Financial Inclusion among Poor
Financial inclusion (FI) is the delivery of financial services at affordable costs to disadvantaged sections and low-income segments of the society. In the recent times, this has become an integral part of most of the development programmes that are designed and implemented to promote inclusive growth among the poor communities. Reaching out to all households with inclusive financial services has however, been a challenging task in India mainly because of its vast geographical spread and inadequate infrastructures, especially in the rural, remote and hard to reach areas.
The Govt., Reserve Bank of India (RBI) and host of other stakeholders have been taking various measures to expand financial inclusion for the poor and excluded families in the country. The Financial Inclusion Plans (FIP) by banks, Government’s Pradhan Mantri Jan Dhan Yojana (PMJDY), Business Correspondents (BC) as last mile delivery channels and expansion of branch network, Small Finance Banks and Payments Banks as differentiated banks for enhancing financial inclusion, Mobile money, Aadhar linked KYC, RuPay debit cards and the recently launched MUDRA Bank are the major institutional, technological and policy changes to hasten financial inclusion.
Financial inclusion is very relevant to State like Odisha having a vast majority of poor including SC & ST population, who mostly depend on casual labour and informal sector employment. Majority of them especially tribals living in remote and hilly areas face extreme financial and economic exclusion due to a range of factors including their remote geographical habitat, cultural and psychological barriers, low literacy and inadequate financial literacy. With a view to cover large number of poor households into the fold of financial inclusion, Odisha has also taken a number of initiatives like creation of Mission Shakti, promotion of SHGs & their federations, implementation of large scale development projects with FI components such as TRIPTI, NRLP, WORLP, OTLEP, OLM .etc. The SHG-Bank Linkage programme has been one of the most significant channels to deliver financial services to poor women in the state. NABARD along with other public & private sector banks and SLBC have worked progressively to achieve SHG-Bank linkage in a substantial manner in Odisha. The state also demonstrated a significant progress in implementing the PMJDY mission for financial inclusion. The role of MFIs, NGOs, CBOs, in providing need based financial services to poor has also been quite encouraging. The support from SIDBI-PSIG, especially for 07 homes grown MFIs has been quite helpful for them to reach out to a large section of poor clients in the state.
In spite of positive growth, challenges still remain in the financial inclusion sector of the state. The sector has yet to fully address the issues of scale and depth in the state. Regional skew in terms of FI coverage is experienced. Growing NPA in the SHG portfolio is a serious concern. Because of that many banks seemed to be not very keen in lending to SHGs and do not consider SHG-BLP as a business proposition. Coverage of micro-insurance and pension services for poor is also not very encouraging. Odisha has huge pockets of unbanked villages/centres. Inadequate infrastructure including rural connectivity and power supply has been a major issue in opening branches. Despite the significant progress made under PMJDY, in terms of its ‘speed, scale and publicity’- in Odisha, almost ¼ A/C are still found to be lying inactive. Many people have-not yet received their RuPay Debit cards and bank passbooks resulting in possible loss of faith and confidence on the scheme.
Given this scenario, the Odisha Development Conclave-2016 would focus on the following key areas for discussion and deliberations and to come out with key policy tasks:
- Collective efforts of all stakeholders to expand Financial Inclusion for the poor
- Increasing the outreach of banking services in the remote areas through PSU & private banks
- Providing adequate infrastructures and facilities for banks to open branches by Govt
- Promotion of financial literacy among the rural poor
- Designing, delivering and expanding appropriate services for the poor in the hilly and tribal areas