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- 1. FINANCIAL INCLUSION & FINANCIAL LITERACY Yuva Parivartan’s 3rd International Summit on Skills Development Dr. DEEPALI PANT JOSHI EXECUTIVE DIRECTOR RESERVE BANK OF INDIA
- 2. The National Mission on Skill Development, under the Chairmanship of Honourable Prime Minister of India has set a target of preparing 500 million skilled persons by 2022 Expected Job creation 75-80 million Target: 500 million skilled persons 2/19/2014 2
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- 6. Focus on needs of both learner and job market Partnerships among various stakeholders Government Private organizations Educational institutes Availability of physical and human infrastructure for learners skill development 2/19/2014 6
- 7. Rural Youth Trained Employment Generated Banks 380070 133378 participation in RSETI 2/19/2014 7
- 8. Govt . sponsored programmes Swarnjayanti Gram Swarojgar Yojna (SGSY) Swarna Jayanti Shahari Rozgar Yojana (SJSRY) Credit delivery by banks (Annex) 2/19/2014 8
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- 10. Low skill Low Technology Lesser incentives to invest in training Low Productivity Fewer Jobs Low competition Lesser Growth Lesser orders 2/19/2014 10
- 11. -to combat with the.. Challenges faced by India Increasing capacity and capability of the existing system to ensure equitable access for all Maintaining quality and relevance Creating effective convergence between school education and the government’s skill development efforts Creating institutional mechanism for research development quality assurance, examinations and certification, affiliations and accreditation Mobilizing adequate investment for financing skill development 2/19/2014 11
- 12. National Vocational Education Qualifications Framework (NVEQF) Introduction of NVEQF at Secondary and Higher Secondary Education (Classes IX – XII) Management Structure National Institute of Open Schooling (NIOS) 2/19/2014 12
- 13. On February 28th presenting The Union Budget for 2013-14 Finance Minister P. Chidambaram Stated- “ The link between policy and welfare can be expressed in a few words: opportunities, education, skill, jobs and incomes” Joseph Stiglitz “ There is a compelling case for equity but it is also necessary if there is to be sustained growth. A country’s most important resource is its people” 2/19/2014 13
- 14. Quality of infrastructure ICT, physical infrastructure Advanced curriculum framework Employable training and skill development 2/19/2014 14
- 15. Financial Inclusion is the process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable groups such as weaker sections and low income groups in particular at an affordable cost in a fair and transparent manner by mainstream institutional players 2/19/2014 15
- 16. • 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. Demand Side & Financial Literacy Fair & Appropriateness Supply Side Financial Inclusion Access • Developing Economies face the problem of low level of literacy, poor accessibility and low demand. Therefore it is necessary for developing an Index for measuring both Access as well as the level of Literacy. 2/19/2014 16
- 17. Spread – How to provide banking services to villages with low population – Viability? Evolving of an Appropriate Business Model & an Efficient Delivery Mechanism Financial Literacy – How to increase financial awareness mainly amongst the excluded masses How to have a National Level Coordination of all stakeholders like Banks, Governments, Civil Societies, NGOs etc. required to achieve the objective of financial inclusion & literacy. Demographic 2/19/2014 17
- 18. Encouraged Electronic Benefit Transfer for routing social security payments through the banking channel. Separate program for Urban Financial Inclusion initiated Roadmap for providing banking services – A structured way of covering villages. In the first phase villages with population above 2000 was targeted. The focus has now shifted to villages with population less than 2000. Financial Inclusion Plan for Banks - All domestic commercial banks - public and private sector have drawn a Board approved 3 year Financial Inclusion Plan (FIP) starting April 2010. Self-set targets - FIPs to be integrated with Business plan of the banks Banks advised to finalise their next 3 year FIP for the period 2013-16 2/19/2014 18
