The presentation includes everything about Financial Inclusion in India, the history of Financial Inclusion, meaning and objectives of Financial Inclusion, reasons for financial exclusion, measures taken by the government and the road ahead.

1. FINANCE CONCLAVE
2013
FINANCIAL INCLUSION
IN INDIA

2. HISTORY OF FINANCIAL INCLUSION
FINANCIAL
EXCLUSION
Coined
In 1993
in UK
Initiatives by UK Government
1.
2.
3.
4.
Credit Unions
Post Office Card Account
Savings Gateway
Community Finance Learning Initiatives
Source: rbidocs.rbi.org.in, worldbank
Limited Physical Access to
Banking services
Priority Areas identified by
UK
1. Access to Banking
2. Access to affordable credit
3. Transparency in Advisory
Services

3. WHAT IS FINANCIAL INCLUSION
AVAILABILITY
AWARENESS
ACCESSIBILITY
FINANCIAL
INCLUSION
AFFORDABILITY
ADEQUACY
Source: world-finance-conference.com/papers_wfc/138.pdf: Rangarajan Committee Report
3

4. OBJECTIVES
•Economic:
-Equitable growth
-FIs can boost the development
process
BANK
ACCOUNT
CAPITAL
FINANCIAL
LITERACY
MARKET
PARTICIPATION
FINANCIAL
INCLUSION
INSURANCE
PENSON
•Mobilisation of Savings
-Capital formation and economic
growth
•Larger Market for the financial system
-Emergence for new players
- Participation of retail investors
REMITTANCES
(Money Transfer
Facilities)
CREDIT PRODUCTS
KCCs, GCCs etc
•Social
-Poverty Eradication
- Financial Literacy
•Sustainability
- To improve income generation by
low income groups
•Institutional
-Effective implementation
Source: Rangarajan Committee Report

5. INDIAN STORY
•The Term Financial Inclusion In India was coined in 2004 by the then RBI Governor YV Reddy.
•In 2008, the Government of India appointed a Committee on Financial Inclusion under the
Chairmanship of Dr. C .Rangarajan

Aprox. 50% of people in India don't have bank accounts

90 % of the people do not have borrowings from the banks

11% of bank branches in India are limited to the metros.

38% of the branches of the SCBs are in the rural areas

Nearly 85% of the population don’t have access to
insurance services.

FIIs hold a stake 10.45% in the Indian capital market

2% of retail investors in India participate in the Indian
capital market
Source: rbidocs.rbi.org.in
5

6. THE TARGET GROUPS
People who are Not Availing Financial Services
SOCIALLY
EXCLUDED
GROUPS
FARMERS
RURAL WOMEN
SENIOR
CITIZENS
MIGRANTS
Why???
DEMAND SIDE
Financial Illiteracy
SUPPLY SIDE
Financial Inclusion
Lack of Knowledge of products
Inaccessibility of Bank
Dependence on informal sources of
credit
Cumbersome Banking procedure
Low Incomes
Inappropriate Design of products &
services
Social Exclusion
High transaction cost and attitude of
bank officials
Source: Rangarajan Committee Report

7. FINANCIAL INCLUSION : IMPORTANT MILESTONES
PHASE II
PHASE I
Setting up
of Rural
Cooperatives
Setting up of
RRBs
1904
Nationalization of 14
Commercial Banks
Rural
Development
Programme
1990
1969
Source: rbi.org.in
Setting up of
Local Area
Banks
PHASE III
1975
Allowance by RBI for
BC/BF to act as
agents of banks
2005
1999
Introduction to
Self Help Group
2000
Opening of No
Frill Accounts
2011
2006
NPCI launched Interbank
Mobile Payment System
(IMPS)
7

8. INSTITUTIONS INVOLVED
MEASURES TAKEN
Introduction of ‘No-Frills’ account
•Low-cost bank accounts
•“Zero” or very low minimum balances.
NABARD
General Credit Cards & Kisan Credit
Cards
India post,
NGOs etc
Key
Institutions
RBI, RRBs,
SCBs
•Credit Cards with a credit limit of Rs 25,000 in
all rural and semi rural bank branches.
•Success: March 2013
•36.39lakhs GCC accounts
•337.89lakhs KCC accounts
Simplification of KYC norms
United Nations
Development
Programme
Source: world-finance-conference.com
•Simplified KYC procedure for low income
groups without documents of identity and proof
of residence to open banks accounts.
Microfinance
Institutions
Financial
Inclusion
Technology
Fund
NABARD
•To meet the cost of technology adoption
•An overall corpus of Rs.500cr each (enhanced
to Rs.600cr in Union Budget for 2010-11)

9. MEASURES contd…
• Business Correspondent : An individual or a committee acting as an intermediary between
the bank and the customer.
i. Delivering all products of the bank
ii. ICT based Business Correspondent Model for low cost.
•
Mandatory requirement of opening 25% branches in Unbanked Areas
i. Progress stimulation through “New Bank Licenses”
ii. To initiate Financial Stability through Financial Literacy.
•
Direct Benefit Transfer Schemes:
i. Increasing significance of DBT scheme and Adhaar Card.
•
Financial Inclusion Plans (FIPs) for banks implemented by RBI (started from April 2010)
i. Increase in number of Regional Rural Banks
ii. Issuing more KCCs and GCCs
iii. Specially designed products for financially excluded segments.
iv. Interest rates on advances totally deregulated.
v. Setting up of Ultra Small Branches
Source: world-finance-conference.com

10. INDIA FACTSHEET – FINANCIAL INCLUSION
1. Scoring considers 618 districts
of total 632 districts in India.
Branch
Penetration
Credit
Penetration
Deposit
Penetration
2. Top 3 states : Kerala, Andhra
Pradesh, Himachal Pradesh
3. Bottom 3 states : Bihar, Assam,
West Bengal
4. 11 of Kerala’s 14 districts
figure in the top 50 scoring
district
INCLUSIX SCORES
62.2
38.2
5. The Financial Inclusion in India
has increased by CAGR of 7%
from 2008 to 2013.
37.1
28.6
28.5
40.1
*Data as per 2011-12
Source: CRISIL Inclusix 2013, rbidocs.rbi.org.in
6. Future potential may be seen
due to rise in tele-density (grew
from 1% to 40% between 2001
to 2010)
10

11. FINANCIAL INCLUSION – CHALLENGES AND WAY AHEAD…
a) Increasing Reach by Banks
b) Effective Intermediation by Business Correspondents
c) Increasing transactions by target group
d) Technological Challenge
e) Cost optimization by Banks
f)
Implementation Challenge- Profit vs. Social Welfare
g) Financial Literacy

12. Thank You !