Inclusive Banking

The Contents To Be Covered

What is Inclusive Growth?

Challenges to inclusive growth

aim

The Crux of inclusive growth

Introduction to inclusive banking

It is the delivery of financial services, at affordable costs, to sections of disadvantaged and low income segments of society. The banking sector is the most important financial intermediary for mobilization of savings leading to investments that drives growth it also plays a decisive role in attaining the economic objectives of any nation. It the availability of banking and payment services to the entire population without discrimination that will lead to the entire nation becoming prosperous.

Introduction to inclusive banking

 About 2.5 billion adults, just over half the worlds adult population, lack bank accounts. India Ranks #50 with regards to Banking Penetration Based on financial literacy, India was 23rd out of the 28 markets surveyed. India also ranked near the bottom when it came to talking to children about managing money.

Mobile Banking Is One of the Most Effective Ways To Ensure Financial Inclusion, but depends on development of good infrastructure

Economic Reforms of the Banking Sector in India

Economic Reforms of the Banking Sector in India

Banking Diversification: India's banking laws now allows the RBI to start distributing licences to set up new banks.

Fixing prudential Norms : In order to induce professionalism in its operations, the RBI fixed prudential norms for commercial banks.
Reduced CRR and SLR: More funds with the commercial banks solving the liquidity problem.

Economic Reforms of the Banking Sector in India

 Simplifies the procedure for opening bank accounts Banks permitted to take any evidence as to the identity and address of the customer

 RBI permits banks to engage business facilitators (BFs) and BCs as intermediaries for providing financial and banking services Enables banks to provide doorstep delivery of services

Customer Enrollment Process

Web Camera for Photograph

Biometric scanner for Fingerprints Pad for Signature capturing Battery Power back-up for undisrupted enrolment

 Transfer of social benefits done electronically to the bank account of the beneficiary Reduces dependence on cash and lowers transaction costs

 Banks encouraged to introduce it at their rural and semi-urban branches Credit limit of up to Rs. 25000 Provide hassle-free credit to banks customers No insistence on security, purpose or end use of the credit

 Mandatory to open 25% of all new branches in rural areas Banks permitted to freely open branches in tier III to tier VI centres with a population of less than 50,000 under general permission, subject to reporting In the north-eastern states and Sikkim, Scheduled banks permitted to open branches without RBI permission, subject to reporting

 The Promotion of A No Frills Bank Account Norms were relaxed (A/c > 50,000) Permission for intermediaries like NGOs, SHGs to aid in the financial inclusion process. States reporting 100% inclusion

 Aggressive Micro Credit Facilities Initiated Over indebtedness of consumers Interference of Politicians Appropriate Regulatory and Educational Framework Financial Literacy