing country like India, the sustainable growth of nation is only possible
by inclusive all financial services to those groups who are excluded to access financial
system. The approach that was first used by the government for financial inclusion
was Swabhimaan. In Swabhimaan, the target area was rural with account opening
as the main focus ignoring the use of mobile banking. Pradhan Mantri Jan-Dhan
Yojana (PMJDY) is introduced to overcome the loopholes of Swabhimaan. It is an
urge of the hour to make the people understand that financial inclusion is the emerging
financial means which play major role to develop country by eradicating poverty.
The main objective of financial inclusion is a basic no frill account, credit availability
at appropriate rate, knowledge of secure savings and financial products, remittance,
pension and insurance etc. PMJDY is major financial plan with the objective of covering
all households in the country with banking facilities along with inbuilt insurance
coverage. The paper implies to study the need of financial inclusions in India with
special reference to PMJDY for the sustainable growth of economy.
Financil Inclusion for Sustainable Development through Pradhan Mantri Jan-Dha...professionalpanorama
For any developing country like India, the sustainable growth of nation is only possible
by inclusive all financial services to those groups who are excluded to access financial
system. The approach that was first used by the government for financial inclusion
was Swabhimaan. In Swabhimaan, the target area was rural with account opening
as the main focus ignoring the use of mobile banking. Pradhan Mantri Jan-Dhan
Yojana (PMJDY) is introduced to overcome the loopholes of Swabhimaan. It is an
urge of the hour to make the people understand that financial inclusion is the emerging
financial means which play major role to develop country by eradicating poverty.
The main objective of financial inclusion is a basic no frill account, credit availability
at appropriate rate, knowledge of secure savings and financial products, remittance,
pension and insurance etc. PMJDY is major financial plan with the objective of covering
all households in the country with banking facilities along with inbuilt insurance
coverage. The paper implies to study the need of financial inclusions in India with
special reference to PMJDY for the sustainable growth of economy.
Keywords: Financial Exclusion, Financial Inclusion, PMJDY, Sustainable Growth.
Indian agriculture sector experiences vicious circle of poverty which decelerate economic growth. Financial exclusion is one of the main reason of it. In India marginals and weaker sections are excluded from main stream of the economy. To achieve sustainable development, all sections of the people need to be come into main stream. This study is an attempt to understand the concept of financial inclusion, financial inclusion in India and micro finance. RBI defines “Financial Inclusion is the process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable groups such as weaker sections and low income groups in particular at an affordable cost in a fair and transparent manner by mainstream institutional players”. The present study also tries to understand how micro finance lending facilitates the acceleration of financial inclusion. Micro finance lending is a strong weapon of financial inclusion. Micro credit provided by banks emerged as a major policy tool of financial assistance in the rural credit, particularly to the poor sections of the society. Micro finance by providing small loans and savings facilities to those who have been excluded from other formal services, acting as a key strategy for reducing poverty and discrimination.
Inclusive development means empowerment of weaker sections, SC/STs and women. In this context “financial inclusion “ owns its significance.
A Little World: Facilitating Safe and Efficient M-Banking in Rural IndiaAshley Metz
The initiative is led by a private sector organization, A Little World (ALW) and its sister entity, a non-profit organization, ZERO Microfinance and Savings Support Foundation (ZMF). ALW and ZMF act as intermediaries between rural communities at one end, and mainstream financial institutions and the government at the other end. ALW offers a secure, low‐cost technology driven delivery platform for financial services through special mobile phones that store and help manage a vast amount of customer bank account data, authenticates account holders through photo and biometric identification and allows access to the bank accounts as Point of Service terminals. Since its pilot project in 2006, ALW and ZMF have rapidly grown and are now present in 22 states, with over four million rural customers, 8,314 points of presence and an average of 25,000 new account openings every day.
