The process of ensuring access to financial services and timely and adequate credit where 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” The Committee on Financial Inclusion (Chairman: Dr. C. Rangarajan, 2008) In advanced economies, Financial Inclusion is more about the knowledge of fair and transparent financial products and a focus on financial literacy. In emerging economies, it is a question of both access to financial products and knowledge about their fairness and transparency.

1. FINANCIAL INCLUSION
by
Tawheed Nabi
Research Scholar
Dept. of studies in Economics
Karnatak University
Dharwad

2. Financial Inclusion - Definition
“The process of ensuring access to financial services and timely and adequate
credit where 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”
The Committee on Financial Inclusion
(Chairman: Dr. C. Rangarajan, 2008)
In advanced economies, Financial Inclusion is more about the knowledge of fair
and transparent financial products and a focus on financial literacy.
In emerging economies, it is a question of both access to financial products and
knowledge about their fairness and transparency.

3. Financial Inclusion - Scope
 Financial Inclusion should include access to
financial products and services like:
 Bank accounts.
 Immediate Credit
 Savings products
 Remittances & Payment services
 Insurance – Healthcare
 Mortgage
 Financial advisory services
 Entrepreneurial credit

4. Financial Inclusion – Who are these
People?
 Underprivileged section in rural and urban areas like, Farmers,
small vendors, etc.
 Agricultural and Industrial Labourers
 People engaged in un-organised sectors
 Unemployed
 Women
 Children
 Old people
 Physically challenged people

5. Financial Inclusion – Steps Taken
 Co-operative Movement
 Setting up of State Bank of India
 Nationalization of banks
 Lead Bank Scheme
 RRBs
 Service Area Approach
 Self Help Groups
5

6. 6
Financial Inclusion – Why Have We
Failed?
Absence of Technology
Absence of reach and coverage
Delivery Mechanism
Not having a Business model
Rich have no compassion for poor

7. 7
Why Are we Talking of Financial Inclusion Now?
Focus on Inclusive Growth
Banking Technology has arrived
Realisation that Poor is bankable

8. What Are RBI ‘s Contribution
 No-Frill Accounts
 Overdraft in Saving Bank Accounts
 Business Correspondent (BC) Model
 KCC Guidelines
 Liberalized branch expansion
 Liberalized policy for ATM
 Introducing technology products and services
 Pre-Paid cards, Mobile Banking etc.
 Allowing RRBs’ / Co-operative banks to sell Insurance and Financial
Products
 Financial Literacy Program
 Creation of Special Funds
 431 districts identified by the SLBC for 100 per cent financial inclusion
across various States/UTs and the target in 204 districts of 21 States and 7
UTs has reportedly been achieved
8

9. What Have We Achieved
Number of No-Frill Accounts – 28.23 million
Number of rural bank branches – 31,727 constituting
39.7% of total bank branches
Number of ATMs – 44,857
Number of POS – 4,70,237
Number of Cards – 167.09 million
Number of Kisan Credit cards – 76 million
Number of Mobile phones–403 million – out of which 187
million (46%) do not have a bank account
9

10. 10
Problems / Difficulties
 Scaling up of activities
 Transaction cost too high
 Appropriate business model yet to evolve
 BC model too restrictive
 Limitation of cash delivery points
 Lack of Interest / Involvement of Big Technology
Players

11. 11
Pre-requisites For The Success of
Financial Inclusion
 Appropriate Technology
 Appropriate and Efficient Delivery model
 Mainstream banks’ determination and involvement
 Strong Collaboration among Banks, Technical Service
Provider, Business Correspondent (BC) Services
 Involvement of all state administration at grass-root level
 Liberalization of Business Correspondent (BC) model

12. Recommendations
 Government should increase number of banks branches in remote areas.
 Banks should focus more on products which should be simple, affordable ,
and should have high utility.
 RBI should frequently check whether the financial products are actually
utilized by customer effectively, if not it should analyse the reasons.
 Banks should do regular surveys in villages for understanding the financial
needs of the people.
 NGOs and other not for profit organisation/ social organisations / Non
Gouvernemental organisations etc. may be involved more to propagate the
financial services to the remote and non accessible areas.

13. Recommendations
 Banks should allow customers to provide feedback about the product
services.
 R B I should allow service providers to provide better mobile banking
products at affordable price.
 Micro Finance Organisations/ Non-Banking Financial organisations may
be given permissions to do limited financial services in remote areas.
 Enlist many intermediaries/ agents with incentives to facilitate
popularising Financial products in remote areas.
 Opening of Bank Accounts without minimum balance condition should be
allowed at all branches and places.

14. Recommendations
 Opening Bank Branches in remote and rural areas should be
liberalised by RBI.
 Institutionalise the agency system that can bring the bank
services at the door step of customer on a commission basis
like commission agents/ daily collectors etc. authorised by
Banks.

15. Recommendations
 Telecom Service providers and Banks should together workout and implement
Mobile Banking simple solutions.
 RBI should allow entrepreneurs to invest in new product innovation in financial
innovation.
 Mobile Banking should be encouraged/incentivised as a smart way of sending and
depositing money in Rural areas.
 There should be special discounted charges for Banking services in Rural areas like
Telephone calls originating in Rural Telephones. For example the interest charges in
Rural areas should be less than that of Urban .Similarly the saving Bank account in
Rural can be given more interest than in Urban. The additional burden on account
of this should be met from a separate fund like USO fund in Telecom.

16. CONCLUSION
16
• Financial Inclusion is a win-win situation for the
financially excluded, the Corporates, the Govt. and
the Banks.
• Bankers can support by financing the Agri products
including their preservation and sales.
• Corporates can sell / market their products to the
large untapped rural markets.

17. CONCLUSION
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• Public-Private partnership can utilise “Common Service
Centers” for enabling access to
• Banking Services and products including consumer loans;
Micro-finance Services
• Farm Equipment, Home & Construction Loans
• Credit Cards, Debit Cards, etc., Bill Payment – Electricity,
Utilities, etc., Payment Gateway, ATMs
• Multi-purpose “Smart Cards” can simplify the financial
inclusion process to reach the unreached.

18. Thank You…!
Have a niceday ahead..