An Overview on Financial Inclusion The objective of Financial Inclusion is to extend financial services to the large hitherto unserved population

of the country to unlock its growth potential. In addition, it strives towards a more inclusive growth by making financing available to the poor in particular. 2. Bank Branch Network :

(a) Scheduled Commercial Banks branches (population group wise) as on 31st March, 2012 :

Rural Branches 34,671 (37.02%)

Semi Urban Branches 24,133 (25.77%)

Urban Branches 18,056 (19.28%)

Metropolitan Branches 16,799 (17.93%)

Total 93,659

(b) Scheduled Commercial Banks branches (Bank category-wise) as on 31st March, 2012 :

Public Sector Banks 64,805

Private Banks

Sector Foreign Banks 321

12,417

Regional Rural Total of Banks Commercial Banks 16,116 93,659

all

(c) Number of branches of Scheduled Commercial Banks opened according to group during the period 1.04.2008 to 31.03.2012 :

population

Year 2007-08 2008-09 2009-10 2010-11 2011-12*

Rural 557 689 964 1185 990

Semi Urban 1237 1277 1691 `2099 1293

Urban 1247 1040 1381 864 570

Metropolitan 968 943 1104 931 557

Total 4009 3949 5140 5079 3410

*provisional data

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(d)

No. of villages and APPB:

Number of villages in India as per the 2001 Census Average Population per Bank Branch (APBB) as on 31.3.2012 (e) No. of bank branches of SCBs over the years:

600,000 (approx.) 12,921

Number of scheduled commercial bank branches as on 31st December, 1969 Number of scheduled commercial bank branches as on 31st March, 1990 Number of scheduled commercial bank branches as on 31st March, 2012 3. Opening of Bank Branches:

8,826 59,762 93,659

Government has been aggressively pursuing the expansion and strengthening of the bank branch network in the country, thereby providing access to financial services to all strata of the society. In view of the continued need to set up the opening of branches in rural areas so as to meet the objectives of increasing banking penetration and financial inclusion rapidly, Government issued detailed strategy and guidelines on financial inclusion in

October 2011, vide which it was, inter-alia, advised to banks to open bank branches by Sept 2012 in all habitations of 5,000 or more population in under banked districts and 10,000 or more population in other districts. As per reports received from the Convener Banks of State Level Bankers Committees (SLBCs), of the 3905 bank branches to be opened, 739 bank branches have been opened by end of April, 2012.

Regional Rural Banks (RRBs) were also advised to work out branch expansion plan such that there is an increase of 10% in bank branches in 2011-12 and also in 2012-13 over the respective previous years. branches during 2011-12. 13. As per provisional data received, RRBs opened 914

RRBs propose to open 1845 branches under the plan in 2012-

4.

Branch Authorisation Policy of RBI

(i)

RBI has permitted domestic Scheduled Commercial Banks (excluding RRBs) to open branches in Tier 2 to Tier 6 Centres ( with population upto 99,999 as per census 2001) without the need to take permission from RBI in each case, subject to reporting. Page | 2 of 5

(ii)

RBI has also permitted SCBs (excluding RRBs) to open branches in rural, semi urban and urban centres in North Eastern States and Sikkim without having the need to take permission from RBI in each case, subject to reporting.

(iii)

Domestic SCBs have been advised that while preparing their Annual Branch Expansion Plan (ABEP), they should allocate atleast 25% of the total number of branches proposed to be opened during the year in unbanked Tier 5 and Tier 6 centres i.e. (population upto 9999) centres which do not have a brick and mortar structure of any SCB for customer based banking transactions.

(iv)

RBI has further stated that for each branch proposed to be opened in Tier 2 to Tier 6 Centres of underbanked districts of underbanked states, excluding such of the rural branches proposed to be opened in the unbanked centres that may be located in the underbanked districts of underbanked states, authorization for opening of an additional branch in Tier 1 centre is provided as an incentive.

(v)

SCBs have also been permitted to operationalise mobile branches in Tier 3 to Tier 6 centres.

5.