Implementing the aspects of financial inclusion in the phase of demonetisatio...IJLT EMAS
The concept of ‘financial inclusion’ was introduced by
the reserve bank of India in April 2005 with an objective of
delivering financial services to the economically challenged and
underdeveloped segment of the society at an affordable rate. RBI
encouraged the formal banking sector as well as the microfinance
sector to provide soft loans and savings facilities especially to the
poor with a flexible documentation process to attract them under
the umbrella of RBI. This will not only improve the financial
stake of the low-income group of the country, but also ensure
them a safe investment and will increase the portfolio size of the
bank and NBFCs. In 2014, The Government of India announced
‘Pradhan Mantri Jan Dhan Yojna” to expand the financial
inclusion project by bringing more people under banking and
banking spread sector. On 8th November 2016, Mr Narendra
Modi, Prime minister of India ceased 500 and 1000 rupee notes
as legal tender which can be termed as demonetization. Although
the immediate mission was to eradicate black money, fake money
and terror financing; it can be considered as a way forward to
the ‘Jan Dhan Yojna” and hence can be used as a strategy
instrument of imposing financial inclusion across the country.
This paper examines the advantages and disadvantages of
demonetization in implementing financial inclusion in India. In
spite of the fact that demonetization will force the people to make
their transaction through bank and NBFCs , there are serious
challenges like the liquidity crunch of the cash based segment of
the economy, the bank and digital literacy issues etc. In this
paper the challenging issues have been addressed as well as the
bottleneck of financial inclusion in post-demonetization period
has been discussed by identifying the crucial parameters like
percentage of people having bank account, the percentage of
people uses mobile and /or internet, the literacy percentage of the
country, the policy of the banks, the documentation requirement
of the bank and feasibility of the poor section etc.
Financial inclusions a pavement towards the future growthTapasya123
India’s economic growth rates higher than most developed countries in recent years, a
majority of the country’s population still residue unbanked. Financial Inclusion is a relatively
new socio-economic concept in India that aspire to change this dynamic by providing
financial services at affordable costs to the underprivileged, who might not otherwise be
aware of or able to afford these services. Global trends have revealed that in order to achieve
inclusive development and growth, the expansion of financial services to all sections of society
is of utmost importance. As a whole, financial inclusion in the rural as well as financially
backward pockets of cities is a win-win opportunity for everybody involving – the
banks/NBFC’s intermediaries, and the left-out urban population. Banks will handle core
infrastructure and services while intermediaries known as Business Correspondents (BC’s)
will be the executors and act as the face of these banking & financial institutions in dealing
with end-users. Therefore, it is assumed that financial inclusion can initiate the next
revolution of growth and prosperity. In the 21st century, India has been pulling all the right
levers to advance financial inclusion and economic citizenship by channelling its own
transactions to lubricate the system. India’s journey towards economic ascension relies on
how the 65% unbanked population of India (conservative 2012 estimate by World Bank) is
enabled with financial infrastructure.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
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what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
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@Pi_vendor_247
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
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What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
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USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
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how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
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how to sell pi coins in all Africa Countries.DOT TECH
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A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
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how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
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A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
A study of Branchless banking for financial inclusion in India!
1. A Study of Branchless Banking
in achieving
Financial Inclusion in India
2. Abbreviations Used:
GOI - Government of India
RBI - Reserve Bank of India
FI - Financial Inclusion
BC - Business Correspondent
BCAs - Banking Correspondent Agents
NSSO - National Sample Survey Office
MOF - Ministry of Finance
NRFIP - National Rural Financial Inclusion Plan
SBI - State Bank of India
BOI - Bank of India
PNB - Punjab National Bank
UBI - Union Bank of India
CSP – Customer service point
CGAP – Consultative group to assist the poor
FI - Financial Inclusion
GDP – Gross Domestic Product
KYC – Know your customer
KYR – Know your resident
MVNO – Mobile Virtual Network Operator
MNO – Mobile Network Operator
NREGA – National Rural Employment Guarantee Act.
REMIT – Real time micro transactions
TRAI – Telecom Regulatory Authority of India
UID – Unique ID
UIDAI – Unique Identification Authority of India
NABARD -National Bank for Agricultural and Rural Development.
SHG - Self Help Groups
MFI - Micro Finance Institution
JJFLCCT - Jnana Jyoti Financial Literacy & Credit Counseling Trust
3. A Study of Branchless Banking in achieving
Financial Inclusion in India
L.S.Subramanian
lssubramanian@niseindia.com
Bharati Vidyapeeth (Deemed) University, Pune
Abstract :
Background & objectives: This research paper is a study of the Role of Branchless
Banking in achieving Financial Inclusion in India . The researcher carried out this
study to understand the role of branchless banking and the implementation of the same
for the unbanked population of India . The researcher has also studied the experiences
in other countries in the implementation of branchless banking and how it has been
adapted in India.