- 19. Banking connectivity has been extended to 2,11,234 villages up to December 31, 2012 from 67,694 villages in March 2010. 5694 rural branches have been opened. Numbers of Business Correspondents have increased from 34,532 to 1,52,328. 1714.27 lakh Basic Savings Bank Deposit Accounts, 317.33 lakh Kisan Credit Cards and 31.14 lakh General Credit Cards remain outstanding as on December 31, 2012. Share of ICT based accounts have increased substantially - Percentage of ICT accounts to BSBDAs has increased from 25% to 45% 2/19/2014 19
- 20. SR Particulars Year Year Year ended ended Mar ended Mar Mar 10 11 12 Prog. Upto Dec 2012 1 Total No. of Branches 85457 91145 99242 103359 2 No. of Rural Branches 33433 34811 37471 39127 3 No. of branches in unbanked villages 0 0 3381 4323 4 Total number of CSPs deployed 34532 60993 116548 152328 5 Banking Outlets >2000 -Total 37791 66447 112130 118718 6 Banking Outlets <2000- Total 29903 49761 69623 92516 7 Banking Outlets - Branches 33378 34811 37471 39127 8 Banking Outlets - BCs 34174 80802 141136 168380 9 Banking Outlets - Other Modes 142 595 3146 3727 10 Banking Outlets -TOTAL 67694 116208 181753 211234 11 Urban Locations covered through BCs 447 3771 5891 17950 12 BSBDA Total (No. in lakh) 734.53 1047.59 1385.04 1714.27 13 BSBDA Total Amt. (Amt. in ` crores) 5501.71 7612.00 12040.62 17008.35 14 OD facility availed in Basic Savings Bank Deposit A/c (No. in lakh) 1.83 6.06 27.05 32.82 15 OD facility availed in Basic Savings Bank Deposit A/c (Amt. in ` crores) 9.98 26.48 108.41 135.17 16 KCCs-Total-No. in Lakh 243.07 271.12 302.35 317.33 17 KCCs-Total-Amt In ` Crores 124007.06 160005.04 206839.03 249139.78 18 GCC-Total-No. in Lakh 13.87 16.99 21.08 31.14 19 GCC-Total-Amt In ` Crores 3510.87 3507.06 4184.41 7660.35 20 ICT A/Cs-BC-Total Transaction -No. in lakhs 265.15 841.64 1410.93 1837.55 21 ICT A/Cs-BC-Total Transactions –Amt. in ` crores 692.07 5800.42 9285.93 16533.34 2/19/2014 20
- 21. Financial Inclusion and Financial Literacy are twin pillars: Financial Literacy stimulates the demand side – making people aware of what they can demand. Financial Inclusion acts from supply side providing the financial market/services what people demand 2/19/2014 21
- 22. • • • • • • • • A large population of alphabetically illiterate population requiring basic financial knowledge A large section of financially excluded population- need to be told of benefits of financial inclusion and also to be provided A large growing segment of educated middle class-requiring financial education A growing capital market with increasing retail participationrequiring financial education and consumer protection A growing insurance market with participation of private players - need consumer protection and financial education A large section of workers having no pension A move from Defined Benefit Pension Schemes to Defined Contribution Pension Schemes Hence, a large workforce need to be told about riskiness of various investment portfolios 2/19/2014 22
- 23. Financial Literacy & Financial inclusion to go together- Financial Stability Development Council Mandated to focus on Financial Inclusion and Financial Literacy A technical group on Financial Inclusion and Financial Literacy under aegis of FSDC–Coordinating the efforts of all Financial Sector Regulators National strategy on Financial Education prepared Financial Literacy-To be included in School Curriculum at National Level 2/19/2014 23
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- 25. • 658 Financial Literacy Centers (FLCs) functioning as at the end of December 2012 • 1.5 million people educated during the period April to December 2012 2/19/2014 25
- 26. Financial Literacy material- Messages for Unbanked audience - Lucid manner-Simple language To be used as standard curriculum by banks during their financial literacy activities Issued Guidelines on Conduct of Financial Literacy Camps-Mass Scale awareness-FLCs (650+) -At least once in a month-Quarterly Monitoring 2/19/2014 26
- 27. • • • • • • • • • • Why Save ? Why save regularly and consistently ? Why start saving early in your life ? Why save with banks ? Why borrow within Limits ? Why borrow from banks ? Why borrow for income generating purposes ? Why repay loans ? Why you should keep money aside regularly and consistently during your earning life for pension in old age ? What is interest? How moneylenders charge very high interest rates? 2/19/2014 27
