strategy and efforts of a Public

sector bank for financial

Inclusion

Group members
Khushi puri-225
Tejal kaur- 487
Ananya lamba- 064
Akshita upadhyay- 051
 Public Sector Banks

Public sector bank is a bank in which the government holds a major

portion of the shares.Public Sector Banks (PSBs) are a major type of
bank in India, where a majority stake (i.e. more than 50%) is held by a
government. The shares of these banks are listed on stock exchanges.
There are a total of 18 Public Sector Banks alongside 1 state-owned
Payments Bank in India.

Role Of Public Sector Banks in India

In India, banks have played an important role in economic growth and
development.

Since the 1970s, public sector banks (PSBs) have been in the
forefront of mobilizing resources from far flung rural areas as well as
extending banking services in the remotest parts of the country.
The burden of social agenda has largely been shouldered by PSBs
without any compensation.

To have a focused approach towards stabilizing policies, government

delegates the monetary policy to the central bank of a country, while
keeping the portfolio of fiscal policy within itself.
The objective of monetary policy is to stabilise the financial system
including inflation and financial institutions while that of the fiscal
policy is to provide conducive environment for growth through
managing taxes and expenditure.

What is Financial Inclusion

Financial inclusion is the availability and equality of opportunities to
access financial services.It is where individuals and businesses have
access to useful and affordable financial products and services that
meet their needs. It refers to efforts to make financial products and
services accessible and affordable to all individuals and businesses,
regardless of their personal net worth or company size. It strives to
remove the barriers that exclude people from participating in the
financial sector and using these services to improve their lives. It is
also called inclusive finance.

Importance of financial inclusion

· The rural masses will get access to banking like cash receipts,
cash payments, and statement of account. And would therefore
enable the vulnerable to step out of poverty and reduce
inequality.
· It inculcates saving habits and would therefore give an
economic boost as it would increase capital formation.
· Direct cash transfers to beneficiary bank accounts, instead of
physical cash payments against subsidies will become possible.
 This also ensures that the funds actually reach the intended
recipients instead of being siphoned off along the way.
· Availability of adequate and transparent credit from formal
banking channels will imbibe the entrepreneurial spirit of the
masses and would be of help to increase prosperity and growth
in the countryside as a result.
· Participation within the financial system leads to all kinds
of individual benefits, including:

i. Ability to start and grow a business, which gives people an

opportunity through different schemes.

ii. The ability to handle uncertainties that require unexpected

payments or to deal with ‘financial shocks’

Hence, it can be said that, financial inclusion can initiate a revolt for
growth and prosperity. In the 21st century, India has been pulling the
right levers to advance financial inclusion and economic citizenship
by using its own transactions to help the system function smoothly.

Objectives of financial inclusion

Financial Inclusion’s main objective is to address constraints that
exclude people from participating in the financial sector and make
financial services available to them to meet their specific needs.
 

· Financial inclusion intends to help people secure financial services

and products at economical prices such as deposits, fund transfer
services, loans, etc.

· It aims to establish proper financial institutions to cater to the needs

of the rural class. These institutions have clear-cut regulations and
 should maintain high standards that are existent in the financial
industry.

· Financial inclusion aims to build and maintain financial

sustainability so that the less fortunate people have a certainty of
funds.

· It also intends to have numerous institutions that offer affordable

financial assistance so that clients have a lot of options to choose
from. There are traditional banking options in the market.
However, the number that offers inexpensive financial services is
minimal.
.

Efforts and strategies of the government and public sector banks in

the Indian subcontinent, the idea of financial inclusion was first
acclimated in the year 2005 by the Reserve Bank of India by releasing
the Annual Policy Statement.

The Government of India has been presenting a few selective plans

with the end goal of financial inclusion. These plans expect to give
social security to the less fortunate areas of the general public. After a
great deal of arranging and research by a few financial specialists and
policymakers, the legislature propelled plans remembering financial
inclusion.
These plans have been propelled over various years.
List of the financial inclusion schemes in India-

• Pradhan Mantri Jan Dhan Yojana (PMJDY)

• Atal Pension Yojana (APY)
• Pradhan Mantri Vaya Vandana Yojana
• Stand up India Scheme
• Pradhan Mantri Mudra Yojana
• Pradhan Mantri Suraksha Bima Yojana (PMSBY)
• Sukanya Samriddhi Yojana
 • Jeevan Suraksha Bandhan Yojana
• Credit Enhancement Guarantee Scheme (CEGS) for Scheduled
Castes (SCs)
• Venture Capital Fund for Scheduled Castes under the Social
Sector Initiatives
• Varishtha Pension Bima Yojana (VPBY)

Some strategies adopted by the government of India

· Regulation and simplifying procedures for access to finance.

· Regulatory freedom to open rural and semi-urban bank branches

and linking these initiatives with the opening of branches in
other areas.

· Mandated banks to open at least 25% of all new branches in

unbanked rural centers.

· Simplification of procedures for access of finance for e.g.

liberalizing KYC norms, no due certificates from other banks,
etc.

Questionnaire
• Do you have a functional bank account in any of the public sector
banks?
• If yes, do you feel satisfied by the service provided?

• if no, what are the reasons

Major reasons-
- Slow service and complicated process
- Delayed work
- Rude staff
• Do you feel opening a bank has become easier than it was 10 years
ago?

The ease of opening a bank an account and getting loans has increased a lot in these

previous years.

Drawbacks of Financial Inclusion

1. The Need to Improve Financial Literacy

Based on studies on remittance services among migrants and surveys
conducted by the World Bank Group in Morocco and Mozambique, it
has been found that the lack of awareness among the study group
prevented them from utilizing the right products and services that
suited their particular needs.

1. Lack of Formal Identification Documents

One of the key factors which prevent the unbanked from getting
access to basic banking services is the lack of formal identification
documents. In most countries, a proper ID is required before an
individual can open a bank account. IDs are also needed for claiming
social benefits and the transfers of funds.

1. Consumer Protection
Although there has been a proliferation of financial services such as
mobile money and virtual currencies designed to expand financial
inclusion, there is a lack of trust among consumers as to the security
and reliability of these newly established platforms.

4. The Rural Poor and Gender Inequality

According the latest data from Findex, approximately 1.1 billion of
the 2 billion unbanked individuals around the world are women. In
developing countries, the rural poor and women in general face
unique obstacles when trying to access financial services. IFC
research has shown that this is largely due to a lack of collateral or
poor credit history which leads to more women being denied credit by
the financial institutions.

5. Promoting the Use of the Transaction Account

It has been noted that of the 355 million adults in developing
countries that reported having a bank account, still resort to remitting
money by cash or over the counter

CONCLUSION
Financial inclusion will strengthen financial deepening
and provide resources to the banks to expand delivery of credit.
The trend of increasing commercialization of agriculture and
rural activities must generate greener pastures, and banks should have
a look at the advantages of growing penetration therein
Further, the actual rate of financial inclusion in India is very low and
about 40% of the bank account holders use their accounts not even
once a month. Financial Inclusion has far attainment results, which
can help many people, come out of miserable dearth conditions.
Financial inclusion provides formal individuality, access to expenses
system and deposit insurance. The aim of financial inclusion is to
expand the scope of activities of the organized financial system to
comprise within its realm people with low incomes. Through
graduated credit, the effort must be to lift the poor from one level to
another so that they come out of poverty.