FINANCIAL INCLUSION IN

INDIA
AND
National Bank for Agriculture
and Rural Development
(NABARD)

Presentat ion by Shri U.C . Sarangi ,

Chai rman, NA BAR D & Shri S. K.Mi tra,
1 Executi ve Di rector, N ABAR D
 History of strategies for Inclusive Growth/
Livelihood improvement/ Financial Inclusion
in India

• Phase I (1960 – 1980)

− Social control of Banks – (1960)

− Nationalisation of Banks – (1969)
− Setting up of Regional Rural Banks – (1975)
− Priority sector lending stipulation by RBI - (1972)
− Lead Bank scheme – (1969)

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 History of strategies for Inclusive Growth/
Livelihood improvement/ Financial Inclusion
in India

• Phase II (1980 – 2005)

− Integrated Rural Development programme/ SGSY
promoted by Govt. Of India
− Microfinance programme– SHG – Bank linkage
facilitated by NABARD

• Phase III (2005 onwards)

− Development of MFIs
− Financial Inclusion in a “MISSION” mode

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 Formal Bank Network In India

Reserve Bank of Government of India

India

NABARD

Public Sector RRBs (96) Private Credit

Banks (28) LABs (4) Banks (24) Cooperatives

Rural 18,197 11,444 / 5 987 SCB – 31

Semi-urban 11,736 2,481 / 14 2,077 DCCB – 367
Urban 10,247 522 / 11 2,102 PACS – 108779
Metro 9,726 59 / 0 1,901 SCARDB – 20
Total 49,906 14,506 / 30 7,067 PCARDB - 727

13,104 NBFCs registered with RBI.

1853 Urban Co-operative banks with 7217 branches.
 Foreign Banks Urban – 43, Semi Urban – 2, Metro –
227. (Total 272)
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 NSSO – 2003 Findings of Survey

 51% lack access to Financial Services

from formal system
 Exclusion predominant amongst:
-- Poor and weaker sections
-- Resource poor regions

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SHG - Photo

Largest Financial Inclusion

programme in the World

 58 million poor households provided access to

banks through 3.48 million SHGs.
 Savings of SHGs with banks $ 703 million.
 Bank loans availed by SHGs $ 2473 million
 NABARD Refinance support $1412 million
NABARD Promotional support $5.5 million
•SHG- Bank Linkage programme in India facilitated by
NABARD, implemented by Banks, NGOs, Government
agencies
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 Financial Inclusion - Definition

“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.”

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 Financial Inclusion eventually to
include the following services

− Savings/ Thrift
− Loans/ Credit
− Remittance / Transfer of Funds
− Micro Insurance Services (Life and Non- Life)
− Mutual Funds/ Annuity Products
− Pension Products

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Creation of Funds with NABARD in 2007 -
08

 Financial Inclusion Fund (FIF) – Rs 5000 million

 Financial Inclusion Technology Fund (FITF) – Rs
5000 million
 Govt. of India : RBI : NABARD (40:40:20)

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 Objectives of FIF

The objectives of the FIF shall be to support

“developmental and promotional activities”
with a view to securing greater financial
inclusion, particularly among weaker
sections, low income groups and in
backward regions / hitherto unbanked areas.

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 Objectives of FITF

The objectives of the FITF shall be to enhance

investment in Information Communication
Technology (ICT) aimed at promoting financial
inclusion, stimulate the transfer of research and
technology in financial inclusion, increase the
technological absorption capacity of
financial service providers / users and encourage an
environment of innovation and cooperation among
stakeholders.

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 Technology Solutions being tried in
India

 Smart card, hand held terminal, central

CPU
 Low cost ATMs
 Mobile Phone Banking
 SMS Banking
 Public Call Office (PCO) Connectivity.

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 Way Forward

Targets fixed for each Branch of Commercial

Bank/Regional Rural Bank to :
– Open 250 accounts every year
– Issue 100 Farmers’ Credit Card
– Issue 100 General Credit Card
– Distribute 100 micro insurance policies

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 Way Forward (contd/-)

Micro Finance Sector (Development and Regulation) Bill,

2007 under consideration.
 Setting up of Rural Credit Information Bureau.
 Ensuring effectiveness of Business Facilitator(BF)
/Business Correspondent(BC).
 Micro finance Development and Equity Fund
 Micro finance Ombudsman
 Regulatory and developmental power to NABARD

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 THANK YOU

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