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- 30. The key is establishing an appropriate Business Delivery Model through the involvement of all stakeholders to make Financial Inclusion a reality Access to financial services and Financial Education must happen simultaneously It must be continuous and must target all sections of the population simultaneously 2/19/2014 30
- 31. Thank you !!! deepalipantjoshi@rbi.org.in Assistance provided by Bipin Nair, AGM, Geetha Nair AGM and Mruga Paranjpe, Manager in preparing the presentation is gratefully acknowledged 2/19/2014 31
Editor's Notes
- Source: 12th Plan -Planning Commission of IndiaThe National Mission on Skill Development, under the Chairmanship of Hon’ble Prime Minister of India has set a target of preparing 500 million skilled persons by 2022. On the other hand it is expected that approximately 75 to 80 million jobs will be created in India over the next 5 years; 75% of these new jobs will require vocational training to enhance the employability prospects. There is a pronounced ‘skill gap’ both in terms of quality and quantity; and current vocational education and training infrastructure is not geared to meet industry requirements (CII report on case for setting sector skill councils, 2009). This is a contradiction of scenarios – supply demand mismatch on the one hand and rising population 83 of educated unemployed. At present only 2% of the work force in the age group 15-29 has undergone formal vocational training and 8% have had non formal vocational training. 93% of the workforce is in the unorganized sector. Vocational education and training is provided in India by several educational institutions / organizations functioning under about 17 different Ministries of the Government of India. In spite of this, of the 12.8 million new entrants to the workforce every year, the existing skill development capacity is only 3.1 million.
- Source: E&Y ReportIndia has the world’s youngest work force with a median age way below that of China and OECD countries. Half the population of India was younger than 25 in 2010. It will change to half the population being under 28 in 2030, making India a very young country for the next 20 years.India is expected to grow at a rate of 8%, on an average, in the next 10 years5. More than 700 million Indians are estimated to be of working age by 2022. Out of these, more than 500 million require some kind of vocational or skill development training.
- Source: Planning Commission Report 2008 & ILOWorking Group ‘Secondary and Vocational Education’ was formed as part of 12th Five Year Plan which recognized the need for capacity building.
- Availability: More Vocational training centers and need for change in vocational education (12th plan)Accessibility: Disparities in terms of income level, education level, geographic divide etcAdaptability: Focus on target groupAcceptability: Training facilities, methods, Govt schemes, infrastructure etc
- Vocational Training: Vocational training programs in India fall outside the formal schooling cycle. It is institution-based with varying entry requirements as well as course durations. The proportion of practical to theoretical instruction in vocational training programs is also higher than in vocational education. It is open to students who leave school after completing anywhere from Grade 8-12. Programs are operated by Industrial Training Institutes (ITIs) and Industrial Training Centers (ITCs). It comes under the auspices of the Ministry of Labour and Employment (MoLE) and the Ministry of Human Resource Development (MHRD). Administrative responsibility is held by the Directorate General of Employment and Training (DGET), located within the MoLE. ITIs and ITCs operate under the guidance of DGET, which formulates policies and lays down standards and technical requirements such developing curricula, instructor training, and skills testing. It governs a number of specialized training-related institutions. 2) Vocational education in India refers specifically to vocational courses offered in school Grades 11 and 12 under a centrally sponsored scheme termed ‘Vocationalization of Secondary Education’. Vocational education falls under the purview of the Ministry of Human Resources Development (MHRD).
