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Our plan : In 2016-18, we plan to share issue programmes of governments, corporates, NGOs, FAs... in any country with focus on Thane, other districts of India.
Our vision : Universal development Our mission : Be sustainable, promote others Our focus : Share challenges & solutions email your programmes on issues
Financial Inclusion programmes Financial Inclusion : Funding proposals by various stakeholders

The Challenge of Financial Inclusion
Inclusion is likely to top the agenda of Indian finance in 2014. Reserve Bank of India (RBI) governor Raghuram Rajan has indicated that financial inclusion will be a key priority. The central bank has constituted a committee headed by Nachiket Mor, which is expected to submit its recommendations shortly. The move by RBI to devise a new framework for issuing bank licences has also been greeted by calls to consider alternative banking models that can target the needy more effectively.

While financial inclusion appears as a noble goal in itself, recent history shows that efforts to drive financial inclusion can be counterproductive unless handled well. The subprime mortgage crisis in the US that wreaked havoc on the global financial system had its origins in the forced drive for inclusion. It led government-backed agencies to lend to customers with limited ability to repay.

India’s microfinance crisis is another such example. The fact that microfinance institutions (MFIs) operated in under-served areas led to regulatory forbearance in the initial years, leading to excessive lending before the eventual bust.
The dangers of reckless credit expansion in the name of financial inclusion should serve as a cautionary tale for policymakers today. Financial inclusion can be a worthy goal only insofar as it helps reduce poverty levels sustainably. Given that the roots of poverty often lie outside the realm of finance, easing access to credit without addressing real economy constraints is unlikely to either boost growth or help fight poverty. Efforts to drive greater financial inclusion can, in fact, end up harming rather than benefiting those in whose name such efforts are launched: the poor and the vulnerable.

It is better to err on the side of caution in the case of financial inclusion because the empirical evidence on the impact of inclusionary policies is quite mixed. A recent report on financial inclusion by the World Bank shows that the impact of financial inclusion strategies has been quite modest globally. While access to basic financial services does help the poor, throwing easy credit at them rarely raises prosperity in a sustainable way.

The history of the microfinance industry illustrates the limited potential of credit interventions. Studies that assessed the impact of MFIs in recent years found very little impact of microfinance loans on either the growth of microenterprises or on poverty levels. In contrast, the so-called social banking model of yore, involving state-directed credit interventions in developing countries such as India seemed to have had a greater impact both in raising growth and in denting poverty.
The problem with such state-directed efforts, as India discovered, is that lending becomes highly politicized. As a result, while such a model can help in mobilizing savings, it adversely affects asset quality of state-owned banks, posing a threat to the stability of the financial system.

There are thus no easy short-cuts to financial inclusion. Ambitions for financial inclusion need to be tempered because the financial system can grow only as fast as the rest of the economy. Given India’s income levels, it is not doing either much worse or much better than its peers as far as key parameters of financial inclusion are concerned. A cross-country survey by the World Bank shows that 7% of Indians reported taking a loan from a financial institution in the past year and 11% reported saving at a formal financial institution. These figures are roughly similar to the average of lower middle-income countries. The proportion of persons taking formal financial loans is roughly the same across the developing world but the proportion of savers is more skewed, with richer developing countries such as China having a much larger ratio of savers.

Given the low proportion of people who save regularly, India must turn its attention to access to savings. A microsavings account offers the poor a viable alternative to the sundry agents of shadowy financial institutions. It can also boost their ability to invest in their farms or enterprises. In the Philippines, for instance, farmers using commitment savings accounts, which involve relinquishing the use of the deposits for a certain period of time, reported improved use of inputs and better crop sales, according to a recent study. If well-designed inflation-indexed products are available, that can also help boost the savings rate even while lowering gold and real estate investments.

To be sure, credit products can also benefit from innovations. But many of the problems plaguing India’s credit markets lie outside the realm of finance. Better land titling systems and digitization of land records, for instance, can open up access to credit much more than any financial innovation can. It seems far safer and sensible to focus on designing and delivering better savings products to the poor.
India’s ambition of financial inclusion can do with a dose of realism about what the financial sector is capable of achieving.
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Financial Inclusion: Issues and Challenges
Financial inclusion is important for improving the living conditions of poor farmers, rural non-farm enterprises and other vulnerable groups. Financial exclusion, in terms of lack of access to credit from formal institutions, is high for small and marginal farmers and some social groups. Apart from formal banking institutions, which should look at inclusion both as a business opportunity and social responsibility, the role of the self-help group movement and microfinance institutions is important to improve financial inclusion. This requires new regulatory procedures and depoliticisation of the financial system.
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Challenges to Financial Inclusion in India
Focusing on the institutional challenges to financial inclusion in Andhra Pradesh, this paper argues that it is the inability of formal financial institutions to meet the specific needs of the poor that has enabled informal service providers to fill the vacuum. Without a paradigm shift, especially on the part of banks, financial inclusion is bound to fall short of expectations. It proposes that the banking sector should look at efforts to expand inclusion not as a capital cost or as a charitable expense, but as a long-term investment in the future. The soundness of such an investment is borne out in the success of individual business correspondents in some districts of the state.
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The Next Financial Inclusion Challenge: Private Sector Leadership
World leaders are embracing financial inclusion at an accelerating pace. In May, the UN High-Level Panel chaired by Liberia‘s President Johnson Sirleaf, Indonesia’s President Bambang Yudhoyono, and the UK’s Prime Minister David Cameron, presented the recommendations for the post-2015 UN Development Goals, which included universal access to financial services as a critical enabler for job creation and equitable growth. In September, the G20 reaffirmed its commitment to financial inclusion as part of its development agenda. And most recently, during the IMF/World Bank Annual Meetings earlier this month, World Bank President Jim Kim called for collective action to reach universal financial access by 2020.

