FINANCIAL INCLUSION: A INDIAN
PERSPECTIVE
Presented by
Dr Tanuj Nandan
Associate Professor
Vivek Tripathi
Research Scholar
School Of Management Studies
Moti lal Nehru National Institute Of Technology,Allahabad
13th August 2010
Financial Inclusion
“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.” - NABARD
2 2
Financial Inclusion : The Indian Perspective
Empowerment
Bank A/Cs - Credit Cards of SHGs
Savings
Payments +
Remittances Financial Inclusion Insurance
Lack of
Financial
Affordable Credit Assets (for
Advice
Collateral)
3
Model for Financial Inclusion
Less constrained spending
Low cost services
Social/wider inclusion
Good Social,economic & Health outcomes Free Use of Money
Financial
inclusion
High standard of living Easy pathway out of poverty
Asset ownership Low or controlled debt Mainstream product
Attributes: fees;
High Income Penalties,bundling,marketing
Which suit those with higher
income/assets
Employment Financial lliteracy Good financial habits
Good education
Macro -environment Personal characteristics Commercial & regulatory environmen
4
Financial inclusion challenges
An accurate data to assess the level of
financial inclusion .
Involving the private sector financial
institutions in developing and
implementing national strategies for
financial inclusion .
Source:Professional banker 2008
Role of Indian government in financial
Inclusion
If financial inclusions and has to make
inroads and has to succeed then
technology is the key parameter.
Thus, the use of technological aids has to
improve .
Sources :Professional banker 2008-09
Role of the Indian government ,to boost inclusion, has
largely been protective .
A scheme of targeted lending where by banks have
been directed to lend a certain percentage of their net
banking credit to certain sectors such as
agriculture,SME etc.
The issues of financial inclusion are imbibed in the
development processes through its various initiatives sucha as
rural employment guarantee scheme the bharat nirman
programme and serve shiksha abhiyan .
The reserve bank of india (RBI)with the active
participation of commercial banks has set up the
banking codes and standards board of india to ensure
better banking services to individual customers .
ROLE OF REGULATORS
Regulators have taken major initiatives in
this regard.
In India smart cards with many features
and applications are being put to use .
In Andhra Pradesh state smart card
technology has been put to use for social
security payments to widows
,handicapped etc.
To bring financial excluded people into their fold banks
may have to look at the policy and procedures and
develop new product line rather than adopting the
traditional root of expansion of branch network .
There has been substantial growth due to adoption of
non branch channels compared to traditional cost
intensive methods of expansion ,which could be an ideal
solution .
Financial inclusion requires efforts in under
standing the needs of customers ,counseling
,financial literacy screening and their monitoring
.
New savings and credit product mix have to be
developed by the banks ,which will not only address
their concerns but will also reduce the transaction cost
and at the time will also provide access to poor .
Role of basel committee
Indian banks are moving towards
adoption of Basel ii norms it is a huge
challenge for the bank supervisors to
decide which procedures are adequate and
keeping the central idea of Basel
committee, balancing these norms,
provision of inclusion services are
important .
Conclusion
There has been expansion ,greater competition
and diversification of ownership of banks
,leading to enhanced efficiency in the banking
sector.
Banks have been bestowed with several
privileges especially of seeking public deposits
on highly leveraged basis, and consequently they
should be obliged to provide banking services to
all segments of the population ,on equitable basis.
Thank you
