This document discusses India's efforts towards financial inclusion through expanding access to banking services. It outlines initiatives like payments banks and small finance banks, the Pradhan Mantri Jan Dhan Yojana (PMJDY) program, and the MUDRA Yojana loan program. It also summarizes the objectives of financial inclusion like increasing savings, providing access to credit, and delivering government benefits. The document reviews the history of efforts starting with bank nationalization and highlights recent innovations in digital payments.
2. Financial Inclusion: Defined
Genesis
Objectives
Steps taken
◦ Payments Banks
◦ Small Finance Banks
◦ PMJDY
◦ MUDRA Yojana
◦ Sovereign Gold and Gold Monetisation Scheme
3. Refers to connecting each strata and individual of the country
with the banking system.
Banking System – System (meaning an organized scheme)
used by a Financial institution in which deposit from the
public is accepted and credit is made to the public
Ad: Every transaction flows under formal system, hence
balance sheet of the country is strengthened, economic
growth witnessed, lifestyle of citizens improved.
Hence Banking System is called as backbone of any economy
4. Term tossed by H.R. Khan committee
Term got momentum from 2008
Mangalam village (TN)
◦ 1st village where every household, atleast one account
5. Access to institutionalised banking
◦ Will develop a habit of saving
Will ensure liquidity (i.e. money flow)
Access to institutionalised credit
◦ To counter informal vendors
◦ Credit – Availing money to the seeker for specified duration with
imposed interest. It’s an Asset to provider.
Provide scheme benefits to all
◦ Ex: PM Jeevan Jyoti Bima Yojana, PM Atal Pension Yojana
Make India a less cash economy
6. Nationalisation of banks
◦ Banking to masses
◦ Nationalisation gives a sense of security to citizens
‘Lead banks’
◦ Tossed in 1969 by Gadgil study group
◦ ‘Bank having maximum no. of branches in a city called…’
Regional Rural Banks (RRBs)
◦ From 1975
National Bank For Agriculture and Rural Development (NABARD)
◦ From 1982
◦ Is not a bank, but a refinancing agency
Funded by GoI
And it further Funds to financial institutions engaged in
agriculture and rural development
7. Kisan Credit Card (KCC)
◦ From 1998
◦ It’s guidelines, issued by NABARD
Restriction on branches of Banks
◦ Atleast 25 % branches in unbanked rural areas
No-Frill Account
◦ Account opened and maintained with zero minimum balance
aka Basic account
Business Correspondents
MUDRA Yojana
◦ Micro Units Development and Refinance Agency (MUDRA)
◦ Avails loan to MSME
◦ Initiated on 8th April 2015
8. Priority sector lending
◦ Credit facility to unserved section
Restructuring of micro-finance sector
◦ Recommended by Malegam committee
Differentiated Banks
◦ Differentiation as Payment banks and Small Finance banks
◦ Recommended by Nachiket Mor committee
Pradhan Mantri Jan Dhan Yojana (PMJDY)
◦ Initiated on 28th August 2014
Sovereign Gold and Gold Monetisation Scheme
9. UPI (Unified Payments Interface)
◦ Common platform for fund transfer, electronically, using a unique
ID
BHIM app (Bharat Interface for Money)
◦ Fund transfer using UPI, exclusively through mobile
Automatic Teller Machine (ATMs)
10. Branches only in rural areas
Can only accept ‘Demand Deposit’
◦ Demand deposit – Deposits which can be withdrawn by depositer
anytime
Ex : CASA (Current Account & Savings Account)
◦ i.e. ‘Term deposit’ isn’t allowed
Term deposit – Withdrawal after maturity
Ex: FD, Recurring deposit
{Demand and Term Deposit are liability to the banks, hence
together constitutes NDTL ( Net Demand & Term Liability )}
Can issue Debit cards
◦ Since they are accepting deposit
11. Can’t provide loans
◦ No credit card, hence, possible
To be maintained
◦ CRR @ 4%
◦ SLR @ 75%
Ex: Airtel, Vodafone, Reliance, Tech Mahindra
12. Can operate in rural and urban areas
Can accept deposit in any form, and loans allowed
◦ Hence, can issue Debit and Credit cards, both
To maintain
◦ CRR @ 4%
◦ SLR @ 20%
75% loans to be given to priority sector
13. Initiated on 28th August 2014
◦ 1st day itself, 1.5 crore bank accounts opened, world record
◦ So far more than 28 crore bank accounts opened
Provides basic account (0 min bal.)
Debit card provided by Rupay
◦ Rupay – payment getaway, setup by National Payment
Corporation of India(NPCI)
Ensures liquidity (i.e. money flow) in market
◦ Hence greater credit flow
Hence demand created
Investment increased
Economic Growth and Employment
14. Not a bank, but a refinancing agency
Funded by GoI
◦ Provides loan ultimately to Micro and Small enterprises
Ex: MSME
◦ Credit facilities to enterprises categorised as
Sishu (can borrow < Rs. 50k)
Kishore ( < 5 lacs )
Tarun ( < 10 lacs )
15. Both scheme initiated by GoI in 2015
◦ To mobilise stocked gold
◦ To reduce demand for physical gold
Hence insulate our reserves
India is single largest consumer of gold (historically India was known
as ‘Dumping Yard of Gold’)
Sovereign Gold Bond scheme
◦ Objective: mobilise more than 20000 tns gold from temples and
indian households (which are out of formal economy)
◦ Issues paper bonds behaving as gold
Adv: Bond value fluctuates with gold value fluctuation
Adv: Interest paid @ 2.5% pa
16. Gold Monetisation scheme
◦ Deposit gold in bank’s locker
Which was further used as investment by bank
Can be withdrawn by depositer in the form of gold/cash
◦ Adv: Safety of one’s gold
◦ Adv: Interest provided
◦ Adv: Value fluctuates as per gold value
17. Categorized as different labels:
Brown label – provided by commercial banks
White label – provided by NBFC
Ex: Tata Indicash, Muthoot ATM
Green label – for agricultural transaction
Yellow label – for e-commerce
