Jump to content

User:Npatel23/sandbox: Difference between revisions

From Wikipedia, the free encyclopedia
Browse history interactively
← Previous editNext edit →
Content deleted Content added
VisualWikitext
Npatel23 (talk | contribs)
141 edits
m removed content from main article - all text is now my own work
Npatel23 (talk | contribs)
141 edits
m updated citation
Line 24: Line 24:
'''Technology,''' particularly the introduction of branchless banking, ATM/Kiosk based banking, and mobile banking initiatives, is being used to deliver banking services to rural and remote areas.<ref name=":54">Garg, S. & Agarwal, P. (2014). Financial Inclusion in India – a Review of Initiatives and Achievements. ''IOSR Journal of Business and Management.'' 16(6), 52-61. [[Doi (identifier)|doi]]:10.9790/487X-16615261.</ref> Banks have been advised to make effective use of information and communications technology (ICT), to provide doorstep banking services (define this) through the BC model where the accounts can be operated by even illiterate customers by using biometrics, thus ensuring the security of transactions and enhancing confidence in the banking system.<ref name="Alternative2">[http://www.thealternative.in/society/the-changing-face-of-rural-banking-in-india/ "The changing face of rural banking in India" by Debroop Sengupta] {{Webarchive|url=https://web.archive.org/web/20140820061118/http://www.thealternative.in/society/the-changing-face-of-rural-banking-in-india/|date=2014-08-20}}, ''The Alternative.in'' Jan 11, 2014.</ref>
'''Technology,''' particularly the introduction of branchless banking, ATM/Kiosk based banking, and mobile banking initiatives, is being used to deliver banking services to rural and remote areas.<ref name=":54">Garg, S. & Agarwal, P. (2014). Financial Inclusion in India – a Review of Initiatives and Achievements. ''IOSR Journal of Business and Management.'' 16(6), 52-61. [[Doi (identifier)|doi]]:10.9790/487X-16615261.</ref> Banks have been advised to make effective use of information and communications technology (ICT), to provide doorstep banking services (define this) through the BC model where the accounts can be operated by even illiterate customers by using biometrics, thus ensuring the security of transactions and enhancing confidence in the banking system.<ref name="Alternative2">[http://www.thealternative.in/society/the-changing-face-of-rural-banking-in-india/ "The changing face of rural banking in India" by Debroop Sengupta] {{Webarchive|url=https://web.archive.org/web/20140820061118/http://www.thealternative.in/society/the-changing-face-of-rural-banking-in-india/|date=2014-08-20}}, ''The Alternative.in'' Jan 11, 2014.</ref>


Banks have been asked to consider offering '''unique credit cards''', the most popular being General Purpose Credit Cards (GCCs), and Kisan Credit Cards. These unique cards offer credit to those in rural and semi-urban areas, farmers, and others with adjusted [[Collateral (finance)|collateral]] and security requirements with the objective of providing hassle-free credit.<ref name=":55">Garg, S. & Agarwal, P. (2014). Financial Inclusion in India – a Review of Initiatives and Achievements. ''IOSR Journal of Business and Management.'' 16(6), 52-61. [[Doi (identifier)|doi]]:10.9790/487X-16615261.</ref><ref name=":73">{{cite web|title=Financial Inclusion {{!}} A road India needs to travel|url=http://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=607|last=Chakrabarty|first=Dr. K.C.|publisher=[[Reserve Bank of India]]|accessdate=12 Oct 2011}}</ref>
Banks have been asked to consider offering '''unique credit cards''', the most popular being General Purpose Credit Cards (GCCs), and Kisan Credit Cards. These unique cards offer credit to those in rural and semi-urban areas, farmers, and others with adjusted [[Collateral (finance)|collateral]] and security requirements with the objective of providing hassle-free credit.<ref name=":53" /><ref name=":73">{{cite web|title=Financial Inclusion {{!}} A road India needs to travel|url=http://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=607|last=Chakrabarty|first=Dr. K.C.|publisher=[[Reserve Bank of India]]|accessdate=12 Oct 2011}}</ref>


