INDIAN management and Business studies Monad University)

INDIAN BANKING SECTOR
AND MICRO FINANCE

 

                                                                           
Rajendra Prakash  Agrawal (
Reseach Scholar     Monad )

 

A.H.KHAN

                                                         
Associate professor (School of management and Business studies Monad
University)

[email protected]

 

 

ABSTRACT:

Indian banking system is fully mature and based on
the best practices of world banking.

In last decay world economy see many up and down but
our banking sector does not affect negatively and in fact after recession of
2007-08 our banking system makes necessary some modification. So that system
can face any eventuality in future. After 1991 Indian economy open up and think
beyond protected walls and do what other developing countries are doing but
with great care of our environment and capibility

As the most of the
rural population is still not using formal banking system so they are not aware
abut micro finance instrument that is why they are not included in the
inclusive growth story of India. The concept of financial inclusion becomes
quite challenging for the Indian rural economy. Since 2006, many focused
initiatives are taken by NABARD and Government of India in favor of financial
inclusion but the impact of these did not result satisfactory outcome. The
paper aims to focus on using the existing resources such as Mobile and smart
phones, Banking Apps, Indian Post Office, Internet banking and Non banking
financial institutions (NBFCs) thereby making it more healthy and user friendly
for the interest of the rural population as well as the formal sector. My study
focused on 250 students studying in Monad University and most of student are
lacking in basic financial literacy. So knowing the facts behind backwardness
in rural population of different part of India .we frame questionnaire and use
simple statistical tools and analyze the problem and found that most of
Government and private schemes related to financial inclusion( crop insurance,
Beema youjna.jandhan account, sukanyia, rural mutual funds,kisan vikas patra)
are not properly convinced to the masses. Usually government official goes to
rural areas and hold a formal talk in difficult language and so on.  For making them aware about financial
instrument we can use SMS service in local languages. What my study found that
they have enough money but in absence financial literacy they are putting into
debt instruments which are not yielding enough to beat inflation. Their saving
can be channelize into well diversified  
mutual by way of SIP

.Keywords: Financial inclusion, Business correspondents, Micro
finance schemes Indian Economy  

INTRODUCTION

 We start our
journey of economic development of India since post independence With Hindu
growth rate 3.5% to 8.9 in 2007-08 and on average 7.5% from last 25 years
change the profile of India the progress of the Indian economy, especially when
the focus is on upliftment   of   people living at the bottom of premed is
proved as sustainable development., There must be an attempt to include maximum
number of participation from all the sections of the society from all part of
country. The attempt had been made in 1969 by Nationalization of dozen of banks
in single go But the lack of awareness and financial literacy among the rural
and same urban population of the country .This big attempt (Nationalization of
banks) not result to include everybody in formal banking system so lowering the
growth of the economy as majority of the population does not have access to
formal credit as world bank report only 35% population have bank account. This
is a serious issue for the economic progress of the country. In order to
overcome such barriers, the banking sector emerged with some technological
innovations such as automated teller machines (ATMs), credit and rupee cards,
internet banking (only 34% have internet connectivity), etc. Though
introduction of such banking cutting edge technologies brought a change in the
urban society, a lot of the rural population is still unaware of these
innovations of banking technology and is out of formal banking channel.

 

 STEPS
TAKEN BY NABARD

 

·        
Hundred per cent refinance to Hundred
per cent refinance to Banks for loans given to SHGs

§  Repayment
period of loans by banks to SHGs varies from two to three years

·        
Repayment period of loans by SHGs to
flexible annum

 

 

 

OBJECTVES
 

•     
To Know the level of financial literacy

•     
To make them aware about micro finance

•     
To know the need of rural people

•     
To suggest instruments and schemes of
financial inclusion

 

 

PRESENT STATUS OF
MICROFINANCE

·        
31% (131.1 million) of the total deposit
accounts are in rural India

·        
43%(22.4 million) of total credit
accounts are in rural India

·        
Positive impact on the poor (Rohini
Pande /Burgess paper

 

 

 

 

 

 

 

 

Conclusion
and Recommendations

 

 Despite 70 years as an independent nation,
India is still lagging behind in the process of providing financial services to
the masses with nearly half the households remaining unbanked, and nearly
ninety percent villages not having bank branches. More importantly, people in
these unbanked areas do not fully appreciate why they need a bank account at
all, or why loans from the formal sector are more useful than the informal
sector. The advantages of a financially inclusive model are many-fold.
Illustratively, unbanked and underprivileged could receive appropriate and
timely payments for social benefit and employment schemes through the Direct
Cash Transfer program. The government and Reserve Bank of India have been
making concerted efforts since mid1950’s and with renewed vigor since 2006 but
success has been rather slow, due to lack of a strong network, and financial
instruments not suited to rural residents. Moreover, lack of awareness and
financial literacy among rural population are primarily responsible for low penetration
of financial services..All governments’ schemes are well thought of and have
long

lasting impact but
implementation of these schemes are still a big problem area which need
immediate actions.

References 

Distribution (2011),”Number of Ration Shops in the
country”, June. Planning Commission (2009

Financial Inclusion With Reference To Daily Wage
Earners”, Journal of Business Management & Social Sciences Research, Volume
2, No. 6, June “Report on Financial Sector Reforms”

Financial Inclusion in India: Select Issues Charan
Singh RBI Chair Professor Economics & Social Science Indian Institute of
Management Bangalore

 

 

 Kishanjit
Badu, Krishan Jindal, “Microfinance Emerging Challenges”, TATA McGraw HILL, New
Delhi, 2000, P:273-317. 126 Op. Cit., SIDBI Report, P: 173. 127 Meera Lal,
“SHG-Bank Linkage in India: Empowerment and Sustainability”, B.R. Publishing
Corporation, Delhi, 2007, P: 126-132

Kamath, Rajalaxmi (2008) “Ramanagaram Financial
Diaries: Loan repayments and cash patterns of the urban slums”, IIMB
Working paper 268. Ministry of Consumer Affairs, Food and Public Joshi, Deepali
P. (2014), “Strategy Adopted For Financial Inclusion”, Speech, Workshop of
Government of Madhya Pradesh, New Delhi, January. K., Divya (2014), “A Study On
Impact Of” (Chairman: Dr. Raghuram G. Rajan). Radcliffe, Dan (2012), “A Digital
Pathway to Financial Inclusion”, Bill & Melinda Gates Foundation. RBI
(2005), “Report on Rural Credit and micro finance” (Chairman: H.R. Khan)

Government
reports

Economic survey of India 2015-16

Union budget 2016-17

Economics Times

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