2. The 'Pradhan Mantri Jan Dhan Yojana'
The Union Cabinet cleared the two-phase financial inclusion
scheme under which bank accounts will be opened for 15
crore poor people with an overdraft facility of Rs 5,000 and
accident insurance of Rs 1 lakh.
Jan Dhan Yojana crossed 100-mn mark as on Jan 2015. In the
last three months, 103 million new accounts have been
opened under the Jan Dhan Yojana. By now, 98.41 per cent
households in the country are covered under the scheme
3. Financial Inclusion -Mera Khata - Bhagya Vidhaata
Under the scheme:
1. Account holders are provided zero-balance bank account
with RuPay debit card, in addition to accidental insurance cover
of Rs 1 lakh(to be given by 'HDFC Ergo').
2. Those who have opened accounts by January 26, 2015 over
and above the 1 lakh accident, they will be given life insurance
cover of Rs 30,000(to be given by LIC).
3. After Six months of opening of the bank account, holders can
avail 5,000 overdrafts from the bank.
4. Country
Number of
Branches
Number of
ATMs
Bank Credit Bank Deposits
(per 0.1 million adults) (as percent of GDP)
India 10.91 5.44 43.62* 60.11*
Austria* 11.81 48.16 35.26 32.57
Brazil 13.76 120.62 29.04 47.51
France 43.11 110.07 56.03 39.15
Mexico 15.22 47.28 16.19 20.91
UK* 25.51 64.58 467.97 427.49
US 35.74 173.75* 46.04 53.14
Korea 18.63 250.29* 84.17 74.51
Philippines 7.69 14.88 27.57 53.02
Source - World Bank, Financial Access Survey
Note: Data pertains to 2010. For rows/cells indiciated as *, data pertains to 2009
Financial Inclusion - India’s Position Compared with Other Countries
6. 6
Summary of Accounts Opened
Data as on 17thJan 2015 from banks
Rural (Cr)
Urban
(Cr)
No Of
Accounts
(Cr)
Grand Total 6.84 4.66 11.50
7. 7
Progress of Deposits (in Rs Cr)
Data as on 17thJan 2015 from banks
No Of
Accounts
(Cr)
Balance In
Accounts
(In Cr)
No Of
Accounts
With
Deposits
(Cr)
Grand Total 11.50 9188 3.23
8. 8
Summary of RuPay Card Issuance
Data as on 17thJan 2015 from banks
Public
Sector
Banks
(Cr)
Regional
Rural
Banks
(Cr)
Pvt
Banks
(Cr)
Total No
Of Rupay
Debit
Card (Cr)
Grand Total 8.45 1.25 0.30 10.00
9. 9
PMJDY Progress - No of Accounts & Rupay Cards
Data as on 17thJan 2015 from banks
Total Accounts Male Female Rural Urban
11.50 Cr 5.68 Cr 5.82 Cr 6.84 Cr 4.66 Cr
% of Total 49.37 50.63 59.49 40.51
11. INTERNATIONAL BODY
The Alliance for Financial Inclusion (AFI) is a network of financial
inclusion policymakers.
AFI's core mission is to encourage the adoption of inclusive financial
policies in developing nations, to lift 2.5 billion citizens out of poverty.
AFI was founded in 2008 as a Bill & Melinda Gates Foundation-funded
project, supported by AusAid, in order to advance the development of
smart financial inclusion policy in developing and emerging countries.
AFI's network has more than 100 institutions from more than 89
member nations.
AFI utilizes a peer-to-peer learning model to connect, encourage and
enable financial policymakers to interact and exchange knowledge on
policy initiatives such as consumer protection, mobile financial services,
financial integrity, agent banking, formalizing microsavings, data and
measurement, and general financial inclusion
11
12. MAYA DECLARATION OF AFI
Main Objective is to Commit as a network of developing and emerging
market financial regulators and policymakers to:
a. Putting in place a financial inclusion policy that creates an enabling
environment for cost effective access to financial services that makes
full use of appropriate innovative technology and substantially
lowers the unit cost of financial services;
b. Implementing a sound and proportional regulatory framework that
achieves the complementary goals of financial inclusion, financial
stability, and financial integrity;
c. Recognizing consumer protection and empowerment as key pillars
of financial inclusion efforts to ensure that all people are included in
their country’s financial sector;
d. Making evidence-based financial inclusion policy a priority by
collecting and analyzing comprehensive data, tracking the changing
profile of financial inclusion, and producing comparable indicators
in the network.
12
13. INDIAN DEFINITIONS
Financial inclusion may be defined as 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
(The Committee on Financial Inclusion, Chairman: Dr. C.
Rangarajan).