Methods: A study of a number of research papers and articles in magazines and other
publication including internet was used to research this paper. The researches has relied
on secondary data and interaction with senior leaders of the banking industry.
Results: Indian Banks must embrace financial inclusion as an economically viable and
profitable business activity by innovation in service delivery process and information
technology solutions to lower costs of transactions and improve customer acceptance
and satisfaction. Business Correspondent (BC) agents have been a key resource in
ensuring that the unbanked population receives banking facilities. Banks continue to
built brick and mortar branches, customer service points and card based service outlets
to service customers; this have to be strengthened by financial literacy programs and
marketing campaigns to ensure that these services are used by the targeted population.
Branchless Banks in future should also offer services like life and non-life insurance,
accept investment in financial and commodity markets and also in other saving
instruments like mutual funds and bonds to the poor.
Conclusions: Financial Inclusion is one of the most significant initiatives taken by the
Government of India, The Reserve Bank of India and the Indian Banks. It has already
4. made a significant impact to the poor in rural and urban India by empowering them
with financial services thus providing them economic stimulus and security.
Financial Inclusion can be considered as the 2nd Economic Reforms in India in making
India a Global Economic power house.
More research can be done on customer satisfaction, process improvement
opportunities, cost reduction and also the economical impact in the area of Branchless
Banking for Financial Inclusion in India.
Keywords: Branchless Banking, Financial Inclusion, Banking Correspondent, unbanked
population.
1.
Introduction
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 population. 1
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 seen as the key enabler of
financial inclusion of the poor in India.
The two pillars of Financial inclusion are the Bank linked Special Help Groups (SHG)
and the Business Correspondent (BC) Model.2
The Committee on Financial Inclusion in India:
Dr. C. Rangarajan the Chairman of the Committee on Financial Inclusion, defines the
1
Source: http://articles.economictimes.indiatimes.com/2012-11-06/news/34946268_1_rrbs-regionalrural-banks-financial-inclusion
2
Source: http://forbesindia.com/article/financial-inclusion/c-rangarajan-the-two-pillars-of-financialinclusion/19262/1
5. need of financial inclusion as " Access to finance by the poor and vulnerable groups is a
prerequisite for poverty reduction and social cohesion. This has to become an integral
part of our efforts to promote inclusive growth. In fact, providing access to finance is a
form of empowerment of the vulnerable groups. Financial inclusion denotes delivery of
financial services at an affordable cost to the vast sections of the disadvantaged and
low-income groups. The various financial services include credit, savings, insurance
and payments and remittance facilities. The objective of financial inclusion is to extend
the scope of activities of the organized financial system to include within its ambit
people with low incomes. Through graduated credit, the attempt must be to lift the poor
from one level to another so that they come out of poverty." 3
The Committee on Financial Inclusion recommended , "A National Rural Financial
Inclusion Plan (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. Semiurban 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 noncultivator households." 4
The Committee on Financial Inclusion also has recommended, "Micro-insurance is a
key element in the financial services package for people at the bottom of the pyramid.
The poor face more risks than the well off. It is becoming increasingly clear that microinsurance needs a further push and guidance from the Regulator as well as the
3
Recommendations of the Committee on Financial Inclusion, Press Information Bureau Government of
India, Ministry of Finance 05-February-2008 .
4
Recommendations of the Committee on Financial Inclusion, Press Information Bureau Government of
India, Ministry of Finance 05-February-2008 .
6. Government. The Committee concurs with the view that offering micro credit without
micro-insurance is self-defeating. There is, therefore, a need to emphasise linking of
micro credit with micro-insurance". 5
Financial inclusion is the process of ensuring access to appropriate financial products
and services needed by vulnerable groups such as weaker sections and low-income
groups at an affordable cost in a fair and transparent manner by mainstream institutional
players. Financial inclusion has become one of the most critical aspects in the context
of inclusive growth and development. 6
2.
