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A PRESENTATION ON
STUDY OF PROGRESS & DEVELOPMENT
OF FINANCIAL INCLUSION BY BANKING
SECTORA DETAIL STUDY FOR
GANDHINAGAR REGION.
Presented By:
Sachin Patel (B-03): 117690592013.
Sumit Kumar (B-04): 117690592011.
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Finacial Inclusion
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.
The process of ensuring access to financial services and timely and adequate
credit where needed by vulnerable groups such as weaker sections andlow income groups at an affordable cost
- The Committee on Financial Inclusion
(Chairman: Dr. C. Rangarajan, 2008)
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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 bankinginfrastructure 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 encouragedgovernments 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 tothe 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 Nationalization of 14 major Commercial Banks.
1975 Setting up of Regional Rural Banks.
1990s Self Help Group
2005 RBI advised banks to open no frill accounts.
2006 RBI allowed BC/BF to act as agents of bank.
Sept. 2010 RBI allowed for - profit companies (excluding
NBFC) to act as Business Correspondent.
2008 Proposed Financial Inclusion with convergence toElectronic 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 andservices like;
Bank accounts
check in account Immediate Credit
Savings products
Remittances & Payment services
Insurance - Healthcare
MortgageFinancial 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 peopleSJPI (NICM) GANDHINAGAR
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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 WhyHaveWe 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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Financial Inclusion Models Adopted by theBanks
FinancialInclusion
Branch basedModel
(Brick andMortar)
BranchlessModel
(ICT Model)
ICT (Information & Communication Technology)
Model
Base Branch acts as a focal point for Business
Correspondents (BCs)
BCs are engaged by the Bank/technologyproviders
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
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.
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Web Camera for Photograph
Biometric scanner forFingerprints
Pad for Signature capturing
Battery Power back-up for undisruptedenrolment
Customer Enrollment Process
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FI Intermediaryserver
Vendor
Intermediary
server
Data conversion
Back Office 1
Back Office 3Back Office n
Back Office 2
Validation of
Data
External
FirewallExternal
Firewall
FINCBS Server at DC
FI Vendor
Cardpersonalization
centre
Card distributioncentre
ENROLLMENT
PROCESS
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Machine is used to
capture Transactions
HHT application
supports all products
Secured transactionWith BCA card &
Customer card
Transactions are
Recorded in customer
& BCA card
Banks security key
embedded in SAM-
smart chip component
of HHT
Transaction Process
Transaction at the village carried out by BCA with
Hand Held Terminal (HHT)
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THANK YOU !
SJPI (NICM) GANDHINAGAR