Financial Inclusion, broadly defined, refers to universal access
to a wide range of financial services at a reasonable cost.
These include not only banking products but also other
financial services such as insurance and equity products
(The Committee on Financial Sector Reforms, Chairman:
Dr.Raghuram G. Rajan).
14. Twin Aspects of Financial Inclusion
Financial Literacy & Financial Inclusion
Demand Side
Financial Literacy & Credit
Counseling Centres
Credit Absorption Capacity
Knowledge of products
Ability to Tap new Technology
Right to Services
Consumer Rights & Redressal
Supply Side
Financial Markets ,
Banks
& Services
Agency Models
Appropriate Design of
products & services
AADHAR enabled
payment systems
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.
15. Adavantages of A Proper Financial Inclusion Policy
Less constrained spending
Low cost services
Free Use of Money
Easy pathway out of poverty
Good Social, economic
High standard of living
Financial lliteracy Good financial habits
Good education
Macro -environment Personal characteristics
Social/wider inclusion
Financial
inclusion
Low or controlled debt
Asset ownership
Employment
High Income
16. 16
Scope
Financial Inclusion should include access to financial
products and services like:-
Bank accounts – check in account
Immediate Credit
Savings products
Remittances & Payment services
Insurance - Healthcare
Mortgage
Financial advisory services
Entrepreneurial credit
17. FI - Road map for Institutions
Financial
Inclusion
Banks/ Co-ops/ RRBs
Loan/ Credit A/c
Saving A/c
Payment &
Remittances
MFIs/ NGOs
Financial Counselling/
Literacy
Micro Credit/ Saving
Insurance Cos Post Offices
Postal Savings
Remittances
Stand Alone
Insurance
BC/
BF
BC/
BF
18. Recent Initiatives of RBI
No-Frill Accounts
Overdraft in Saving Bank Accounts
BC / BF Model
KCC / GCC Guidelines
Liberalised branch expansion
Liberalised 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 convenor banks 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
18
20. BRANCH EXPANSION MODEL
Ease of Licensing Norms by RBI
Allowing Private Sector Banks to open branches in rural
areas
Branch authorisation has been relaxed to the extent that
banks do not require prior permission to open branches
centres with population less than 1 lakh which is subject
to reporting.
Banks have been mandated to open at least 25 per cent
of the new branches in unbanked rural centres.
21. Agent Banking- Business correspondent/
Business facilitator Model
In Jan 2006 the Reserve bank permitted banks to utilise
the services of intermediaries in providing banking
services through the use of business facilitators and
business correspondents.
The BC model allows banks to do cash in – cash out
transactions at a location much closer to the rural
population, thus addressing the last mile problem.
22. Combination of Branch and BC structure to
deliver Financial Inclusion
The idea is to have a combination of physical branch
network and BCS for extending financial inclusion,
especially in geographically dispersed areas.
To ensure increased banking penetration and control
over operations of BCs, banks have been advised to
establish low cost branches in the form of intermediate
brick and mortar structures in rural centres between the
present base branch and BC location so as to provide
support to a cluster of BC ( about 8-10) at a reasonable
distance of about 3-4 km.
23. Product Expansion Model
Allowing the Banks or the BCs to provide Bouquet of
Financial Services…
A savings cum overdraft account.
A pure savings account, ideally a recuring or variable
recurring deposit.
A remittance product to facilitate EBT and other
remittances.
Enterpreneurial credit products like a General Purpose
Credit Card (GCC) or Kisan credit card (KCC).
25. DHAARAVI
Urban Financial Inclusion in India
Indian bank decided to open a branch in Dharavi in
February, 2007.
Today this branch is supported by three ATMs, two on
site and one offsite. The bank has also achieved a
business of Rs 60 crores with more than 30,000 ‘no-
frill accounts
FINO’s TATKAAL remittance scheme also showed
encouraging results.
25
26. PAYMENT BANKS & CASH WALLETS
MOBIKWIK, PAYTM, QUIKWALLET
SUPPORT ONLINE RECHARGE, ONLINE SHOPPING,
WALLET TO WALLET CASH TRANSFER
NEW FEATURES INCLUDE BILL & OTHER PAYMENTS
LIKE INSURANCE PREMIUM.
PROBLEM :- CASH WITHDRAWALS…
PROPOSED SOLUTION:- TEAM UP WITH LOCAL ATMs.
27. FINO
In 2006, ICICI Bank (ICICI ) started Financial
Information Network and Operations Private Limited
(FINO) to provide technological infrastructure to
financial service providers.
