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Financial Inclusion : The Task

Krishan Jindal

Financial Inclusion Definition


Delivery of financial services at an affordable cost to vast sections of disadvantaged and low income groups

Financial Services includes


Savings Credit Insurance Remittance

facilities etc.

NSO Survey (2003) on indebtedness of farmers


27% farm household only have access to formal credit sources. Only 4% in NE Region have access to formal sources. Only 20% in NE Region borrow both from formal and informal sources (Tripura State 49%) More exclusion among marginal farmers and tribal families.

Demand Deposit Bank Accounts


41%

population do not have a Demand Deposit Bank account


unbanked in rural areas

61%

63%

unbanked in NE Region (62% in Tripura State)

Number of Loan Accounts


14%

of adult population has loan accounts in rural areas in NE Region

9.5% 7%

Why Financial Inclusion ?


High
High High

transactions costs of borrowers transactions costs of savers


transactions costs of banks

High

risk cost
products

Inappropriate

Who are excluded ?


Marginal Farmers Landless Farmers Oral Lessees Self Employed Urban slum developers Migrants Minorities Social excluded groups Senior citizens Women

Products

Measures for promoting financial inclusion


No frill account KYC norms simplified Introduction of GCC OTS for overdue loans upto Rs.25,000/KCC

Measures for promoting financial inclusion

Use of intermediaries
Linkage of SHGs with bank

29 lakh SHGs credit linked 42 million families covered Linkage of MFIs with banks
Business facilitators and correspondence model.

Measures for promoting financial inclusion

Others IT solution for financial inclusion Credit counseling and financial education Revamping of RRBs and cooperative banks

Funds for Financial Inclusion

Micro Finance Development and Equity Fund

Financial Inclusion Fund for Development and Promotional Interventions


Financial Inclusion Technology Fund to meet cost of technology

Financial Inclusion : Challenges


Holistic approach Viability Scalability Adoption of technology Use of intermediate agencies.

Thank you

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