...are acquiring companies all over the world, hence benefitting from expansion. This has directly affected the lives of many citizens in our country. For many, there has been a dramatic increase in the disposable income. The savings, consumption and investment patterns have changed in the past few years. This has meant that there has been an increase in demand for many financial services from different financial firms. The market has responded to this soaring demand with making attractive offers and services for the customers at affordable rates. Since the LPG reforms of 1991, there have been progressive reforms in the financial sector allowing for better and easier facilities and options to the consumer. An increasing financially aware middle class have realized the importance of financial services. Banks have streamlined and rationalized themselves to meet with the changing demands of the people. However, not all the reforms in the financial services sector have still been able to bring in the other half of India’s population who are un-banked. There are many reasons that are obvious for this kind of financial exclusion. Most of the un-banked or financially excluded population of India lives in rural areas; nevertheless, there is also a significant amount of the urban population of India who faces the...
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...Financial inclusion is the availability of banking services at an affordable cost to disadvantaged and low-income groups. In India the basic concept of financial inclusion is having a saving or current account with any bank. In reality it includes loans, insurance services and much more. The first-ever Index of Financial Inclusion to find out the extent of reach of banking services among 100 countries, India has been ranked 50. Only 34% of Indian individuals have access to or receive banking services. In order to increase this number the Reserve Bank of India had the Government of India take innovative steps. One of the reasons for opening new branches of Regional Rural Banks was to make sure that the banking service is accessible to the poor. With the directive from RBI, our banks are now offering “No Frill” Accounts to low income groups. These accounts either have a low minimum or nil balance with some restriction in transactions. The individual bank has the authority to decide whether the account should have zero or minimum balance. With the combined effort of financial institutions, six million new ‘No Frill’ accounts were opened in the period between March 2006-2007. Banks are now considering FI as a business opportunity in an overall environment that facilitates growth. The main reason for financial exclusion is the lack of a regular or substantial income. In most of the cases people with low income do not qualify for a loan. The proximity of the financial service is another...
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...Financial inclusion is the availability of banking services at an affordable cost to disadvantaged and low-income groups. In India the basic concept of financial inclusion is having a saving or current account with any bank. In reality it includes loans, insurance services and much more. The first-ever Index of Financial Inclusion to find out the extent of reach of banking services among 100 countries, India has been ranked 50. Only 34% of Indian individuals have access to or receive banking services. In order to increase this number the Reserve Bank of India had the Government of India take innovative steps. One of the reasons for opening new branches of Regional Rural Banks was to make sure that the banking service is accessible to the poor. With the directive from RBI, our banks are now offering “No Frill” Accounts to low income groups. These accounts either have a low minimum or nil balance with some restriction in transactions. The individual bank has the authority to decide whether the account should have zero or minimum balance. With the combined effort of financial institutions, six million new ‘No Frill’ accounts were opened in the period between March 2006-2007. Banks are now considering FI as a business opportunity in an overall environment that facilitates growth. The main reason for financial exclusion is the lack of a regular or substantial income. In most of the cases people with low income do not qualify for a loan. The proximity of the financial service...
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...An Outline of Escalation of Financial Inclusion in India Dr.Vani .N. Laturkar Miss Jaya .D. Muley Research Guide Research Student School of Management Sciences Swami Ramanand Teerth Marathwada University, Nanded. ------------------------------------------------------------------------------...
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...Overview of Financial Inclusion in India C. Paramasivan Assistant Professor, PG & Research Department of Commerce Periyar EVR College, Trichy, Tamil Nadu V. Ganeshkumar Research Scholar, PG & Research Department of Commerce Periyar EVR College, Trichy, Tamil Nadu Abstract Inclusive growth is possible only through proper mechanism which channelizes all the resources from top to bottom. Financial inclusion is an innovative concept which makes alternative techniques to promote the banking habits of the rural people because, India is considered as largest rural people consist in the world. Financial inclusion is aimed at providing banking and financial services to all people in a fair, transparent and equitable manner at affordable cost. Households with low income often lack access to bank account and have to spend time and money for multiple visits to avail the banking services, be it opening a savings bank account or availing a loan, these families find it more difficult to save and to plan financially for the future. This paper is an attempt to discuss the overview of financial inclusion in India. Key Words: Financial Inclusion, Reserve Bank, Inclusive Growth, Financial services. Introduction Financial inclusion is the recent concept which helps achieve the sustainable development of the country, through available financial services to the unreached people with the help of financial institutions. Financial inclusion can be defined as easy access to formal financial services...
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...Financial Inclusion ntroduction Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. It is argued that as banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of public policy. The term "financial inclusion" has gained importance since the early 2000s, and is a result of findings about financial exclusion and its direct correlation to poverty. Financial inclusion is now a common objective for many central banks among the developing nations. Financial Inclusion Includes Accessing Of Financial Products And Services Like, Savings Credit Insurance Remittance facilities etc Savings facility Credit and debit cards access Electronic fund transfer All kinds of commercial loans Overdraft facility Cheque facility Payment and remittance services Low cost financial services Insurance (Medical insurance) Financial advice Pension for old age and investment schemes Access to financial markets Micro credit during emergency Entrepreneurial credit The Reserve Bank of India has set up a commission (Khan Commission) in 2004 to look into financial inclusion. In India, Financial Inclusion first featured in 2005. India, being a mostly agrarian economy...