The appraoch
Doorstep Technology
Micro ATMs
The Business Money Transfers
FINO TATKAAL (remittance service)
27
28. EKO
Eko, the brain child of Abhishek Sinha (Abhishek), was
founded in 2007 to provide banking services using
mobile phones to that section of the population that
commercial banks had not reached.
It acted as a business correspondent (BC) as per the
guidelines of Reserve Bank of India (RBI), the central
bank of India.
Eko's business model earned recognition from several
quarters and it was nominated for several
competitions targeted at start-ups...
28
29. SHG LINKAGE
SHG-Bank Linkage Programme was started with the
intention of extending the outreach of formal banking
to poor who mainly consist of women, small and
marginal farmers, daily wage labourers, landless
farmers, small businessmen, craftsmen etc.
To begin with pilot project was launched by NABARD
by linking 500 SHGs with banks in 1992. It has
increased to 0.5 million in 2002. As on March 2012
total number of SHGs linked with banks were 79.60
lakhs with balance of Rs 6550 crore with banks (Status
of Micro finance in India 2011-2012). I
29
30. EVOLUTE SYSTEMS
Developed and successfully implemented
Zeal - India's fully integrated first micro ATM
Impress - India's one of the fastest thermal printer
30
31. 31
PAHEL
•AADHAR Linked Bank Accounts for
Direct Cash (Benefit) Transfer of Subsidy
on Cooking Gas
• Available to Eldest Woman Member of
the Family
33. The BCs emerge as the Winners
Branches
3%
BCs 94%
Other
modes 3%
Roadmap > 2000 population
villages - Final Progress
Branches
Business
Correspondents
Other modes
Branches
7%
BCs 88%
Other
modes
5%
Roadmap < 2000 population
villages - Progress upto
Dec. 2013
Branches
Business
Correspondents
Other modes
33
34. WHAT NEEDS TO BE DONE?
CLARITY IN SOCIAL & BUSINESS GOALS
INCLUDE “ALL” NOT JUST POOR & THE UNBANKED
PRODUCT INNOVATION
USE OF COST EFFECTIVE TECHNOLOGY TO REPLACE
THE NEED FOR VISITING THE BANKS
EXPLORE THE EXISTING POSTAL SERVICES FIRST
CHANNEL INNOVATION
ADDRESS SECURITY CONCERNS
36. KYC NORMS
Relaxed KYC norms
Know your customer KYC requirements have been
simplified to such an extent that small accounts can be
opened with self certification in the presence of bank
officials.
RBI has allowed Aadhaar to be used as one of the eligible
documents for meeting the KYC requirement for opening
a bank account.
37. CHANNEL INNOVATION
Channel innovation is a way of identifying new and
sustainable channels of distribution that fit naturally
into the customer’s lifestyle. It provides organizations
the opportunity to create new markets, offer new
products, expand to new geographies.
Eg :- In July 2011, Grameen Foundation worked with
Cashpor to create a three-way partnership between
Cashpor, ICICI Bank and Eko India
37
38. EXISTING POSTAL SERVICES
The Postal services have wide reach in the Urban as
well as rural India.
There are Post offices even in remote and hilly areas,
also in border areas guarded by Armed forces
It is more logical and cost effective to equip our local
post man, with machines like impress and Zeal to
facilitate door step banking.
Post Office Savings Account can be a good means to
pass on the Government Benefits.
If Social upliftment is our motive, then this is better
option.
39. SECURITY CONCERNS
ABSENCE OF REGULATING BODY
CONFUSION AS TO WHO WILL BE RESPONSIBLE FOR
CONSUMER GRIEVANCES
BANKING OMBUDSMAN DOES NOT INCORPORATE
THE BCs AND NEWER TECHNOLOGY
WE NEED REGULATING BODY LIKE “TRAI”
40. India can achieve target of 90% of citizens having access to
banking services by 2034
Overall, the traditional branch heavy approach to financial inclusion would require an
addition of almost 400,000 bank branches and 175,000 ATMs by 2034, to a network of
only 100,000 branches and 115, 000 ATMs existing at present. Such a significant
transformation for both urban and rural India would require an investment outlay of
around US$40bn by 2034 through traditional means.
Business-model innovations could also be combined with national platforms such as the
unique identification number (or Aadhaar) to reduce compliance costs for service
providers. This could reduce customer acquisition costs by as much as 40%, compared
with the face-to-face identification procedures and paper based processes used
extensively today.
Use of digital channels such as mobile and online banking could greatly improve financial
inclusion. Emerging technology solutions such as solar ATMs can help, by slashing ATM
setup costs by almost 50%.
These and other next-generation solutions could help India move toward a cashless
economy. Growth of 5% in cashless transactions could help save more than INR 500 crore
annually for the national economy through lower transaction and administrative costs.
