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Understanding Financial Inclusion

International Workshop on Enhancing delivery Govt. to People Payments for Rural Area 29 th November 2012. Madhya Pradesh Model Paradigm Shift for Financial Inclusion Dr Aruna Sharma ACS, RD, Panchayat & Social Justice. Understanding Financial Inclusion.

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Understanding Financial Inclusion

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  1. International Workshop on Enhancing delivery Govt. to People Payments for Rural Area29th November 2012

  2. Madhya Pradesh Model Paradigm Shift forFinancial InclusionDr Aruna SharmaACS, RD, Panchayat & Social Justice

  3. Understanding Financial Inclusion • Financial Inclusion is an opportunity and not an obligation. • Providing easy and hassle free access to financial services. • For poor it means creating access to affordable banking including micro credits, savings, loans, insurance, remittances and financial advice.

  4. Challenges in Madhya Pradesh

  5. Janpad Panchayat SeoniMalwa RRB CCB Bank Post Office Nationalised Bank

  6. Developing MP Model of FI • Limitations in the present directions of RBI and Ministry of Finance- Speaks about population norm. • Paradigm shift- From Population to Geographic distance. • Banks/Post Office/Other Financial Institutions taken on board through SLBC.

  7. Re Engineered Fund Flow

  8. Paradigm shift from Population to Distance

  9. Bank-wise Shadow Area Villages

  10. Model Ensures • Brick and mortar structure of financial point within 5 km. • Cleaning of Accounts. • Updating of data of beneficiaries of various Social Sector Schemes. • Pension schemes based on recurring deposits can be developed under this model. • Banks to branch out like granting loans, financial literacy drive, selling of insurance etc.

  11. The Service Area Banks have onerous task to reach out through Ultra Small Banks The confidence of beneficiary when the banner reflects name of the Bank and is brick and mortar (100sq feet space provided in E-Panchayat Bhavan).

  12. State Government facilitating • To banks to set up Ultra Small Bank. • Providing Rent Free Accommodation in each Panchayat. • Separate e-Panchayat Room for USB. • Fully furnished room with free internet connectivity.

  13. Issues with Banks • RBI has already agreed for geographical distance approach • The definition of unbanked areas • Need that SLBC approves the list of opening branch in unbanked rural banks • SMALL BANK norm as business proposition to be understood by the banks.

  14. Issues with Post Office • Old instruction of post office having account only in District HQ commercial bank: resulting in two months of delayed payments due to late clearance of cheque. • The new order to open Account in nearest Commercial Banks to be executed immediately • Non-Core banking/Computerization • Cash carry limits to be enhanced

  15. Issues with UID • UID enables to only identify the individual as declared by him/her • Biometrics for payment is the only issue • Monitoring requires family data i.e. family to be provided 100days of employment • MP Model propose to use combination of NPR and UID

  16. Issues related to MORD • The system of payment through banks in state of MP is 100%. • Once account is opened it should be multi-purpose for all the schemes of the Government/Financial Inclusion:- payments, housing subsidy, pensions, fertilizer subsidy, food-subsidy etc.. Along with enabling factor for deposits etc..

  17. The Model in Action Case Study of district. • T+3 system an integrated model of ongoing initiatives by various financial institutions. • T+3 system for NREGS workers to enable them to received payment within 3 days. • Android based facilities to generate e- Pay Orders.

  18. Vast Distances in Balaghat District

  19. The Model in Action

  20. Accounts Status as on September 2012

  21. Out come Time taken for cheque to be credited in GP Account

  22. Time taken for Payment to Labour

  23. The Smiling Faces

  24. The Smiling Faces

  25. THANK YOU

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