Objectives
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.
3.
Research Questions
The Researcher has tried to answer the following questions:
1. What is the concept of Branchless Banking?
2. How is Branchless Banking deployed in India?
3. A study of selected banks who offer branchless banking in India?
4. The experience of branchless banking in other countries?
5. What will be the Future of Branchless Banking in India?
5
Recommendations of the Committee on Financial Inclusion, Press Information Bureau Government of
India, Ministry of Finance 05-February-2008 .
6
. Source: Financial Inclusion |A road India needs to travel an Article by Dr. K. C. Chakrabarty, Deputy
Governor, Reserve Bank of India, published in www.livemint.com.; reference RBI Monthly Bulletin
November 2011; http://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/01BLAR111111F.pdf
7. 4.
Research Methodology
Research methodology used is partly descriptive, partly exploratory and partly by
interaction with banking industry professionals . For this study data and
information has been collected with the help of Books, Magazines, Newspapers,
Research Articles, Research Journals, E-Journals, RBI Reports, Report of Finance
Ministry Government of India and the internet.
5.
Findings of the Research
Branchless Banking:
By definition, unbanked customers have no savings, bank loans, or insurance
account with a traditional, regulated financial institution. Meanwhile unbanked
customers who do not have one or more of these accounts conduct many of their
financial transactions with alternative service providers, such as daily cash loan
services, local money lenders, and even pawn shops and still use cash for most of
their transactions.
Branchless banking is the use of technology, such as mobile phones and bank
cards, for the conduct of financial transactions electronically and remotely. The
use of third party resources as agents for the financial services provider allows
customers to use financial services without going to bank branches.
In addition to transactional services, branchless banking provides basic cash
deposit and withdrawal and also government remittances for the poor.
Branchless Banking uses innovative delivery services for financial inclusion, with
cost effective technology to provide financial inclusion to the unbanked in India
Branchless Banking in India:
Reaching out to a large unbanked population can be achieved by a judicious use of
8. 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.7
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, taluks and villages, identified by the government of
India.
Branchless banking is the vehicle to take banking to customer's doorstep rather
than the traditional approach of the customer seeking the banks. Table 1 gives the
growth of financial inclusion in India in the year 2012.
It can be gleaned from the table that Business Correspondents (BC) have been the
key enablers of financial inclusion ; there were 95,767 BC's servicing 1,20,355
villages in India as on March 2012.
7
Recommendations of the Committee on Financial Inclusion, Press Information Bureau Government of
India, Ministry of Finance 05-February-2008 .
10. 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.8
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 years 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 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
8
Source : An overview of Financial Inclusion, Ministry of Finance, Government of India
http://financialservices.gov.in/banking/financialinclusion.asp
11. 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
2013.
Table No 2 : Progress in Financial Inclusion
SR
Particulars
Year
Year
ended Mar ended Mar
10
11
Year
ended
Mar 12
Year
ended
March 13
Progress
April 10 March 13
1
Banking Outlets – Rural Branches
33378
34811
37471
40845
7467
2
Banking Outlets – BCs
34174
80802
141136
221341
187167
3
Banking Outlets - Other Modes
4
Banking Outlets –TOTAL
5
Urban Locations covered through BCs
6
BSBD Accounts (No. in lakh)
7
OD facility availed in BSBD Accounts (No. in lakh)
8
9
142
595
3146
8424
8282
67694
116208
181753
270610
202916
447
3771
5891
27124
26677
734.53
1047.59
1385.04
1833.30
1098.77
1.83
6.06
27.05
39.42
37.59
KCCs (No. in lakh)
243.07
271.12
302.35
337.87
82.43
GCC (No. in lakh)
13.87
16.99
21.08
36.29
22.28
10 BC-ICT Accounts (No. in lakh)
132.65
316.30
573.01
810.38
677.73
11 ICT Accounts-BC-Total Transactions (No. in lakh)
265.15
841.64
1410.93
2546.51
4799.08
Source: Address by Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India at the 32nd
SKOC Summit held at Mumbai on June 6, 2013.
12. 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.
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;
13. 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 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
14. 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
dependant 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.
6.