Swabhimaan the Financial Inclusion Campaign In order to extend the reach of banking to the rural hinterland, Banks were advised in

2010-11

to provide appropriate banking facilities to habitations having a population in

excess of 2000 (as per 2001 census) by March, 2012 under Swabhimaan campaign Smt. Sonia Gandhi, Chairperson UPA, formally launched Swabhimaan the Financial Inclusion Campaign in February, 2011. Swabhimaan aims at providing branchless banking through use of technology. Banks provide basic services like deposits, withdrawals and remittances using the services of Business Correspondents. The initiative enables Government

subsidies and social security benefits to be directly credited to the accounts of the beneficiaries and who would be able to draw the money from the Business Correspondents in their village itself.

As per reports received from State Level Bankers Committee (SLBC) Convener Banks, out of 74,398 such villages identified, 74,194 villages have been covered by March, 2012. Further in terms of Finance Ministers Budget Speech 2012-13 it has been decided to extend the Swabhimaan campaign to habitations with population of more than 1000 in North Eastern and hilly States and to other habitations which have crossed population of 2,000 as per census 2011. Page | 3 of 5

Accordingly Banks have been advised to initiate steps for providing banking facilities in habitations with population of 1000-2000 in North Eastern and hilly States and to habitations of 1600-2000 in all States/UTs by March, 2013.

Considering the population distribution in Andaman & Nicobar Islands, Chhattisgarh, Daman & Diu, Lakshadweep, and Puducherry, all villages of population 1000 and above will also be provided BCA/branch by September, 2012. 6. Establishment of Ultra Small Branches Considering the need of close supervision and mentoring of the business

correspondent agents by the respective bank branch and to ensure that a range of banking services are available to the residents of such villages, it has been decided that Ultra Small Branch be set up in all villages covered through BCA under financial inclusion. Ultra Small Branch would comprise of a small area of 100-200 sq. feet where the officer designated by the bank would be available with a lap top on predetermined day and time in a week. While the cash services would be offered by the BCA, the bank officer would offer other services to be offered by the bank, undertake field verification and follow up the banking transactions. The BCA shall also operate from such premises. The periodicity and duration of visits can be progressively enhanced depending upon business potential and reviewed periodically.

7.

Banking Facilities in Unbanked Blocks

In order to provide banking facilities in unbanked blocks, the Government in July, 2009 identified 129 unbanked blocks, of which 91 blocks were in North East States and 38 in other States. With the persistent efforts of the Government, the number of unbanked banking facilities

blocks were brought down to 71 as on 31.3.2011, and by March 2012,

have been provided in all the unbanked blocks either through Brick and Mortar Branches or Business Correspondents Model or mobile banking. As a next step it has been advised to cover all those blocks with BCA and Ultra Small Branch which have so far been covered by mobile banking only.

8.

Electronic Benefit Transfer Electronic benefit Transfer (EBT) is one of the products offered under Financial

Inclusion in which benefits are directly credited into the account of beneficiary who can then withdraw it from the bank branch or the ATM or the Micro ATMs. Government in its strategy Page | 4 of 5

and guidelines on financial inclusion has advised banks that benefits in the areas covered under Financial Inclusion must be transferred electronically into the accounts of the beneficiaries. The Convener Banks of SLBC have been advised to take up this matter in the SLBC meeting and the roadmap for Electronic Benefit Transfer in respect of each of the 32 scheme under which subsidies are provided by Central Government must be finalized. 9. Interoperability of BCAs:

The Department had taken up with RBI and NPCI the issue of interoperability at the level of BCAs. Two Pilot Projects in Mewat District of Haryana and Bulandshahar District of UP were implemented by Syndicate Bank and PNB respectively. Due to the persistent follow up by the Department, RBI has issued guidelines relating to interoperability vide its letter dated 02.03.2012. Based on these guidelines NPCI has also formulated the Standard Operating Procedures which have been circulated by IBA to CEOs of all member banks.

Interoperability will enable a customer of a bank to conduct transactions though BCA of not only his own bank but also BCA of any other bank also. It will also ensure standardization of PoS devices and procedures in transactions though the BC channel. This would also greatly benefit the common man as he/ she would be able to transact through any BCA of any bank.

10.

GIS: A Geographical Information System (GIS) is being developed for mapping of all the

branches in the country so as to enable the banks to determine the deficit areas of banking. Pilots have already been done for Mewat and Bulandsahar districts.

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