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गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Role of State-owned Banks in Financial Inclusion Presentation by Dr H K Bhanwala, Chairman, NABARD Asia.

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Presentation on theme: "गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Role of State-owned Banks in Financial Inclusion Presentation by Dr H K Bhanwala, Chairman, NABARD Asia."— Presentation transcript:

1 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Role of State-owned Banks in Financial Inclusion Presentation by Dr H K Bhanwala, Chairman, NABARD Asia Microfinance Forum Sanghai, China 04 – 08 August 2014

2 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward India, briefly India, briefly 1.21 billion, 69% rural, density: 382 persons/sq km 400 million, 70% rural 105 million cultivators, 65 million agricultural labourers 30% (355 million) poor, 10% unemployed 192 million households Low per capita income @ US $ 1527

3 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Banking Structure in India Banking Structure in India Reserve Bank of India Commercial Banks Nationalized (28) Private (17) Foreign (12) Development Banks Agricultural (NABARD) Industrial (SIDBI) EXIM Cooperative Banks Regional Rural Banks

4 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Banking with the Poor- Few Landmarks Banking with the Poor- Few Landmarks YearEventYearEvent 1904Cooperative Movement1991Indian Economy Liberalized 1935Reserve Bank of India established1992SHG Pilot Launched by NABARD 1969Bank Nationalization2000sNew Age Banks came into being 1975Formation of Regional Rural Banks 2006RBI allows Agency Model (BC Model) 1982NABARD established2008Government announces Financial Inclusion Plan

5 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Enabling Environment in India Financial Inclusion in India Bank-led Model Technology driven Outsource (Agency) Model BC Model CBS, PoS, Micro ATM, Smart Cards (RuPay), Biometric Banks, incl. SoBs & incl RRBs allocated villages All social benefits, wages of employment generation programmes, student scholarships to be credited directly to the accounts Offer small value savings, credit, deposit, micro insurance, micro pension & remittance

6 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Financial Inclusion and Public Subsidies Financial Inclusion and Public Subsidies Commission based (not subsidy oriented) Two funds created by Govt of India & housed in NABARD For strengthening demand side thru financial literacy, capacity building etc. Supporting ICT solutions in banks (RRBs & Coop Banks, not SoBs) BC Customers Bank Branch As per RBI directive, SoBs are expected to take financial inclusion as a business opportunity FITF FIF

7 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward NABARD & Group Approach Self Help Groups (SHGs) Joint Liability Groups (JLGs) Experimented by NABARD in 1992 A savings first, credit later model Norm: Credit Discipline & Social Collateral Solved the twin problems faced by banks: low recovery & high transaction costs 7.3 million SHGs (81% exclusive women groups), covering 95 million households of which 4.5 million availed credit of INR 394 billion Comprises share croppers, oral lessees 529000 such groups INR 46 billion availed as loan

8 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Collaboration with other players Collaboration with other players In India, MFIs have been receiving support from SoBs for increasing their credit outreach Bank Loan provided to MFIs – as on 31 March 2013 BanksNoAmount (INR Billion) SoBs149784 Private Banks 26840 Foreign Banks 41.31 RRBs1530.71 Coop Banks180.068 Other FIs10218.80 Total2042144 The experience with MFIs are mixed ones – profit motive & high rate of interest have gone against their reputation The Central Bank (RBI) had to step in to curb their profit instincts MFIs have their limitations under Indian law - they can’t open bank accounts, can’t provide savings and remittance products though they can deliver other financial products like insurance, pension etc. Nevertheless, Bandhan, an MFI with 5.4 million as its rural customers bagged the banking license in a stiff competition

9 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Using Technology for Financial Inclusion Using Technology for Financial Inclusion Technology Requires initial CAPEX investment Creates Customer Segmentation But is cheaper in the long run Secular (Customer Neutral) 904.5 million out of 1221 million (74%) mobile phone users in India Technology has always been at the core of Financial Inclusion – it has been ‘the’ driving force India is going M Banking way viz. Mobile Wallet (a la M-PESA, Airtel Money etc.)

10 गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward Thanks www.nabard.org chairman@nabard.org www.nabard.org chairman@nabard.org www.nabard.org chairman@nabard.org


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