Study of Branchless Banking by Syndicate Bank :
Though a number of banks have been implementing financial inclusion as directed
by the RBI, the researcher has chosen to study the Syndicate Bank's Branchless
Banking achievements in India.
The Syndicate Bank has an exclusive financial inclusion department headed by a
General Manager to ensure constant monitoring and supervision and is manned by
officers with experience of Technology implementation, rural lending and
agricultural background.
15. The Bank has an ambitious plan for meeting its targets on financial inclusion and
has achieved its goals as shown Table 3.
Table 3 - Financial Inclusion Goals of Syndicate Bank
Particulars
Number of
villages allotted
above 2000
population
Number of
Villages covered
by BC
Number of
branches/Satellite
Offices opened
Target
for
20102012
Achievement
as on
31.3.2012
Target
for
20122013
Achievement
as on
31.03.13
1553
1553
-
-
Actual
against
target
as on
30.06.13
1553
1219
1219
-
-
1219
300
334
-
-
334
Number of Basic
3.0 lakh
8.89 lakh
3 lakh
5.35 lakh
Saving Bank
accounts opened
Number of
496
81
496
522
villages allotted
with population
below 2000
Source: Syndicate Bank, "Initiatives Taken by Syndicate bank on furthering financial
inclusion-position as on 30.06.2013".
6.37
lakh
522
Syndicate Bank opened 334 Brick and Mortar branches and satellite offices, it has
a healthy ratio of 21.5% in the number of branches to the number of Satellite
offices opened.
The Bank has been able to cover all the 1553 villages allotted to it of which it has
covered 1219 villages with a population of over 2000 with the help of Business
Correspondents within the stipulated date of 31st March 2012.
Table 4 shows the performance of Syndicate Bank in implementation of financial
inclusion as on 30th June 2013.
16. Table 4 - Implementation of Financial Inclusion in Syndicate Bank
Sl.
No.
Particulars
Target
for
Achievement
as on
Target
for
Achievement
as on
31/03/2012
31/03/2012
31/03/2013
31/03/2013
1553
1553
334
334
1219
-
1219
81
Cumulative
Achievement
as on
30/06/2013
1
2
3
4
Coverage of No
of villages
allotted with >
2000 population
Through Brick
and Mortar
Branch &
Satellite Office
Through BCAs
Coverage of
villages allotted
with < 2000
population
-
-
1553
-
-
334
496
522
1219
522
5
No of Basic
3,00,000
8,89,000
3,00,000
5,35,000
15,26,902
Savings Bank
Deposit Accounts
opened
Source: Syndicate Bank, Initiatives Taken by Syndicate bank on furthering financial inclusion-position as
on 30.06.2013
Table 5 show the status of the training imparted by Syndicate Bank to the
resources for financial inclusion.
Table 5 - Training of Resources for Financial Inclusion in Syndicate Bank
Sl. No.
1
2
3
Description of persons
Trained
Branch managers in the
Financial Inclusion (FI) villages
Nodal officers for FI at Regional
Offices
Business Correspondents (BCs)
Total No of Persons
Trained
648
35
1023
A total number of 8178 financial literacy campaigns have been conducted through
posters at branches and other strategic locations, classes, meetings and mobile
vans dedicated for spreading financial literacy.
Syndicate Bank along with Vijaya Bank have formed a Trust named "Jnana Jyoti
Financial Literacy & Credit Counseling Trust" ” (JJFLCCT) for promoting Financial
Literacy.
Twenty Six (26) Financial Literacy centres are functioning, and 232 financial
17. literacy programmes with farmer's club were conducted, and seventy seven (77)
programs in association with the District Development Office of NABARD were
also done in the given period.
In addition they have organized 1696 Financial Literacy Program with SHG's .
With these sustained efforts Syndicate Bank has been able to cover 4,14,489
persons through its financial literacy programs.
7. Branchless Banking in Other Countries and their Adaptation in
India:
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.
i) Brazil
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' 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.
ii) Kenya
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
18. 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 Safaricom & 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
customers 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.
iii) Mexico
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 and resources .
The microfinance for profit behemoth has 1.5 million clients and is the largest
microfinance institution (MFI) in Latin America and is named as Compartamos.