In January 2006, the RBI permitted banks to engage intermediaries in the banking process, developing the '''Business Correspondents (BC) Model'''.<ref>{{Cite web|title=Business Correspondents / Business Facilitators (BCBF) Model Details|url=https://www.sakshieducation.com/Banks/Story.aspx?cid=35&sid=747&chid=1396&nid=116384|website=www.sakshieducation.com|access-date=2020-05-08}}</ref> This model enables banks to service neglected areas by allowing intermediaries to facilitate transactions and deliver other banking services directly.<ref>{{Cite web|title=Reserve Bank of India - Database|url=https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2234|website=www.rbi.org.in|access-date=2020-05-08}}</ref> Originally, a fairly limited number of entities, including NGO's and certain microfinance institutions were eligible to act as BCs, however in 2010 the list was expanded to include for-profit companies<ref>{{Cite web|title=Over 20% of business correspondents faced fraud in 2017: MicroSave report|url=https://www.livemint.com/Industry/4jL1r9XnS43BbwdEOZEVLO/Over-20-of-business-correspondents-faced-fraud-in-2017-Mic.html|last=Gupta|first=Asit Ranjan Mishra,Komal|date=2018-02-15|website=Livemint|language=en|access-date=2020-05-08}}</ref> In 2018, operators of [[Common Service Centres|Common Service Centers]](CSCs) which work with local governing [[Gram panchayat|gram panchayats]] also began working as BCs to further improve penetration of banking services.<ref>{{Cite news|last=Rathee|first=Kiran|date=2018-07-04|title=Common Service Centres to work as banking correspondents of HDFC bank|work=Business Standard India|url=https://www.business-standard.com/article/finance/cscs-to-work-as-banking-correspondents-of-hdfc-bank-118070401113_1.html|access-date=2020-05-08}}</ref>
In January 2006, the RBI permitted banks to engage intermediaries in the banking process, developing the '''Business Correspondents (BC) Model'''.<ref>{{Cite web|title=Business Correspondents / Business Facilitators (BCBF) Model Details|url=https://www.sakshieducation.com/Banks/Story.aspx?cid=35&sid=747&chid=1396&nid=116384|website=www.sakshieducation.com|access-date=2020-05-08}}</ref> This model enables banks to service neglected areas by allowing intermediaries to facilitate transactions and deliver other banking services directly.<ref>{{Cite web|title=Reserve Bank of India - Database|url=https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2234|website=www.rbi.org.in|access-date=2020-05-08}}</ref> Originally, a fairly limited number of entities, including NGO's and certain microfinance institutions were eligible to act as BCs, however in 2010 the list was expanded to include for-profit companies<ref>{{Cite web|title=Over 20% of business correspondents faced fraud in 2017: MicroSave report|url=https://www.livemint.com/Industry/4jL1r9XnS43BbwdEOZEVLO/Over-20-of-business-correspondents-faced-fraud-in-2017-Mic.html|last=Gupta|first=Asit Ranjan Mishra,Komal|date=2018-02-15|website=Livemint|language=en|access-date=2020-05-08}}</ref> In 2018, operators of [[Common Service Centres|Common Service Centers]](CSCs) which work with local governing [[Gram panchayat|gram panchayats]] also began working as BCs to further improve penetration of banking services.<ref>{{Cite news|last=Rathee|first=Kiran|date=2018-07-04|title=Common Service Centres to work as banking correspondents of HDFC bank|work=Business Standard India|url=https://www.business-standard.com/article/finance/cscs-to-work-as-banking-correspondents-of-hdfc-bank-118070401113_1.html|access-date=2020-05-08}}</ref>

Revision as of 06:31, 8 May 2020

Financial inclusion

Financial inclusion is defined as the availability and equality of opportunities to access financial services.[1] It refers to a process by which individuals and businesses gain access to appropriate, affordable, and timely financial products and services which include banking, loan, equity, and insurance products.[2][3] Financial inclusion efforts typically target those who are unbanked and underbanked, and directs sustainable financial services to them.[2] Having more inclusive financial systems has been linked to stronger and more sustainable economic growth and development and thus achieving financial inclusion has become a priority for many countries across the globe. [4]

