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Financial Inclusion -Definition
Delivery of financial services at an
affordable cost to vast sections of
disadvantaged and low incomegroups
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Who are excluded ?
Marginal Farmers
Landless Farmers
Oral Lessees Self Employed
Urban slum developers
Migrants
Minorities
Social excluded groups
Senior citizens
Women
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Financial Services includes
Savings
Credit
Insurance
Remittance facilities etc.
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Financial Needs
access to safe, easy and affordable credit and other
financial services
for
economic growth, reducing income disparities and
reducing poverty
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5A few statistics
51.40%: Farmer households financially excluded.
73%: Farmer households having no access to
formal sources of credit.
64%:Share of Central, Eastern and North Eastern
regionsin the total financially excluded farmer
households in the country.
Source: NSSOSurvey 59th Round
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6TARGET
By 2012:Cover at least 50% (55.77 million) of the
excluded.
By 2015:Includethe remaining.
250 new households per branch per annumto be
covered by all semi-urban and rural branches of
banks and RRBs.
Source: Reportof the Committee on Financial
Inclusion in India (Chairman: DrC. Rangarajan);
January 2008
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4Benefits of GreaterFI
For the common manescape from the clutches of money
lenders; sending / receiving remittances; no need to hold
savings in cash etc.
For th
e banksach
ieving access to a large untapped poolof customers.
For the Govt.-ensuring flow of aid / grants to the targeted
beneficiary.
For the RBI -spread of banking culture and extension of
the reach of formal financial system.
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Financial Inclusion - Challenges
Regulatory aspects
3 AML, KYC, etc. norms to have inclusive parameters for rural banking
Under utilisation of physical & banking infrastructure
3 High delivery costs, legacy systems, inflexible procedures
Information asymmetry
3No credit history for rural customers, willful defaulting, unclear
Government policies
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Technology Solutions
Smart Card, hand held terminal, central
CPU
Automated Teller Machine (ATM)
Point of sale
Mobile Phone Short Message Service (SMS)
Public Call Office (PCO) connectivity
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Enabling Environment for Financial Inclusion
ENABLING INFRASTRUCTURE
FinancialInclusion
BusinessCorrespondentsBanks
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Leveraging Technology
Common Platform Sharing Resources
Financial Inclusion initiative by IDRBT
Multi-application smart card system
Store of electronic cash, data repository for essential information relating to the
card holder
Biometric identification, doubling up as an entitlement identifier/social security
card
For government payments like pension, subsidies, utility payments healthcare,
crop insurance, life insurance
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Role ofTechnology
Key Challenges
Dispersed client based with poor access
Limited electricity supply and access
Limited telecom/ broadband connectivity
ATMs may not be viable and maintainable inerratic power situations
Cash collection points customers like to
deposit at a fixed location
Banking service delivery of information ,statements, etc
Access to account in nearby cities, townsvillages
Financial education & awareness
Developing trust in rural India for financialsystems
Mitigation through technology
Mobile branches covering select geographies
Self generated power - diesel, solar, battery
UID as common identification mechanism
Online/Offline and Pseudo online datacapture and updation systems. LeverageMobile networks
Cash deposit & dispensing partners e.g. postoffices which can deliver cash like moneyorders
Developing rural-banking infrastructure
Information dissemination through partners,Internet kiosk enabled , toll free call centrein local language
ATM cards for such customers
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Triggers for Financial Inclusion
IT as enabler Trigger 1:Growing affluence leading to ACCEPTABILITY
Trigger 2:Building the rural-banking INFRASTRUCTURE
Trigger 3:INNOVATION IN TECHNOLOGY leading to enhanced
penetration, user-friendly approach and security
Trigger 4:Convergence of communication systems are ensuring
scalability of delivery channels leading to greater ACCESSIBILITY
Financial Inclusion initiative by IDRBT
Multi-application smart card system
Store of electronic cash, data repository for essential
information relating to the card holder
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Achieving Synergies - Integration
Technology Providers Service Providers
Chip Manufacturers
Card Manufacturers
Device
Manufacturers
Software companies
Application
Developers
Systems Integrators
Banking Channels Smart Phone
ATM
Point of SaleTermnial
Personal Computer
Telephone
Mobile phone
Set-top Boxes
Kiosks
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Supportive Financial Services
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ProgrammedMobile as a Hand Held Device
ProgrammedMobile as a Hand Held Device
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Simputers/PDAs/Laptops/PCs can be effectively used
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COMPOSITE HAND HELD DEVICE
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Deployment channel -1Card Many Applications
The smart cards can be used for various purpose like Financial inclusion, Merchant
Establishments, Government initiatives like Pension, NREGS disbursement, ATMs, ShoppingMalls etc.
ATMs Financial Inclusion
Merchant Establishments
NREGP Disbursement
Pension Disbursement
Shopping Malls
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Pros and Cons of some Technologies- Source RBI
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Pros and Cons of some Technologies- Source RBI
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Thank you