A PRESENTATION ON

STUDY OF PROGRESS & DEVELOPMENT

OF FINANCIAL INCLUSION BY BANKING SECTOR A DETAIL STUDY FOR GANDHINAGAR REGION.

Presented By:

Sachin Patel (B-03): 117690592013. Sumit Kumar (B-04): 117690592011.

SJPI (NICM) GANDHINAGAR

Finacial Inclusion
The process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost
- The Committee on Financial Inclusion (Chairman: Dr. C. Rangarajan, 2008)

Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.

Electronic Benefit Transfer (EBT)

A system that allows state governments to provide and track benefits to authorized recipients via a plastic debit card. Common benefits provided via EBT are Food Stamps and Cash benefits.
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LITERATURE REVIEW
The future lies with those companies who see the poor as their customers. -C.K.Prahalad

Electronic Benefit Transfer (EBT) for servicing low value accounts and extending banking infrastructure to underserved low income areas has been implemented in the states of Andhra Pradesh, Haryana, Karnataka, Orissa, Chhattisgarh, Himachal Pradesh, Uttarakhand, Bihar, Punjab, etc. on pilot basis in select districts under the "One District One Bank" Model. Difficulties have been expressed by stake holders in scaling the model. The Reserve Bank, therefore, as part of its Financial Inclusion initiative encouraged governments to disburse social security payments through the banking channel leveraging Electronic Benefit Transfers for financial intermediation. EBT is one of the products offered under Financial Inclusion, which facilitates payments to reach the intended beneficiaries through bank accounts, as now paying to NREGA &MNREGA workers. This relieves State Government functionaries of cost and time involved. In administering the high volume small value payments. Provision of door step banking services in remote areas entails a cost on the banks. The payment of commission by the State Governments for EBT transactions makes the model economically viable and also helps banks to extend their penetration to remote villages. It also provides banks with a business opportunity of linking credit products to the payments. - August 12, 2011, RBI/201112/153, www.rbi.org.in
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CONT

Currently, local banks have a long way to go in bringing the unbanked areas within the banking fold. As competitive intensity hoot up and ripples from international competition touch the Indian shores in search of virgin markets, banks will have to revisit their cost models. Some estimates indicate that the lack of financial inclusion from the banking system reduces potential

GDP by nearly 1.5 per cent.

Financial inclusion is one of the viable routes through which banks can maintain their development and also survive the current financial crisis. But in order to do that there should be extensive efforts both from the governments side as well as the banks themselves. According to the Boston Consulting Groups 2007 report, The Next Billion Banking Customers the most effective marketing campaigns will have to include equal parts of education and sales pitch. To include their next customers, bank will have to access them, and be accessible. (Business world Issue (18-24 Nov 2008)

In recent times financial inclusion has appeared as a major global agendum. At aggregate level,

the common measure of financial inclusion are the number of bank account per adult,
geographic branch penetration, demographic branch penetration, geographic ATM penetration, demographic ATM penetration, demographic deposit penetration, demographic credit penetration, deposit income ratio, credit income ratio and cash deposit ratio (Beck, et al. 2006, Peachy, et al., 2006 Conrad, et al., 2008 cited in Chattopadhyay (2011).
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Objective of the Study

To study the relative importance of Financial Inclusion.

Financial Inclusion a new scope for market penetration by

Banks.

To understand the operation of banking towards Financial Inclusion and its Progress.

To check the awareness about Financial Inclusion among

urban and rural people.

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Significance of the Study

This study will help to understand;

The Banking operation towards Financial Inclusion. To study and analyse customers need from banking services. Extensive study of EBT with convergence to Financial Inclusion The awareness for the perception towards banking by society at large, especially financially excluded.

The overall scenario of market need by banks and its prospective

customer.

The discovery of the best possible way to cover financially excluded people and maximise customers.
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Research Methodology
Objective:
To study the customer awareness with respect to banking services. To check whether the awareness level of customers differs on account of their education background.

Data Collection Method Primary Data. Data Collection Tool Questionnaire.

Sampling Technique Convenience Sampling.

Sampling Unit Account holders & Non A/C holders. Sample Size 390 respondents.

HYPOTHESES Ho = Gender and owning an account are independent. Ho = Income and owning an account are independent.
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Important Milestones on Road to Financial Inclusion in India

1969 1975 1990s 2005 2006 Sept. 2010

Nationalization of 14 major Commercial Banks. Setting up of Regional Rural Banks. Self Help Group RBI advised banks to open no frill accounts. RBI allowed BC/BF to act as agents of bank. RBI allowed for - profit companies (excluding NBFC) to act as Business Correspondent.

2008

Proposed Financial Inclusion with convergence to

Electronic Benefit Transfer (EBT.)

2011

National Payment Corporation of India (NPCI) launched Interbank Mobile Payment System.

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Financial Inclusion - Scope

Financial Inclusion should include access to financial products and services like; Bank accounts check in account Immediate Credit Savings products Remittances & Payment services Insurance - Healthcare Mortgage Financial advisory services Entrepreneurial credit Underprivileged section in rural and urban areas like, Farmers, small vendors, etc. Agricultural and Industrial Labourers People engaged in un-organised sectors Unemployed Women Children Old people Physically challenged people
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Extent of Financial Exclusion

Coverage of (Estimates based on various studies and Market Surveys):
Check in accounts - 40% Life Insurance - 10.0% Non-Life Insurance - 0.6% Credit Card - 2% ATM + Debit Card - 13%

1.

Geographical coverage
5.2% villages are having a bank branch

2.

Farmers out of coverage- Out of 119 million farmers, small and marginal farmers are 97.7 million (82.1 %)

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Reasons of financial Exclusion Why Have We Failed?

Absence of Technology

Absence of reach and coverage

Delivery Mechanism Not having a Business model Rich have no compassion for poor Focus on Inclusive Growth Banking Technology has arrived Realization that Poor is bankable

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SJPI (NICM) GANDHINAGAR

Financial Inclusion Models Adopted by the Banks

Financial Inclusion
Branch based Model (Brick and Mortar) Branchless Model (ICT Model)

Brick & Mortar Model

Opening -No frill accounts (Zero balance accounts) with relaxed KYC norms - Launched ATM card; withdrawal limit : upto Rs. 5,000 per day. ICT (Information & Communication Technology) Model Base Branch acts as a focal point for Business Correspondents (BCs) BCs are engaged by the Bank/technology providers BC Agents (BCAs) contact the customers for enrollment and issue biometric smart cards. BCAs use laptops and POS in Off Line mode. Relaxed KYC norms SJPI (NICM) GANDHINAGAR -

Customer Enrollment Process

Web Camera for Photograph Biometric scanner for Fingerprints

Pad for Signature capturing

Battery Power backup for undisrupted enrolment

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FI Vendor

Data conversion
Back Office n

ENROLLMENT PROCESS
Back Office 3

Validation of Data
External Firewall

FINCBS Server at DC

Vendor Intermediary server

External Firewall

FI Intermediary server

Back Office 1 Back Office 2

Card personalization centre

Card distribution centre

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Transaction Process
Transaction at the village carried out by BCA with Machine is used to Hand Held Terminal (HHT) capture Transactions HHT application supports all products Secured transaction With BCA card & Customer card Transactions are Recorded in customer & BCA card Banks security key embedded in SAMsmart chip component of HHT
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THANK YOU !

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