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APROJECT REPORT ON

FINANCIAL INCLUSION:A STUDY OF TAKING BANKINGSERVICES TO THE RURAL POPULATION

DEVELOPED FOR PREPARED BYRIDDHI BHATIA(11047)MBA BATCH 2010-2012

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Founded:In 1985 as Kotak Capital Management Finance

Ltd. by Mr. Uday Kotak and Sidney A.A. Pinto.

IndustrialistsHarish Mahindra and Anand Mahindratook a stake in 1986, and that is when the company's

name was changed toKotak Mahindra Finance Limited.

In February 2003, company was given the license to

carry on banking business bythe Reserve Bank of India

(RBI).

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Delivery of financial services at affordablecosts to sections of disadvantage and lowincome segments of society.

Financial Exclusion one major factor.

FI is essential for overall economic growth.

Key Focus: A Pure savings product with inbuilt overdraft facility

A recurring deposit product A remittance product

Entrepreneurship credit in the form of KCC/GCC

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Extending formal banking system among lessprivileged in urban & rural India.

Weaning them away from unorganized moneymarkets and moneylenders.

Equipping them with the confidence to make

informed financial decisions.

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To know the priority of existing customers ofbanking sector.

To know the satisfaction of existingcustomers of banking sector.

To know the financial literacy of the people.

To understand various aspects of financialinclusion.

To analyse the initiatives to be implementedto achieve financial inclusion.

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Exploratory type of research Sample Size: 1000 (specified by the bank)

Primary data collection : Questionnaires

Secondary data collection

Area sampling used suggested by the bank ( inand around Ahmedabad)

Areas covered: Dudeshwar, Bapunagar, Vadaj,Kalupur, Naroda, ThaltejGam, Rakhial, Asarva,Meghaninagar, Vatva, Sabarmati, Changodar,Kadi, Viramgham, Visnagar, Mehsana, Nadiad,Baroda, Bhayali, Padra, Por, Halol, Dahod, Rajkot

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Relaxation of Know Your Customer (KYC)guideline for No-Frill accounts.

Introduction of Business Correspondent (BC)Model for service delivery in remote areas.

Financial Literacy and Credit Counseling(FLCC)

Setting up of RUDSETIs

Establishment of FIF and FITF

Financial Empowerment through Mobilephones

Swabhimaan

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More than 54,000 No frills accounts openedunder FI initiative.

Started its ICT based FI Initiative at MehsanaDistrict,Gujarat.

Covered 30 villages by opening rural bankbranches and 245 villages by engagingBusiness Correspondents.

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Easy Savings Account offered through bankbranches (No frills) Initial Deposit: Rs. 100/-

AQB: Rs. 100/-

Free: Replacement of damaged card,Internet bankingfacility,Bank statement,Pass Book

Etc.

Easy Savings Account offered through BusinessCorrespondents (No frills) Initial Deposit: Rs. 100/-

AQB: NIL

Free: Account Opening,Cash Deposit

Etc.

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Khan Commission 2004 Featured in Pondicherry by K C Chakraborthy, the

chairman of Indian Bank.

No frills account

KYC norms relaxed (annual deposits < Rs.50,000) Issuance of GCC

NGOs and other intermediaries

RBIs vision by 2020 : to open nearly 600

million new customers' accounts and servicethem through a variety of channels byleveraging on IT.

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7

84

82

71

54

55

5

3

5

6

0 10 20 30 40 50 60 70 80 90

no answer

car loan

personal loan

home loan

loan against

property

loan against gold

working capital

loan against shares

loan against lic

agri finance

Series1

AWARENESS OF BANKING FACILITIES

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89

4

4

3

2

1

1

1

0

2

0 10 20 30 40 50 60 70 80 90 100

no answer

car loan

personal loan

home loan

loan against property

loan against gold

working capital

loan against shares

loan against lic

agri finance

Series1

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14

62

6540

54

7

65

54

13

36

11

8

17

11

6

0 10 20 30 40 50 60 70

no answer

term life insurance

permanent life insurancemoney back

pension

endowment

health

fire

marine

motor

theft

shop accident

home

travel

machinery

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70

9

12

2

0

0

12

2

0

6

1

0

0

0

0

0 10 20 30 40 50 60 70 80

no answer

term life insurance

permanent life insurance

money back

pension

endowment

health

fire

marine

motor

theft

shop accident

home

travel

machinery

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24%

25%

51%

AWARE ABOUT MOBILE BANKING

yes

no

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205

31

4

14

126

17

9

12

0 50 100 150 200 250

saving a/c

current a/c

recuring a/c

fixed deposit a/c

Outside A'bad Ahmedabad

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Products

Processes

Technology People

Outreach

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Financial illiteracy Low and cyclical income

Minimal collateral

Lack of credit history Absence of formal and verifiable identity

General illiteracy

Apprehension of bureaucracy social

oppression Credit primarily for personal consumption

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Appropriate products

Financial counseling

Increased accessibility

Simplified procedures

Improved public interface

Leverage modern technologies

Provide information in local languages Lower transaction costs

Educate youth in rural areas

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Main barriers from customers side: Lack of awareness of financial services

Social exclusion

Unsuitable products

Unfriendly and distant behavior by the bank staff Exorbitant & non-transparent fees

Terms & conditions

Main barriers from implementer's side:

Lack of communication Language barrier

Cost of infrastructure, technology, etc. leading tohigh costs.

Products

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