Financial Inclusion

According to a World Bank survey in 2012, only 35% of adults in India

had access to a formal bank account and only 8% borrowed from
institutional and formal sources. As on 29 January, banks had opened
nearly 124 million accounts under the Prime Ministers financial
inclusion scheme, according to data on the PMJDY website. Of this,
nearly 74 million were in rural areas, and the rest in urban areas.
Banks are working overtime to utilise their quota of branch licences
before the end of this financial year. It is good to see some large banks
getting their act together to open fully-networked branches and ATMs
simultaneously across the country. Opening many branches and ATMs
on the same day requires meticulous strategy and well-coordinated
efforts, which by no means is a small achievement. This is a great
effort by the banks to promote financial inclusion, which is critical to
promote equitable economic growth, as a large part of the country is
underbanked.
The radical changes in the sector got initiated when banks started
taking their customers seriously. In this context, private sector banks
emerged in the scenario with a bouquet of customer services, private
banks made transactions extremely simple and with ATMs.
Liberalization encouraged the growth of private sector banks as well
as private banks came up because people were looking for an
alternative whereas public sector banks slowly moved into the
category of non-performing assets (NPAs). Unlike other public sector
units, the banking sector witnessed a series of forced nationalizations
during the Emergency in 1975. Hence, it was very easy for banks to
come out of their public sector shells, which had in fact been forced
upon them, and adapt to the liberal, customer-centric economic
environment, the banking sector has the advantage of having probably
the biggest customer base in the country. In other words, the size of

the demand is absolutely huge. To cater to this growing demand, the

country needs more than the number of banks currently in existence.
Hence, private banks could only fill up the gap marginally
Public sector banks also realized that in order to stay on course, they
had to concentrate on two things marketing and technology,
Therefore SBI opened up ATMs and branches where banks had not
reached earlier. With a rural population of 780 million people and
with limited or rather no access to financial services
Farmers are mostly in debt and several among them end up
committing suicide farmers should have easy and fair access to loans.
There is an urgent need to create awareness among farmers and others
staying in villages that they must invest their household income in
banks. Creating micro-enterprises and encouraging rural
entrepreneurship are things that the banking sector can facilitate.
Hence, banks must be encouraged to offer easy loans to young
entrepreneurs who want to start ventures in the rural areas. Especially,
those who want to create social enterprises must be encouraged
Corporate houses that want to invest in micro-enterprises as part of
their corporate social responsibility (CSR), can formalize such
investments through banks rather than do it through NGOs or other
agencies and consultants who might be thoroughly unreliable
Mr Modis call for creating world class banks, needs to be reiterated
that such banks must be able to make lives easier for poor farmers.
The banking revolution will not happen unless the public sector and
private banks work together as equal partners.

ANUPAMA KHICHI
PGDM-07
Section-B