Professional Documents
Culture Documents
Journal of Management
(IJM), ISSN 0976
6502(Print), ISSN 0976(IJM)
- 6510(Online),
INTERNATIONAL
JOURNAL
OF MANAGEMENT
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
IJM
IAEME
ABSTRACT
Most recently a national mission on financial inclusion called PRADHAN MANTRI JAN DHAN YOJANA was launched on the 28th of August 2014. Under the direct supervision of the
Indian Prime Minister and the Department of Financial Services, Ministry of Finance, the objective
of this mission is to enroll over 70 million households and open their bank accounts along with
providing them as a first step a RuPay debit card with a Rs. 1,00,000/- accident cover. In the due
course of time the plan is to also cover these account holders with insurance and pension products.
About 60% of the population in India does not have access to a bank account. The urban population
of financially excluded category mainly comprises of low income groups like urban labourers, slum
dwellers of the cities and socially excluded communities. Poverty as a result of absence of income or
irregular income, low education, lack of financial education, and location of financial service
providers beyond close proximity make it difficult for the service providers to provide financial
services which in turn becomes a primary reasons of financial exclusion. It is also believed that
financial exclusion also leads to social inclusion. This study is focused in the eastern region of India
and particularly capital region of Odisha, India The sample population of 137 for this study
comprises of household servants, domestic helps, migrant & local construction laborers, rickshaw /
cart pullers, taxi drivers and other contractual low income staff at different private institutions.
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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
Keywords: Financial Inclusion, Financial exclusion, Financial Literacy, Poverty, Urban Poor,
Pradhanmantri Jan Dhan Yojna.
1. INTRODUCTION
India's development strategy, particularly since the reforms of the early nineties has identified
the existing positive correlation between economic growth, financial deepening and financial
inclusion. However, in recent years, an accelerated exercise has been done through targeted
mediations by the government and the Reserve Bank of India. The eleventh five year plan (2007-12)
has focused on inclusive growth and has further emphasized the initiatives of financial inclusion as
the underprivileged and the poor have enormous potential to contribute in achieving the objective of
faster and higher inclusive growth. Accessing of financial services by the poor and vulnerable groups
is a precondition for employment, poverty reduction, economic growth, and social cohesion.
Through access to financial services, the weaker groups of the society will get empowered by getting
the opportunity to have a bank account which will enable them to save and make investments thus
breaking their pattern of financial hardships resulting due to low and irregular earnings; to avail the
benefit of securing their families' future with insurance; to avail the facility of credit from formal
sources of finance and attaining freedom from unscrupulous money lenders. All the above mentioned
scenarios will in the long run enable them to break the shackles of poverty.
The banking sector in India has recognized the importance of inclusive growth and as a result
has endured a few essential changes over the period of the last twenty years. Banking reforms which
began in the early nineties has facilitated the entry of new private and foreign players in the sector
which has increased the competition benefiting the consumers and changing the operational mindset
of the banks, the new generation private sector banks have introduced a wide range of services and
delivery channels using technological breakthroughs. With the increase of use of technology the
traditional brick-and-mortar infrastructure like staffed branches have transformed into a system
offering services to their customers such as ATM, credit / debit cards, internet banking, online
money transfer, etc, thus impacting both the delivery channels and access to financial services.
Financial inclusion is the new model of economic growth which plays a major role in
eradicating poverty. the concept of financial inclusion is primary to the process and efforts for
achieving inclusive growth and sustainable development of the country. It is a policy of involving a
wider section of population deposit mobilization and credit intermediation. The financial stability
and development council under the ministry of finance, government of India is committed to provide
financial literacy and financial inclusion and it has directed all the financial entities in the country
including the financial sector regulators, reserve bank of India, commercial banks and other financial
service providers to stay focused on the same cause. Empirical evidence has proved that countries
which are having a large excluded population from the services of the formal financial institutions
show a hiver rate of inequality and poverty. Thus, we can say that banking sector is a key player in
achieving inclusive growth as well as financial inclusion.
However there are still many issues and challenges in the road to achieving 100% financial
inclusion. The first challenge is the coverage of the remote areas which are completely unbanked, to
some extent this has been taken care of by the Business Correspondent / Business Facilitator model
but it involves a higher cost of transaction for the banks as well as the consumer making it
commercially unviable. The second challenge is to develop a user friendly and simple model of
business and service delivery which will enable the customers to access financial services at their
vicinity, there is also a need to develop a strong grievance handling system to address any glitches
and issues. The third challenge is the opening of new branches in the unbanked areas with minimum
infrastructure. The fourth challenge is to develop new customised products according to the
requirements of the poor customers apart from the basic banking services. The fifth and the most
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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
Financially and socially sound institutions having the capabilities of setting standards, selfregulations and performance monitoring systems governed under a sound and robust regulation
system.
Assuring the sustainability of the financial institutions in providing continuous access to poor
customers of the various financial services.
Availability of multiple financial service providers including private, public and non-profit
organizations in the sector making sustainable efforts to reduce the costs of the services.
A wide variety of financial services which enable the underprivileged customers to avail credit,
procure savings, receive and send remittances and other financial benefits which they are
eligible to receive form the government.