In 2018 it was estimated that about 1.7 billion adults lacked a bank account.[5] Among those who are unbanked a significant number were women and poor people in rural areas and often those who are excluded from financial institutions face discrimination and belong to vulnerable or marginalized populations.[6] Financial inclusion is understood to go beyond merely opening a bank account; it is possible for banked individuals to be excluded from financial services.[7] While it is recognized that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both supply side and demand side.[6] Supply side barriers are those which stem from financial institutions themselves and often indicate poor financial infrastructure and include lack of nearby financial institutions, high costs to opening accounts, or documentation requirements. Demand side barriers refer to aspects of the individual seeking financial services and include poor financial literacy, lack of financial capability, or cultural or religious beliefs that impact their financial decisions.[3]

Initiatives by Country

Financial Inclusion in India

The concept of financial inclusion, extending financial services to those who typically lack access, has been a goal for the Government of India since the 1950s.[8]

The nationalization of banks, which occurred from the mid 1950s to the late 1960s, culminating in 1969 with the nationalization of 14 commercial banks by Prime Minister Indira Gandhi, brought banking facilities to previously unreached areas of the country.[9] The “branching” of banks into rural areas increased lending for agriculture and other unserved rural populations and Indira Gandhi spoke of it as a tactic to “accelerate development” and to address poverty and unemployment.[10]

The Lead Bank Scheme followed nationalization as a way to coordinate banks and credit institutions by districts to more comprehensively ensure that rural areas had their credit needs met.[11] In 1975, the Government of India followed this with efforts to specifically reach rural areas by establishing Regional Rural Banks (RRBs) meant to exclusively meet demand in the rural economy and the number of RRBs has significantly increased over the years.[11]

In 2004 the Khan Commission, created by the Reserve Bank of India (RBI), investigated the state of financial inclusion in India and laid out a series of recommendations. In response, RBI Governor Y. Venugopal Reddy, expressed concern regarding the exclusion of millions from the formal financial system and urged banks to better align their existing practices with the objective of financial inclusion.[12][13] The RBI began to spearhead efforts to expand institutional access to financial services and, in conjunction with the Government of India, has been proactive in developing banking products, crafting new regulations, and advocating for financial inclusion.[6][11]

Since financial inclusion was established as a priority for the GOI and RBI, progress has been made. Mangalam, Puducherry became the first village in India where all households were provided banking facilities.[14] States or union territories such as Puducherry, Himachal Pradesh and Kerala announced 100% financial inclusion in all their districts.[15] The Indian Reserve Bank vision for 2020 is to open nearly 600 million new customers' accounts and service them through a variety of channels by leveraging on IT. However, illiteracy, low income savings and lack of bank branches in rural areas continue to be a roadblock to financial inclusion in many states and there is inadequate legal and financial structure.[3]

Financial sector strategies

No Frills Accounts (NFAs) can be opened with zero or minimal balances, removing a cost barrier to banking. Banks are also meant to charge minimal overdraft fees on NFAs. [16]

Know-your-customer (KYC) requirements for opening bank accounts were relaxed for small accounts in August 2005, eliminating a documentation barrier to banking. The new procedure only requires an introduction by an account holder who has been subjected to the full KYC screening.[17] Additionally, banks were permitted to accept more easily produced forms of documentation for proof of identity and address.

Technology, particularly the introduction of branchless banking, ATM/Kiosk based banking, and mobile banking initiatives, is being used to deliver banking services to rural and remote areas.[18] Banks have been advised to make effective use of information and communications technology (ICT), to provide doorstep banking services (define this) through the BC model where the accounts can be operated by even illiterate customers by using biometrics, thus ensuring the security of transactions and enhancing confidence in the banking system.[19]

Banks have been asked to consider offering unique credit cards, the most popular being General Purpose Credit Cards (GCCs), and Kisan Credit Cards. These unique cards offer credit to those in rural and semi-urban areas, farmers, and others with adjusted collateral and security requirements with the objective of providing hassle-free credit.[16][20]

In January 2006, the RBI permitted banks to engage intermediaries in the banking process, developing the Business Correspondents (BC) Model.[21] This model enables banks to service neglected areas by allowing intermediaries to facilitate transactions and deliver other banking services directly.[22] Originally, a fairly limited number of entities, including NGO's and certain microfinance institutions were eligible to act as BCs, however in 2010 the list was expanded to include for-profit companies[23] In 2018, operators of Common Service Centers(CSCs) which work with local governing gram panchayats also began working as BCs to further improve penetration of banking services.[24]

[25]

Banks have been advised to implement electronic benefit transfer (EBT) with the goal of reducing dependence on cash, lowering transaction costs, and address corruption.

