financial inclusion in j&k by suhail qasim mir initiatives by major banks

A study on the effectiveness of the Financial Inclusion program in Jammu and Kashmir:

Initiatives by the major banks

Presentation by:

Suhail Qasim Mir

MBA Student, CMS,

JAMIA MILLIA ISLAMIA

International Conference on:

“Modern Strategies for Management of Business, Economy, Services vis a- vis-Social Sciences- A Sustainable Approach”

(MSMBESSA - 2014)

“Jawaharlal Nehru University, New Delhi”

Copyright Suhail Qasim Mir 2014

What numbers say?

Extent of Financial Exclusion-Global

2.5 billion adults, just over half of world’s adult population, do not use formal financial services to save or borrow.

2.2 billion of these unserved adults live in Africa, Asia, Latin America, and the Middle East.

Of the 1.2 billion adults who use formal financial services in Africa, Asia, and the Middle East, at least two-thirds, a little more than 800 million live on less than $5 per day.

Not an Indian specific problem but a global one


Extent of Financial Exclusion-India

In India, almost half the country is unbanked.

India has the highest number of households (145 million)

excluded from Banking.

There is only one bank branch per 14,000 people.

Just 18 per cent have debit cards and less than 2 per cent have

credit cards.

Exclusion is staggering whichever parameter one chooses to

look at !


What is Financial Inclusion?

Financial Inclusion is the process of ensuring access to

appropriate financial products and services needed by all

sections of the society in general and vulnerable groups

such as weaker sections and low income groups in

particular at an affordable cost in a fair and

transparent manner by mainstream institutional players.

In advanced economies, Financial Inclusion is more about the knowledge of

fair and transparent financial products and a focus on financial literacy.

In emerging economies, it is a question of both access to financial

products and knowledge about their fairness and transparency.

Awareness + Access = Financial Inclusion


5

What has been done so far…

(RBI Initiatives….)

Opening of No-Frills accountsRelaxation on know-your-customer (KYC)

normsEngaging business correspondents (BCs)Financial Literacy and Credit Counseling

Centers (FLCCCs) Use of technologySimplified branch authorization Opening of branches in unbanked rural

centers


Achievements so far….

Banking connectivity has been extended to 2,11,234 villages up to December 31, 2012 from 67,694 villages in March 2010. 5694 rural branches have been opened.

Numbers of Business Correspondents have increased from 34,532 to 1,52,328.

1714.27 lakh Basic Savings Bank Deposit Accounts, 317.33 lakh Kisan Credit Cards and 31.14 lakh General Credit Cards remain outstanding as on December 31, 2012.

658 Financial Literacy Centers (FLCs) functioning as at the end of December 2012

1.5 million people educated during the period April to December 2012


FIP achievements

April 2010- march 2013

About 2,68,000 banking outlets opened in villages –

About 7400 rural branches opened

27143 Urban Location covered through BCs

182.06 million Basic Savings Accounts (NFAs),

out of which BC-ICT based – 81.27 million

OD facility extended in about 3.95 million Accounts

33.79 million KCCs and 3.63 million GCC accounts

The State of Jammu and Kashmir lags behind other states in its

vital Financial Inclusion Indicators; Credit-Deposit Ratio at a

meagre 35.71 against the benchmark 60, and Financial

Exclusion to the extent of 68% which

is highest in the Northern Region.

It has a CRISIL Inclusix score of

36.9 compared to the national

score of 42.8.Objectives of the study: To examine the various financial inclusion

initiatives taken by the banking fraternity

in Jammu and Kashmir.

To evaluate the progress and current status

of Financial Inclusion in the State.


Banking Network in Jammu and Kashmir

Banking

Network

In the state

Public

Sector

Private

Sector

Regional

Rural

Banks

Cooperative Others

Banks 22 7 2 10 1

Branches 392 672 325 253 14

BCs 118 663 101 0 0

Banking

Parameters

(Amt in Rs

Crores)

Deposits 17489.47 4606.61 61884.53 2742.30 ……..

Advances 5124.92 17616.48 23944.88 943.21 573

CD Ratio 29.30 42.34 43.16 34.39 ……..


Major Bank Initiatives

FINANCIAL INCLUSION PLAN:

FIP PHASE-1

Aimed at villages having population more than 2000

For providing banking services through various ICT-based banking outlets.

Under this 795 identified unbanked villages were identified & allocated among 5 major banks for

banking services. Out of these 795 unbanked villages 789 have been covered so far.

FIP PHASE-2:

Aimed at villages having population less than 2000

For providing a bank account to every household throughout the State for facilitating transfer of all

Govt. benefits including MGNREGA

Under this 5582 villages were identified & allocated among the existing 5 participating banks. Out of

these 5582 villages identified, 2331 villages have been covered upto the end of December, 2013.

KISAN CREDIT CARD SCHEME:

Upto the end of December 2013, banks have sanctioned a total number of 7, 22,212 KCCs in J&K

State, against which 5, 55,512 KCCs have been disbursed credit amounting to Rs.3,101.52 Crore.

Major contributors are J&K Bank (52%) followed by JKGB (14%) and SBI (9%)


Initiatives Contd….Financial Literacy Centres (FLCs): Financial Literacy Centres

(FLCs) will impart financial literacy among the people of J & K.

Rural Self-Employment Training Institutes (RSETIs): RSETIs are

to impart training and skill upgradation of rural youth geared towards

entrepreneurship development.

Other Initiatives:

Under the Annual Credit Plan, by the end of December 2013 banks in J&K have

extended total credit of Rs 7,672.06 (both under Priority as well as Non-priority

Sector) against a target of Rs 16,322.68( Achievement of 47%)

Branch Expansion Plan

Electronic Benefit Transfer (EBT) scheme

Common Service Centres

No Frills account etc. Copyright Suhail Qasim Mir 2014

Major Findings:

1. CRISIL Inclusix score of the state is 36.9 compared to the national score of 42.8.

2. In the first phase of FIP, out of 795 identified unbanked villages (having population over

2000), 789 had been already covered which is 99% of the target.

3. In the phase-2 of FIP, out of total 5582 villages (having population less than 2000) to be

covered, 2331 villages have already been covered, which is just 41% of the target.

. 6. The activities undertaken by all the 22 FLCs (both indoor and outdoor) during the

quarter under review have facilitated credit linkage to 2565 entrepreneurs out of which

2269 entrepreneurs have established their business ventures.

7. A total of 4,778 persons were trained in all the 22 RSETIs during first three quarters of

CFY(2013-14) as against the 4,054 persons trained during 4 quarters of the previous

financial year.

6. Out of total 227 branches to be opened, the banks in state have opened only 85 branches till

31 Dec., 2013.


Franklin D. Roosevelt remarks, “The test of our progress is

not whether we add more to the abundance of those who

have much; it is whether we provide enough for those who

have too little.”

THANK YOU !

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financial inclusion in j&k by suhail qasim mir initiatives by major banks

Economy & Finance