World leaders do this because they know that an inclusive financial system that responsibly reaches all citizens is an important ingredient for social and economic progress for emerging markets and developing countries. At the microeconomic level, it helps poor households and small businesses generate income, build assets, smooth consumption, and better manage risks. At the macroeconomic level, the depth of financial intermediation under most circumstances spurs growth and reduces inequality. An inclusive financial system also helps governments to better execute social policy in other priority areas such as education and health, for example through more targeted financial transfers.

Despite the political tailwind, half of the working-age adults globally – 2.5 billion people – remain excluded from formal financial services. Instead, they have to rely on the age-old informal mechanisms of the moneylender or pawnbroker for credit or the rotating savings club and vulnerable livestock for savings. These informal mechanisms tend to be unreliable and can be very expensive.

What needs to happen to meaningfully advance financial inclusion for the poor – an end-state in which everyone has access and can use the broad range of financial services they need to improve their lives? World Bank President Kim has identified 2020 as a target for achieving universal access to basic transaction services via mobile money, debit cards or simplified bank accounts. This is an important first step towards that broader range of services.

The key critical element at this juncture is stronger private sector engagement and leadership. To meet the massive challenge of including the 2.5 billion people without access, financial services need to be delivered sustainably and at scale. Charity won’t do. This requires local resource mobilization and responsible market development, which cannot be decreed by the G20, the UN, or the World Bank.

In the end, for responsible market development to be sustainable, services have to be viewed as valuable by consumers and as economically viable by providers. Local provider ecosystems that eventually reach all citizens of a country will comprise a large number of front-end entities trusted in the community such as banking agents, cash-in/cash-out outlets or microfinance institutions; a payment infrastructure that links these institutions to the broader financial system; and a smaller number of well-capitalized and regulated entities that hold and manage the financial risks that the more inclusive system has originated. The relevant private sector actors for the required market development are thus a myriad of local players; and the right level of engagement is at the individual country or even sub-national market level.

This private sector engagement must ultimately involve national-level regulators and national financial services providers as well as other stakeholders to identify barriers to business viability in their market and to put the right infrastructure (e.g., a unique national identity that also serves the purpose of financial customer due diligence) and regulatory frameworks in place.

In an important effort to advance and showcase the right type of dialogue at the global level, the Financial Inclusion 2020 effort by the Center for Financial Inclusion at ACCION, an international microfinance network, is gathering industry representatives at the end of October in London, supported by a number of leading institutions in the Financial Inclusion space. On the agenda are global topics and ideas such as a potential financial inclusion roadmap, but the program also features specific country lessons from Peru and India. This type of global dialogue is an important part in a broader agenda that needs to move to the national level in a larger number of countries to make a meaningful dent against the ambitious financial inclusion objectives formulated by the world leaders.
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Indian Bank

Corporate

Financial Inclusion Plan
As per extant guidelines issued by the Government of India, Reserve Bank of India, NABARD and Indian Bank (Sponsor Bank), our Bank is implemented Financial Inclusion Plan (FIP) in 60 villages with population having more than 2000 in Dharmapuri, Krishnagiri, Cuddalore, Villupuram and Salem districts. The bank has also prepared a roadmap to implement the FIP in 222 villages having population below 2000 covering all our 15 command districts.

Accordingly FIP has been prepared for providing banking services in all the villages with population above 2000 and below 2000 allotted to our bank covering 99131 households. 74 of our branches are to implement this Financial Inclusion Solution Project.

A comprehensive financial inclusion plan for our bank has been formulated as “PALLAVAN SEVA GRAM PROJECT” which includes all aspects of Financial Inclusion activities. The Project is being implemented in all 60 villages having population more than 2000 and 207 villages with population below 2000.

The bank has introduced two new products, “Pallavan Akshaya Savings Bank”, a No Frill product having mandatory overdraft facility from Rs.500/- to Rs.5000/- which will be provided at the time of opening of account itself. The other one is “Pallavan Kathiroli Kanakku”, a General Credit Card product to cater the need for small traders by providing overdraft facility upto Rs.25000/-.