Increasing the number of rural banks continues to be a priority for the RBI. In 2009, the RBI relaxed previous policies requiring authorization before opening new branches in the hopes that simplified authorization would increase branches in underserved areas. Beginning in 2011 the RBI required 25% of new branches opened in a given year be in unbanked rural areas centers to ensure a more even spread of banking facilities.[26]

Government policies

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is meant to provide supplemental employment at a guaranteed minimum wage and facilitate financial inclusion to empower women and rural laborers.[27] While achieving financial inclusion is not its main goal, the program directly deposits wages into bank accounts as a way to limit corruption, speed delivery of benefits, and connect wage laborers to bank accounts.[28]

The Pradhan Mantri Jan Dhan Yojana policy scheme was announced by Prime Minister Narendra Modi in his 2014 Independence Day Speech and launched in August of 2014 in an effort to provide "universal access" to banking through the creation of basic banking accounts which come with other basic financial services.[29] Modi informed all Indian banks of the initiative and declared it a national priority.[30] On the inauguration day of the scheme, 1.5 crore (15 million) bank accounts were opened and since then, more than 18 million bank accounts have been created.[31][32]

In 2016, the Government of India instituted a sweeping demonetisation policy in an attempt to stop corruption and the flow of black money. This move forced people to deposit their money into banks or see its value evaporate, with the goal of integrating citizens into a cashless and taxable economy and banking system.[33] While India has seen new bank accounts continue to open in the wake of this policy change, and an overall increase in use of digital payment systems and other financial services, the policy change caused an extreme disruption to the financial system and debate continues on its efficacy. Many people, particularly those in rural areas still lack easy access to banks and awareness of digital services and those working as day laborers saw the cash flow of their incomes interrupted by the sudden change.[34]