- Source: www.nird.com (data as on 9/4/2013)RSETIs are Rural Self Employment Training Institutes, an initiative of Ministry of Rural Development (MoRD) to have dedicated infrastructure in each district of the country to impart training and skill upgradation of rural youth geared towards entrepreneurship development. RSETIs are managed by banks with active co-operation from the Government of India and State Governments.
- Several anti-poverty programmes have been in operation focusing on the poor and the unemployed in the rural and urban areas. Over the years the poverty alleviation and employment generation programmes have been strengthened to generate more employment, create productive assets, impart technical and entrepreneurial skills and raise the income levels of the poor. RBI monitors the anti-poverty programmes which are sponsored by Central Government. There are two major programmesvizSwarnjayanti Gram SwarojgarYojna (SGSY) and SwarnaJayantiShahariRozgarYojana (SJSRY) meant for poverty alleviation and employment generation in rural and urban areas respectively. These programmes are implemented through credit linkage with commercial banks and subsidy allocations through the concerned Ministry’s budgetary allocations. The beneficiaries under these schemes are rural below poverty line / urban below poverty line people, minorities and SC/STs including OBCs . All the beneficiaries under these schemes falls under the category of weaker sections which are eligible to get credit under priority sector lending. Credit given by commercial banks under these schemes during the last three years is given in Annex I & II. Government has approved the restructuring the SGSY as the National Rural Livelihoods Mission (NRLM), to be implemented in a mission mode across the country. NRLM’s mandate is to reach out to all the poor families, link them to sustainable livelihoods opportunities and nurture them till they come out of poverty and enjoy a decent quality of life. The core belief of National Rural Livelihoods Mission (NRLM) is that the poor have a strong desire and innate capabilities to come out of poverty. They are entrepreneurial. The challenge is to unleash their innate capabilities to generate meaningful livelihoods, which enable them to come out of poverty. The first step in this process is motivating them to form their own institutions. Their true potential is realized when they are provided sufficient capacities to manage the external environment and easy access to finance, and are enabled to expand their skills and assets and convert them into meaningful livelihoods. This requires continuous handholding support by their institutions. An external dedicated, sensitive support structure, from the national level to the sub-district level, is required to induce such social mobilization, institution building and livelihoods promotion.
- Government has approved the restructuring the SGSY as the National Rural Livelihoods Mission (NRLM), to be implemented in a mission mode across the country. NRLM’s mandate is to reach out to all the poor families, link them to sustainable livelihoods opportunities and nurture them till they come out of poverty and enjoy a decent quality of life. The core belief of National Rural Livelihoods Mission (NRLM) is that the poor have a strong desire and innate capabilities to come out of poverty. They are entrepreneurial. The challenge is to unleash their innate capabilities to generate meaningful livelihoods, which enable them to come out of poverty. The first step in this process is motivating them to form their own institutions. Their true potential is realized when they are provided sufficient capacities to manage the external environment and easy access to finance, and are enabled to expand their skills and assets and convert them into meaningful livelihoods. This requires continuous handholding support by their institutions. An external dedicated, sensitive support structure, from the national level to the sub-district level, is required to induce such social mobilization, institution building and livelihoods promotion. NRLM Values The core values which will guide all the activities under NRLM are as follows: Inclusion of the poorest, and meaningful role to the poorest in all the processes Transparency and accountability of all processes and institutions Ownership and key role of the poor and their institutions in all stages – planning, implementation, and monitoring Community self-reliance and self-dependence
- In order to provide adequate training to the youth and develop necessary skills, the Government of India took steps to improve the skill training scenario in the country. In 2009, the government formulated the national skill development policy that laid the framework for skill development, ensuring that individuals get improved access to skills and knowledge.Key features of the National Skill Development policy• Scope: The skill development policy includes:• Institution-based skill development, including it is/ vocational schools/technical schools/ polytechnics/ professional colleges, etc.