The interest rates are usurious at more than 100 percent per annum, and there
are host of compliance issues with Compartamos. But it is a success story of
innovation, efficiency and tight cost controls and is efficient at training and
managing a very de-centralised base of loan officers. Compartamos has
demonstrated how a MFI can succeed by being extremely profitable for its
shareholders.
19. 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 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 an
20. 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.
8. Conclusions
1. Indian Banks have accelerated financial inclusion in India and must now work
towards making its operations as an economically viable and profitable business
for all stake holders by increasing the volume of business and services offered.
2. Economic viability and Cost per transaction continues to be a key issue for
Indian Banks offering Branchless banking for Financial Inclusion; cost
reduction need to be achieved by innovation in service delivery processes along
with reliable and low cost information technology solutions.
3. Business Correspondent agents have been a key outsourced resource in
ensuring that the unbanked population has access to branchless banking
facilities. In the long term the customers service by Business Correspondents
will need brick as mortar banks once the volume and value of transactions
become significant. Indian Banks need to plan for opening these new branches.
4. Banks which have already invested in brick and mortar branches, customer
service points and card based service have to be strengthen their training
initiatives by financial literacy programs and marketing campaigns to ensure
that these services are used by the targeted population.
5. Financial inclusion using branchless banking should expand to offer products
like insurance, investments in equity and commodity markets and in other
saving instruments like mutual funds and bonds as the financial program
transforms the economical health of the poor in India.
21. 9. Recommendations and Limitations
Financial Inclusion is one of most significant initiatives taken by the Government of
India and should be considered as the 2nd wave of Economic Reforms in India to
make India a Global Economic Powerhouse.
It will make a significant impact to the poor in rural and urban India by empowering
them with financial services thus providing them economic stimulus and security.
More research needs to be done in the area of financial inclusion to measure
customer satisfaction, process improvement opportunities, cost reduction and also
the social and economical impact on the poor in India.
10. References
1. The Early Experience with Branchless Banking by Gautam Ivatury & Ignacio
Mas April 1, 2008 ,CGAP Focus Note, No. 46, April 2008
2. Press Information Bureau Government of India Ministry of Finance 05February-2008
http://pib.nic.in/newsite/erelease.aspx?relid=35141
3. Reach the Unreached – Status of Financial Inclusion in India
http://world-finance-conference.com/papers_wfc/138.pdf
4. Address of Dr. (Smt.) Deepali Pant Joshi, Executive Director, Reserve Bank of
India at National Seminar on Consumer Protection – Agenda for Inclusive
Growth, New Delhi on July 24, 2013
5. Banking, Insurance, Pension A Journal of the Department of Financial Services
Theme : Financial Inclusion Issue 1 - September 2012Publication issued by the
Department of Financial Services, Ministry of Finance, Government of India
6. Syndicate Bank, Initiatives Taken by Syndicate bank on furthering financial
inclusion-position as on 30.06.2013
http://www.syndicatebank.in/downloads/Performance.pdf
22. 7. Financial Inclusion Models from Around the World, November, 2010, The
Forbes Magazine, India.
http://forbesindia.com/article/financial-inclusion/financial-inclusion-modelsfrom-around-the-world/19292/1
8. Deloitte banking the unbanked.
http://www.deloitte.com/assets/DcomMalaysia/Local%20Assets/Documents/Bankingtheunbanked.pdf
9. Recommendations of the Committee on Financial Inclusion, Press Information
Bureau Government of India, Ministry of Finance 05-February-2008
10. Financial Inclusion |A road India needs to travel an Article by Dr. K. C.
Chakrabarty, Deputy Governor, Reserve Bank of India, published in
www.livemint.com.; reference RBI Monthly Bulletin November 2011;
http://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/01BLAR111111F.pdf
11. Reach the Unreached – Status of Financial Inclusion in India, presented at the
World Finance Conference.
http://world-finance-conference.com/papers_wfc/138.pdf
12. CGAP Focus Note Use of Agents in Branchless Banking for the Poor: Rewards
Risk and Regulation
http://www.cgap.org/sites/default/files/CGAP-Focus-Notes-Use-of-Agents-in-BranchlessBanking-for-the-Poor-Rewards-Risks-and-Regulation-Oct-2006.pdf