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...College of Agricultural Banking & Institute for Financial Management and Research Centre for Micro Finance December 2008 Cost –Benefit and Usage Behaviour Analysis of No Frills Accounts: A Study Report on Cuddalore District S. Thyagarajan Jayaram Venkatesan S. Thyagarajan is a Member of Faculty at the College of Agricultural Banking, Reserve Bank of India, Pune (http://cab.org.in). Jayaram Venkatesan is a Research Consultant at the Centre for Microfinance (http://ifmr.ac.in/cmf/). The views expressed in this paper are entirely those of the authors and do not in anyway reflect the views of the institutions with which they are associated. S. Thyagarajan & Jayaram Venkatesan: Cost –Benefit & Usage Behaviour Analysis of No Frills Accounts Contents Acknowledgements............................................................................................................. 3 Executive Summary ............................................................................................................ 4 Introduction......................................................................................................................... 5 1. Literature Review............................................................................................................ 7 1.1 Notable Indian Initiatives.......................................................................................... 8 2: Financial Inclusion Project .....................................................
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...Introduction : 'Financial Inclusion';Unorganised Sector; are the buzz word today. What is 'Financial Inclusion' ? "Financial inclusion is delivery of banking services at an affordable cost ('no frills' accounts,) to the vast sections of disadvantaged and low income group. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. As banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of the public policy." Areas of concern by banks The banking industry has shown tremendous growth in volume and complexity during the last few decades. Despite making significant improvements in all the areas relating to financial viability, profitability and competitiveness, there are concerns that banks have not been able to reach and bring vast segment of the population, especially the underprivileged sections of the society, into the fold of basic banking services. Internationally also efforts are being made to study the causes of financial exclusion and design strategies to ensure financial inclusion of the poor and disadvantaged. The reasons may vary from country to country and so also the strategy but all out efforts are needed as financial inclusion can truly lift the standard of life of the poor and the disadvantaged. RBI's Policy on 'Financial Inclusion' : When bankers do not give the desired attention...
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...Across the developed world, access to financial services is largely ubiquitous; there is an abundance of cash and credit on demand, from multiple channels, any locations, and 24 hours a day. But, this story is very different in the developing countries which house nearly 90 per cent of the world’s unbanked populations. The situation is worse in least developing countries (LDCs), where more than 90 per cent of the population is excluded from access to the formal financial system. The limited access to finance severely reduces the choices citizens have in, determining the way they work and live. Microfinance has emerged as a potent tool to address this issue, and its ability to do so has grown in recent years with the adoption of new technologies and financial innovations, the increasing sophistication of microfinance institutions, and policy reforms. Finding solutions to encourage greater financial inclusion has not typically been a core activity of central banks or other financial regulators. Also, when a majority of the population is excluded from access to financial services, it can significantly and adversely affect the efficient allocation of financial and physical resources, economic growth, income and non-income inequalities, and the distribution of benefits in an economy. This has opened up space for an increased role of international standard-setting and advisory bodies to promote improved financial access across the globe, which has the potential to improve efficiency...
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...Why Financial Inclusion “Swabhimaan”- the Financial Inclusion Campaign To increase the penetration and FI, the “Swabhimaan” campaign was launched in pursuance of Budget Announcement (2010-11). Government advised banks to open branches in all habitations of 5,000 or more population in under-banked districts and 10,000 or more population in other districts under this campaign. In two years time ending March 2012, Banking facilities were provided to 74,194 such villages. Further, 62,468 Banking Correspondent Agents (BCAs) were appointed and about 3.16 FI accounts had been opened by end of March, 2012. To build on the momentum and success achieved, the “Swabhimaan” campaign was extended as per Budget Announcement (2012-13) to habitations with population of more than 1000 in North Eastern and hilly States and to other habitations which have crossed population of 2,000 as per Census 2011. About 45,000 such habitations have been identified to be covered under the extended “Swabhimaan” campaign. Bank branches in 1237 such villages have been opened in the current year. The objective of Financial Inclusion(FI) is to extend financial services to the large hitherto unserved population of the country to unlock its growth potential. In addition, it strives to achieve more inclusive growth by making financing available to the poor in particular. FI enables Banks to channelize the savings of the unserved population of the country and offers new business avenues for lending...