• Learning initiatives of sectoral skill development organized by different ministries/ departments• Formal and informal apprenticeships and other types of training by enterprises• Training for self-employment/entrepreneurial development• Adult learning, retraining of retired or retiring employees and lifelong learning• Non-formal training, including training by civil society organizations• E-learning, web-based learning and distance learning • Institutional framework: The policy lays down three the institutional framework comprising:• Prime Minister’s National Council on Skill Development• National Skill Development Co-ordination Board• National Skill Development Corporation (NSDC)• National Council for Vocational Training (NCVT)The policy states the roles and responsibilities of stakeholders, which include the government, industry, trade unions, local governments, civil society institutions and all skill providers. • Promotes the expansion of outreach, equity and access under the skill development initiative: The skill development initiative requires that there is a considerable amount of capacity expansion, innovative delivery approaches and PPPs. The policy provides for equal access of skill development for women, disadvantaged groups (SC, ST and OBCs), minorities, disabled persons and economically challenged people.• Lays down standards for quality and relevance: The policy provides for quality standards to achieve global competitiveness. It lays downs standards for:• Quality assurance (based on validation of qualifications for ensuring that qualifications reflect market needs, validation of training process, accreditation of training providers/institutions, research and information) • Quality of infrastructure• Quality of trainer• National vocational qualification framework• Labor market information systems and HR planning mechanisms• Emphasizes on skill development for the unorganized sector: The policy lays down special emphasis on skill development for the unorganized sector. The policy provides for having a separate institutional mechanism to plan, implement and monitor the skill development for the unorganized sector. It focuses on having target groups within the unorganized sector, literacy and soft skills, recognition of prior learning, and skill development for self-employment.The Indian government recently developed ‘The National Skill Development Policy’ to provide skills to a huge population and make them employable. The core operating principles of the National Skill Development Policy are:Government financial support must complement private investment: The Central Ministries must focus on areas where private investment in skilled development is unlikely to be available or forthcoming. The Government would aim at useful public-private partnerships.States as key actors: The States being the key actors in Skill Development would set up overarching integrated framework for action for Skill Development through State level Skill Development Missions.Deployment of funds: The funds would be deployed more for activities than for buildings and other hard assets. However, upgradation of machinery and equipment, teaching and learning aids will be a continuous process. Creation of infrastructure in latest technology, need-based new initiatives, creation of infrastructure in rural, remote and difficult areas will continue.Focus of modular courses, open architecture and short term courses: With fast changing skills in the labour market, focus would be on short, relevant and effective courses that would get candidates into the workplace. They will be welded through NVQF to maintain dynamism and open to feedback.Separate financing from delivery: Today Government funds are only available for government delivery. National Skill Development Corporation will support private skill development initiatives. Following financing options will be explored:a) Link financing to outcomes: Today public and private training is financed largely on inputs viz. number of courses, number of students, faculty, etc. Efforts would be made to move towards Government financing linked to placement ratios and outcomes.b) Focus funding on candidates: The focus would be on funding the candidates rather than institutions to create choice. This could be structured as a scholarship, skill voucher, outcome based reimbursement, etc.Create infrastructure for on-the-job-training and encourage apprenticeships: The enabling infrastructure for large number of formal apprentices needs to be built that includes modification to the Apprentices Act, 1961.Publicise rating and outcome information on training institutions: A framework of accreditation and infrastructure for information dissemination around measurable criteria on institutions will be created. Ratings of public and private institutions would be put on public domain.Effective assessment and credible certification: Quality assured learning, credible assessment and certification will be developed. This will allow employers to use the certificate as a proxy to fast track job applicants.Restructure employment exchanges as career guidance centres: Employment Exchanges will be restructured as career guidance centres to channelize candidates into jobs, apprenticeships and training.Expand formal employment: Formal employment is not only fiscally attractive but more amenable to financing innovations. This will require a review of existing State and Central legislations which encourage informal and unorganized employment.Source: Ministry of Labour and Employment; Government of India
- Source: 12th plan
- “Of late, employability of graduates coming out of our educational system is becoming a matter of great concern. I am told only 25% of the general graduates across all streams have employable skills.”— E Ahamed, (Minister of State for HRD and External Affairs)