Financial Inclusions

Chapter Outlines
Defining financial inclusions
Nepalese Case

Defining Financial Inclusion
Financial Inclusion is the delivery of
banking services at affordable costs to
vast sections of disadvantaged and
low income groups including
households, enterprises, SMEs,
traders.

Contd.
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.
Major Three Aspects Of Financial Inclusion
Make people to:
Access financial markets
Access credit markets
Learn financial matters (financial education )

Model of Financial Inclusion
Financial
Inclusion
Savings
Insurance
Affordable
Credits/Fin
ancial
Advise
Bank
Accounts/
Payments
and
Remittanc
e
Financial products and services for
increasing financial inclusion
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

Financially Excluded People
Marginal farmers
Landless labourers
Self employed and unorganised sector
enterprises
Migrants
Ethnic minorities and socially excluded groups
Senior citizens
Women
People living in remote area of the country like
Humla, Jumla etc.
Factors affecting access to financial
services
Legal identity
Limited literacy
Level of income
Terms and conditions
Complicated procedures
Psychological and cultural barriers
Place of living
Lack of awareness

Benefits Of Inclusive Financial Growth
Growth with equity
Get rid of poverty
Financial Transactions Made Easy
Safe savings along with financial services
Increase in National Income
Becoming Global Player

Relationship between Financial
Inclusion and Development Indicators
Economic growth follows financial inclusion. In
order to achieve the objective of growth with
equity, it is imperative that infrastructure is
developed with financial inclusion.
Savings and credit accounts - indicators of
financial inclusion.
Per capita income - indicator of economic
development
Electricity consumption and road length -
indicators of infrastructure development.

Status of Access to Finance in Nepal in
2009 and 2010
12
Fact Sheet of FIs of Nepal
Financial Institutions as of May 2011
Commercial Banks 31
Development bank 89
Finance Companies 88
Micro Credit Development-
Banks
20
FI-NGOs
43
Financial cooperatives
8,000
Small farmers cooperatives limited
(SFCLs).
230
Savings and credit groups (SCGs)
Concentration of
Commercial Banks
------------------------
Kathmandu Valley- 35.7%
Hilly Area- 25.3%
Terai- 39%
Region wise Gap on Financial Inclusion in Nepal
Nepalese Scenario
Around 30% of the Nepalese people live below poverty
line.
Only 29 % of the Nepalese population has access to
Banking services.
he rest 71 % are still deprived of bare minimum banking
services for which they are totally dependent on informal
banking sources like private money lenders.
Trailing behind all South Asian countries except
Afghanistan on the financial inclusion front, Nepal
provides 4.19 bank branches for every 100,000 adults.
Some Efforts and Achievements
CBs, DBs and FCs are involved on indirectly on
promoting financial inclusion to meet their
deprived sector lending requirements.
Monetary policy 2010/11 requires CBs, DBs and
FCs to invest at least 3%, 2.5% and 2% of their
total loan portfolio on deprived sector either
directly or through Microfinance Institutions
(MFIs).
Current supply of finance for the poor and dis-
advantaged groups is estimated to be around Rs.
20,000 Rs. 22,000 millions.