Financial Inclusion Plan
As per extant guidelines issued by the Government of India, Reserve Bank of India, NABARD and Indian Bank (Sponsor Bank), our Bank is implemented Financial Inclusion Plan (FIP) in 60 villages with population having more than 2000 in Dharmapuri, Krishnagiri, Cuddalore, Villupuram and Salem districts. The bank has also prepared a roadmap to implement the FIP in 222 villages having population below 2000 covering all our 15 command districts.

Accordingly FIP has been prepared for providing banking services in all the villages with population above 2000 and below 2000 allotted to our bank covering 99131 households. 74 of our branches are to implement this Financial Inclusion Solution Project.

A comprehensive financial inclusion plan for our bank has been formulated as “PALLAVAN SEVA GRAM PROJECT” which includes all aspects of Financial Inclusion activities. The Project is being implemented in all 60 villages having population more than 2000 and 207 villages with population below 2000.

The bank has introduced two new products, “Pallavan Akshaya Savings Bank”, a No Frill product having mandatory overdraft facility from Rs.500/- to Rs.5000/- which will be provided at the time of opening of account itself. The other one is “Pallavan Kathiroli Kanakku”, a General Credit Card product to cater the need for small traders by providing overdraft facility upto Rs.25000/-.

PALLAVAN AKSHAYA - SB CUM OVERDRAFT FACILITY – NO FRILL SAVINGS BANK ACCOUNT
All the No frill accounts in the allotted villages will be provided with inbuilt overdraft facility.
It is a No frill account having mandatory requirement of overdraft from Rs.500/- to Rs.5000/- which will be provided at the time of opening of account itself.
The limit under SB/ OD facility will be decided by the branch based on the felt need of No frill account holder.

Pallavan Kathiroli Kanakku - General Credit Card
This product is designed to provide overdraft facility to the existing no frill account holders who are included in the Financial Inclusion Plan to carry out any economic viable business proposition.
Eligible house hold can be provided with a limit not exceeding Rs.25000/-

Source

More programmes of various stakeholders are accessible to content members.

Address
Corporate Office
PB No: 5555, 254-260
Avvai Shanmugam Salai
Royapettah
Chennai - 600 014

 

Aajeevika Bureau

NGO

Financial services and social security
Low income migrant workers face serious exclusion from formal financial services such as savings, credit, insurance and pension. Lack of financial access leads to an erosion in their incomes and savings, and pushes them into recurrent debt. Overall, levels of financial literacy are also poor which push workers into becoming victims of fraud and malpractice.

Aajeevika Bureau has promoted the Rajasthan Shram Sarathi Association (RSSA), a Section 25 Company which offers targeted financial services to migrant workers and their households. RSSA provides a diverse range of financial products - micro loans, insurance, assistance in opening bank accounts, pension and savings advise. Micro-loans offered by RSSA help migrant families smoothen their consumption gaps and avoid expensive debts. An informal savings' instrument called "Gullak Bachat" for women is helping them manage their cash flows in the absence of a wage earning male members. A number of financial literacy tools have been designed for workers to help them become more proficient at calculating their wages and managing their expenses.

Aajeevika Bureau and RSSA together are actively involved in the registration of construction workers in the Construction Workers' Welfare Board. The Board offers a number of social protection products such as scholarships, life insurance, pension, and emergency assistance to construction workers. RSSA also enrols low income workers into the New Pension Scheme (NPS) - Swavalamban.

Under its financial inclusion programme, migrant workers are extended help in opening bank accounts - the major objectives being promotion of savings and facilitating remittances. This service is in much demand, especially at destinations, where a few banks have started accepting the ID cards issued by Aajeevika Bureau, as a valid document to satisfy their Know Your Customer (KYC) requirements.

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Website : http://www.aajeevika.org/

 

Ballarpur Industries Ltd.

Corporate

Availability of timely credit is central to the success of a livelihood program. In many remote areas, formal institutions of credit are not always available, and most people depend upon local moneylenders. The Self Help Group (SHG) movement has opened up a channel of credit for poor families. However, setting up entrepreneurial activities requires larger loans, and, in the absence of banks, this gap needed to be filled through the creation of an institution that could give such loans.

Through its partnership with the SHGs around its plant at Maharashtra, BILT set up the women's credit co-operative society, which as of today, is transacting at a volume of USD 667,000 per annum. This co-operative venture has made significant contributions to the lives of 432 families who have accessed loans from it for economic activities.

The credit co-operative started in 2004, with a share capital of USD 445 collected from 201 women members . Today, 447 women are members and the numbers are growing steadily. The total cumulative transactions of the credit cooperative have reached USD 2 Million as on 30 June 2010. The co-operative has also generated employment for 125 women.

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Address
Ballarpur Industries Ltd.
First India Place, Tower C
Mehrauli - Gurgaon Road
Gurgaon, Haryana - 122002

 

 

 

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