1 Presentation by Shri U.C. Sarangi, Chairman, NABARD & Shri S.K.Mitra, Executive Director, NABARD FINANCIAL INCLUSION IN INDIA AND National Bank for Agriculture and Rural Development (NABARD)

2 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)

3 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

4 Government of India NABARD Public Sector Banks (28) RRBs (96) LABs (4) Private Banks (24) Rural Semi-urban Urban Metro Total 18,197 11,736 10,247 9,726 49,906 11,444 / 5 2,481 / / / 0 14,506 / ,077 2,102 1,901 7,067 Credit Cooperatives SCB – 31 DCCB – 367 PACS – SCARDB – 20 PCARDB  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) Formal Bank Network In India Reserve Bank of India

5 NSSO – 2003 Findings of Survey  51% lack access to Financial Services from formal system  Exclusion predominant amongst: -- Poor and weaker sections -- Resource poor regions

6 Largest Financial Inclusion programme in the World 58 million poor households provided access to banks through 3.48 million SHGs. 58 million poor households provided access to banks through 3.48 million SHGs. Savings of SHGs with banks $ 703 million. Savings of SHGs with banks $ 703 million. Bank loans availed by SHGs $ 2473 million Bank loans availed by SHGs $ 2473 million NABARD Refinance support $1412 million NABARD Refinance support $1412 million NABARD Promotional support $5.5 million NABARD Promotional support $5.5 million SHG- Bank Linkage programme in India facilitated by NABARD, implemented by Banks, NGOs, Government agencies SHG - Photo SHG - Photo

7 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.”

8 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

9 Creation of Funds with NABARD in Financial Inclusion Fund (FIF) – Rs 5000 million Financial Inclusion Fund (FIF) – Rs 5000 million Financial Inclusion Technology Fund (FITF) – Rs 5000 million Financial Inclusion Technology Fund (FITF) – Rs 5000 million Govt. of India : RBI : NABARD (40:40:20) Govt. of India : RBI : NABARD (40:40:20)

10 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. “developmental and promotional activities” “developmental and promotional activities”

11 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. 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.financial servicefinancial service

12 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.

13 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

14 Way Forward (contd/-) Micro Finance Sector (Development and Regulation) Bill, 2007 under consideration. Setting up of Rural Credit Information Bureau. Setting up of Rural Credit Information Bureau. Ensuring effectiveness of Business Facilitator(BF) /Business Correspondent(BC). Ensuring effectiveness of Business Facilitator(BF) /Business Correspondent(BC). Micro finance Development and Equity Fund Micro finance Ombudsman Regulatory and developmental power to NABARD

15 THANK YOU