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...https://www.nabard.org/english/about_Highlights.aspx Financial Inclusion During the year 2011-12, the disbursements under Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF) were 18.49 crore and 128.05 crore reflecting a growth (over previous year) of 100.8% and 137.1% respectively. With this, the cumulative disbursement since inception touched a level of 36.05 crore under FIF and 183.82 crore under FITF. Support was extended for setting up of Financial Literacy and Credit Counseling Centres (FLCCs) to Lead Banks (111 FLCCs), capacity building programmes by commercial banks and (Regional Rural Banks)RRBs and Financial Literacy awareness camps by RRBs, under FIF. Under FITF, support was extended for implementation of Core Banking Solution (CBS) by weak RRBs (26 out of 28) and Information & Communication Technology (ICT) solution by RRBs (52 out of 82). Financial Inclusion During the year 2012-13, the disbursements under Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF) were 33.31 crore and 17.14 crore respectively. With this, the cumulative disbursement since inception touched a level of 69.77 crore under FIF and 201.30 crore under FITF. Support was extended for setting up of Financial Literacy and Credit Counseling Centers (FLCCs) to Lead Banks in 256 excluded districts and 10 disturbed districts, capacity building programmes by commercial banks and RRBs and Financial Literacy awareness camps by RRBs, under FIF. Under...
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...FINAL ESSAY Financial inclusion is the availability of banking services at an affordable cost to disadvantaged and low-income groups. In India the basic concept of financial inclusion is having a saving or current account with any bank. In reality it includes loans, insurance services and much more. Financial inclusion mainly focuses on the poor who do not have formal financial institutional support and getting them out of the clutches of local money lenders. As a first step towards this, some of our banks have now come forward with general purpose credit cards and artisan credit cards which offer collateral-free small loans. The RBI has simplified the KYC (Know your customer) norms for opening a ‘No frill’ account. This will help the low income individual to open a ‘No Frill’ account without identity proof and address proof. The Indian Government has a long history of working to expand financial inclusion. Nationalization of the major private sector banks in 1969 was a big step. In 1975 GOI established RRBs with the same aim. It encouraged branch expansion of bank branches especially in rural areas. The RBI guidelines to banks shows that 40% of their net bank credit should be lent to the priority sector. This mainly consists of agriculture, small scale industries, retail trade etc. More than 80% of our population depends directly or indirectly on agriculture. So 18% of net bank credit should go to agriculture lending. Recent simplification of KYC norms are another milestone...
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...SPECIAL ARTICLE Challenges to Financial Inclusion in India The Case of Andhra Pradesh S Ananth, T Sabri Öncü Focusing on the institutional challenges to financial inclusion in Andhra Pradesh, this paper argues that it is the inability of formal financial institutions to meet the specific needs of the poor that has enabled informal service providers to fill the vacuum. Without a paradigm shift, especially on the part of banks, financial inclusion is bound to fall short of expectations. It proposes that the banking sector should look at efforts to expand inclusion not as a capital cost or as a charitable expense, but as a long-term investment in the future. The soundness of such an investment is borne out in the success of individual business correspondents in some districts of the state. 1 Introduction The views expressed in this paper are those of the authors and do not necessarily reflect views of the Centre for Advanced Financial Research and Learning. S Ananth and T Sabri Öncü (Sabrioncu.cafral@rbi.org.in) are with the Centre for Advanced Financial Research and Learning, Mumbai. Economic & Political Weekly EPW inancial inclusion has become central to Indian policymaking over the past few years and various attempts have been made to expand its scope. Despite these attempts, the challenges to financial inclusion remain formidable. These attempts and challenges have to be not only examined in the context of an increasingly globalised economy, of expanding markets...
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...ntroduction Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. It is argued that as banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of public policy. The term "financial inclusion" has gained importance since the early 2000s, and is a result of findings about financial exclusion and its direct correlation to poverty. Financial inclusion is now a common objective for many central banks among the developing nations. Financial Inclusion Includes Accessing Of Financial Products And Services Like, Savings Credit Insurance Remittance facilities etc Savings facility Credit and debit cards access Electronic fund transfer All kinds of commercial loans Overdraft facility Cheque facility Payment and remittance services Low cost financial services Insurance (Medical insurance) Financial advice Pension for old age and investment schemes Access to financial markets Micro credit during emergency Entrepreneurial credit The Reserve Bank of India has set up a commission (Khan Commission) in 2004 to look into financial inclusion. In India, Financial Inclusion first featured in 2005. India, being a mostly agrarian economy, hardly has schemes...
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...Financial Exclusion: India is one of the fastest growing economies in the world, but it still hosts one-third population of the world poors. Studies say, the banking system in India has shown a huge growth however is still unable to reach the remote corners of the nation especially the underprivileged section of the society. According to the data in 2009, 51.4% of the farmer households are financially excluded from both the formal and informal sources, and accounts for 45.9 million out of 89.3 million of this population. 1. Almost three fourth (73%) of all farmer households do not have the access to the formal sources of credit. This makes it more difficult to invest in updating technologies and opportunities. 2. India stands at very low position in the overall ranking of financial inclusion in the world list of countries. Also, it stands at 2nd position followed by china, when considering financially excluded households in the world. 3. Across regions in India, financial exclusion is most acute in central, north-eastern, and eastern regions. They account for almost two-third (64%) of all financially excluded farmer households in the nation. Overall indebtedness to formal sources of finance only acocunts for 19.66% for these regions. According to the census 2011, only 58.7% of the houeholds population are availing the banking services. However it has increased drastically in the rural regions when compared to census 2001. Educational and Social exclusion: ...
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