  1. ^ Nanda, Kajole; Kaur, Mandeep (2016). "Financial Inclusion and Human Development: A Cross-country Evidence". Management and Labour Studies. 41 (2): 127–153. doi:10.1177/0258042X16658734.
  2. ^ a b World Bank (2013-11-07). Global Financial Development Report 2014: Financial Inclusion. The World Bank. doi:10.1596/978-0-8213-9985-9. ISBN 978-0-8213-9985-9.
  3. ^ a b c Shankar, Savita (2013). "Financial Inclusion in India: Do Microfinance Institutions Address Access Barriers?" (PDF). ACRN Journal of Entrepreneurship Perspectives. 2: 60–74.
  4. ^ Dixit, R., Ghosh, M. (2013). Financial Inclusion for Inclusive Growth of India – A Study of Indian States. International Journal of Business Management and Research. 3, 147-156.
  5. ^ "Overview". World Bank. Retrieved 2020-04-22.
  6. ^ a b c Garg, S. & Agarwal, P. (2014). Financial Inclusion in India – a Review of Initiatives and Achievements. IOSR Journal of Business and Management. 16(6), 52-61. doi:10.9790/487X-16615261.
  7. ^ Ranjani, K.S.; Bapat, Varadraj (2015-01). "Deepening Financial Inclusion Beyond Account Opening: Road Ahead for Banks". Business Perspectives and Research. 3 (1): 52–65. doi:10.1177/2278533714551864. ISSN 2278-5337. {{cite journal}}: Check date values in: |date= (help)
  8. ^ Mahajan, V & Ramola, B.G. (1996). Financial Services for the Rural Poor and Women in India: Access and Sustainability. Journal of International Development. 8(2), 211-224.
  9. ^ Ketkar, Kusum W. Ketkar, Suhas L. Bank nationalization, financial savings, and economic development : a case study of India. OCLC 82987271.{{cite book}}: CS1 maint: multiple names: authors list (link)
  10. ^ Cole, Shawn Allen (2007). "Financial Development, Bank Ownership, and Growth: Or, Does Quantity Imply Quality?". SSRN Electronic Journal. doi:10.2139/ssrn.1158078. ISSN 1556-5068.
  11. ^ a b c Sudhakar, A. & Singh, T.S. (2017). Financial Inclusion: The Role of RBI and Government. IOSR Journal of Business and Management. 6(13), 70-75.
  12. ^ "Reserve Bank of India - Annual Policy Statement for the Year 2005-06", Reserve Bank of India
  13. ^ "Report of the Internal Group to Examine Issues relating to Rural Credit and Microfinance" Archived June 10, 2012, at the Wayback Machine, Reserve Bank of India, July 2005.
  14. ^ Babu, P. Raja (2015). "Measure for Achieving Financial Inclusion in India and Its Inclusive Growth" (PDF). IOSR journal of Economics and Finance. 6: 35–37.
  15. ^ Seeman, Bharath (2014). Bank Exam Pedia. Rapid Academy of Competitive Exams (RACE) Institute. p. 67.
  16. ^ a b Garg, S. & Agarwal, P. (2014). Financial Inclusion in India – a Review of Initiatives and Achievements. IOSR Journal of Business and Management. 16(6), 52-61. doi:10.9790/487X-16615261.
  17. ^ Chakrabarty, Dr. K.C. "Financial Inclusion | A road India needs to travel". Reserve Bank of India. Retrieved 12 Oct 2011.
  18. ^ Garg, S. & Agarwal, P. (2014). Financial Inclusion in India – a Review of Initiatives and Achievements. IOSR Journal of Business and Management. 16(6), 52-61. doi:10.9790/487X-16615261.
  19. ^ "The changing face of rural banking in India" by Debroop Sengupta Archived 2014-08-20 at the Wayback Machine, The Alternative.in Jan 11, 2014.
  20. ^ Chakrabarty, Dr. K.C. "Financial Inclusion | A road India needs to travel". Reserve Bank of India. Retrieved 12 Oct 2011.
  21. ^ "Business Correspondents / Business Facilitators (BCBF) Model Details". www.sakshieducation.com. Retrieved 2020-05-08.
  22. ^ "Reserve Bank of India - Database". www.rbi.org.in. Retrieved 2020-05-08.
  23. ^ Gupta, Asit Ranjan Mishra,Komal (2018-02-15). "Over 20% of business correspondents faced fraud in 2017: MicroSave report". Livemint. Retrieved 2020-05-08.{{cite web}}: CS1 maint: multiple names: authors list (link)
  24. ^ Rathee, Kiran (2018-07-04). "Common Service Centres to work as banking correspondents of HDFC bank". Business Standard India. Retrieved 2020-05-08.
  25. ^ SRINIVASAN, R. "Financial inclusion for whose benefit?". @businessline. Retrieved 2020-05-08.
  26. ^ "Reserve Bank of India - Notifications". www.rbi.org.in. Retrieved 2020-05-08.
  27. ^ Breitkreuz, R, Stanton, C.J., Brady, N., Pattison Williams, J., King, E.D., Mishra, C., Swallow, B. (2017). The Mahatma Gandhi National Rural Employment Guarantee Scheme: A Policy Solution to Rural Poverty in India? Development Policy Review. 35(3), 397-417.
  28. ^ Reddy, D.N., Reddy, A.A., Bantilan, M.C.S. (2014). The Impact of Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) on Rural Labor Markets and Agriculture. India Review. 12(3), 251-273.
  29. ^ "Prime Minister to Launch Pradhan Mantri Jan Dhan Yojana Tomorrow". Press Information Bureau, Govt. of India. 27 August 2014. Retrieved 28 August 2014.
  30. ^ "PM's email to all bank officers". Press Information Bureau, Govt. of India. 25 August 2014. Retrieved 28 August 2014.
  31. ^ ET Bureau (28 August 2014). "PM 'Jan Dhan' Yojana launched; aims to open 1.5 crore bank accounts on first day". The Economic Times. Retrieved 28 August 2014.
  32. ^ Sudhakar, A. & Singh, T.S. (2017). Financial Inclusion: The Role of RBI and Government. IOSR Journal of Business and Management. 6(13), 70-75.
  33. ^ Taruna & Kumar, N. (2017). Demonetization in rural areas of Lucknow (U.P): Immediate impact make life difficult to live. International Journal of Commerce and Management Research. 3(4), 100-103
  34. ^ Devi, L.V.K & Devi, L.V.R. (2017). Impact of Demonetisation on Financial Inclusion in India. IOSR Journal of Business and Management. 8(7), 42-47
Retrieved from "https://en.wikipedia.org/enwiki/w/index.php?title=User:Npatel23/sandbox&oldid=955510954"