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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
attitude and the mindset of the serviced providers also feature prominently in the factors resulting in
urban financial exclusion.
4. PRADHAN MANTRI JAN DHAN YOJNA (PMJDY)
The objective of "Pradhan Mantri Jan-Dhan Yojana (PMJDY)" is ensuring access to various
financial services like availability of basic savings bank account, access to need based credit,
remittances facility, insurance and pension to the excluded sections i.e. weaker sections & low
income groups. PMJDY is a National Mission on Financial Inclusion encompassing an integrated
approach to bring about comprehensive financial inclusion of all the households in the country. The
plan envisages universal access to banking facilities with at least one basic bank account for every
household, a strong financial literacy drive, access to credit, insurance and pension facility. In
addition, the beneficiaries would get RuPay Debit card having inbuilt accident insurance cover of
Rs.100000/-. The plan also envisages channeling all Government benefits (from Centre / State /
Local Body) to the bank accounts of the beneficiaries and pushing the Direct Benefits Transfer
(DBT) scheme of the Union Government. The technological issues like poor connectivity, on-line
transactions will be addressed. Mobile transactions through telecom operators and their established
centres as Cash Out Points are also planned to be used for Financial Inclusion under the Scheme.
Also an effort is being made to reach out to the youth of this country to participate in this Mission
Mode Programme.
The main objectives pillars of this scheme include:
To achieve universal access to banking facilities.
Providing basic bank accounts with overdraft facility and RuPay Debit card to all households.
A robust financial literacy programme.
Creation of a credit guarantee fund to cover the defaults on the overdraft accounts.
To provide micro- insurance to all willing and eligible persons.
To provide for a way to implement unorganized sector pension schemes.
Pradhan Mantri Jan Dhan Yojana (Accounts Opened As on 31.01.2015)
No Of Accounts
S.No
(In Lacs)
Urban
451.47
Total
984.48
Rural
533
184.89
32.98
Private Banks
Total
32.26
750.15
20.12
504.57
No Of RuPay
Debit Cards
Balance In
Accounts
No Of
Accounts
With Zero
Balance
(In Lacs)
(In Lacs)
(In Lacs)
912.32
817463
655.41
217.87
149.68
159948.1
159.35
52.38
1254.7
45.93
1107.93
72551.5
1049963
29.97
844.73
To examine the level of financial access to banking services of the urban unorganized
workforce and the reasons for not accessing banking services.
To examine the number of respondents availing credit from non-institutional sources and the
respective reasons and the awareness on the available banking products and services.
34
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
To examine the awareness on the Pradhan Mantri Jan Dhan Yoyna Scheme and the
satisfaction level with regards to the available banking services and initiatives for the
underprivileged and financial literacy program initiatives of the banks.
35
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
Dangi N & Kumar P (2013) - An inclusive financial system helps in improving the standard
of living and financial condition of the poor and the disadvantaged population in a society. In this
research papers the authors have focused on the various initiatives and policy measures taken by the
Government of India and the Reserve Bank of India for implementing financial Inclusion, its current
status and future prospects. The authors conclude that despite various policy and technological
changes implemented in the road for achieving 100 % Financial Inclusion, a large section of the
population is still deprived from access to affordable and appropriate financial services. The focus
should be on creating financial literacy, conducting training and education programmes on Mobile
banking and e - banking. Moreover the banks should take financial inclusion as a business initiative
rather considering it as a social initiative.18
Sinha A (2013) - The author has commented on the occasion of the launch of the financial
inclusion programme of Cosmos bank that without overall financial inclusion , both financial
stability and inclusive growth cannot be reached. Banks need to look at financial inclusion as a
business model that can generate profits and not as an obligation which they need to fulfill. In order
to make financial inclusion as a successful business model, the banks have to focus on lowering the
costs of transactions by leveraging technology and offering more products of credit to the already
included population. The author finally concludes that the Urban Co-operative banks have the
potential to complete the objectives of financial inclusion.19
9. METHODOLOGY OF THE STUDY
For the purpose of this study we have shortlisted the city of Bhubaneswar which is the capital
city of the the state of Odisha. The sample size considered for this survey was 300 out of which 137
responses were received. The variables were finalized on the basis of a pilot study conducted on the
sample size of 30. The source of the data is primary and the data collection tool used is
questionnaire. The data analysis tool used is SPSS 17.0.
10. FINDINGS OF THE STUDY
The data indicates that both 19% of male and 7% female respondents are having access to
bank accounts. The total 13.87% of the respondents have access to bank accounts. The age group
distribution indicates that 86% of the respondents are not having access to bank accounts. The age
group of 30 to 40 has the highest 18.18% of access to bank accounts. The data reveals that the
respondents which belong to the income group of 1000 to 2000 per month do not have access to
bank accounts. 80% of the respondents which belong to the income group of > 4000 per month
indicate the highest access to bank account. Respondents having lower income have little or no
access to bank account.
Out of the total respondents, 97 % of the respondents having no education do not have access
to bank accounts. And, the respondents who are educated up to the intermediate level have access to
bank accounts. Higher the level of education the higher is the level of financial access. Out of the
number of respondents who do not have access to bank account, 48 respondents (81% males and
18% females) have said that they do not have enough savings to open a bank account, followed by
39 respondents (53% males and 46% females) have said that they do not have an idea to open a bank
account.
Out of the total respondents, 101 (63% males and 36% females) are borrowing from noninstitutional sources. The data indicates that 51 respondents (62% males and 37% females) are taking
credit from non- institutional sources because they can borrow relatively small sums from these
sources.30 respondents (56% males & 43% females) borrow from non- institutional sources because
it is locally available.
36
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
A total of 71 respondents (76% males & 24% females) are aware bout the ATM service, 38
respondents (68% males & 31% females) are aware about the mobile banking units and 38
respondents (89% males and 10% females) are aware about the zero balance accounts. Awareness of
services like E-banking, mobile banking & credit cards is very miniscule. We also find that 67%
male respondents and 79% female respondents perceive the financial education programme has a
neutral effect, 32%males and 21% females agree that the financial education awareness programmes
are helpful.
Amongst the male respondents 12% strongly agree, 53% agree and 35% are neutral to the
point that opening of zero balance accounts has increased the opening of bank account in their area.
Amongst the female respondents 50% remain neutral to the subject. Out of the total respondents who
do not have a bank account due to various reasons, an alarmingly large number are still not aware
about the Pradhan Matri Jan Dhan Yojna. Amongst males 78.94% and in females 95.08%
respondents are unaware of such a scheme and their benefits.
11. CONCLUSION
It can be observed from the analysis of the data that out of the sample size a very small
portion is having a bank account. Most of the respondents have indicated that they have very little
savings and they do not have an idea to open a bank account also. The banks have to take note of this
situation and try to create more awareness on zero balance account and if possible should launch a
campaign for opening bank accounts outside the banking premises so that maximum people get
benefited. Also there is a very high incidence of respondents depending on informal sources of credit
which needs to be addressed by the banks. Poor knowledge of the available banking services among
the respondents are also a concern area.
PMJDY is a major catalyst in achieving the goal of inclusive growth as the initial figures are
encouraging and as more and more people get in the ambit of formal institutions they will be in a
position to contribute more positively in the economic development of the country. When people
save money ultimately they make for themselves the availability of surplus which can be utilized by
the banks to channelize it to the needy sectors. Also by opening a bank account people can earn risk
free returns and can also enjoy the benefits of other linked financial services which they were not
able to access.
Annexure
1. Respondents having access to bank Account
Table 1: Gender distribution of access to Bank Account
Bank A/c
No
yes
Count
57
14
Male
% within Gender
80.28%
19.72%
Gender
Count
61
5
Female
% within Gender
92.42%
7.58%
Count
118
19
Total
% within Gender
86.13%
13.87%
Source: Compiled from primary data
37
Total
71
100.00%
66
100.00%
137
100.00%
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
Table 2: Age Group distribution of access to bank accounts
Bank A/c
No
yes
Count
39
4
20 to 30
% within Age Group
90.70%
9.30%
>30 to 40
Age Group
(In Yrs)
>40 to 50
50 and Above
Total
Count
Total
43
100.00%
36
44
81.82%
27
84.38%
16
18.18%
5
15.63%
2
100.00%
32
100.00%
18
88.89%
11.11%
100.00%
Count
% within Age Group
118
86.13%
19
13.87%
137
100.00%
Total
76
100.00%
36
100.00%
10
100.00%
15
100.00%
137
100.00%
Education
38
Total
28
100.00%
14
100.00%
7
100.00%
88
100.00%
137
100.00%
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
Count
Male
21
39
% within Gender
46.15%
53.85%
100.00%
13
16
18.75%
81.25%
100.00%
29
19
48
60.42%
39.58%
100.00%
11
15
73.33%
26.67%
100.00%
61
57
118
51.69%
48.31%
100.00%
Count
Not Required
Reasons
Total
Female
18
% within Gender
Count
No Savings
% within Gender
Count
Other Reasons
% within Gender
Count
Total
% within Gender
Count
% within Gender
Count
% within Gender
Total
Female
Male
19
32
51
37.25%
62.75%
100.00%
11
15
26.67%
73.33%
100.00%
13
17
30
43.33%
56.67%
100.00%
20.00%
80.00%
100.00%
37
64
101
36.63%
63.37%
100.00%
Reasons
Count
Locally Available
% within Gender
Count
Repayment Flexibility
% within Gender
Count
Total
% within Gender
39
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
Awareness
Total
20
100.00%
38
100.00%
38
100.00%
5
100.00%
71
100.00%
1
100.00%
3
100.00%
176
100.00%
Total
4
100.00%
34
100.00%
38
100.00%
Count
% within Gender
Count
% within Gender
Count
% within Gender
Helpful
23
32.39%
14
21.21%
37
27.01%
Neutral
48
67.61%
52
78.79%
100
72.99%
Total
71
100.00%
66
100.00%
137
100.00%
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 2, February (2015), pp. 31-42 IAEME
Total
57
100.00%
61
100.00%
118
100.00%
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