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When there are some efforts and lesser results, it calls for an introspection. This is the simple reason why we should look into the matter of lesser proportionate results or improvement in financial inclusion of India despite the colossal efforts.Since independence India is pushing itself towards financial inclusion in rural areas as the soul of India lies in rural India. There are several initiatives which include priority sector lending, followed by, co-operative lending, lead bank scheme, service area approach, microfinance, kisan credit cards, and business correspondence. Creation of National Bank for Agriculture and Rural development, the introduction of regional rural banks/ local area banks and Pradhan Mantri Jan-Dhan Yojana forms some notable and extensive initiatives.Financial inclusion is our nation’s priory. It is no longer an option, but a compulsion. The state of India today, where about three-fourths of the total population is surviving with under rupees 120 a day. It is probably a reflection of our collective mistake of believing all the pushing efforts would include every Indian under financial services or inclusion.If we closely observe, all these initiatives are supply driven. That is supplying financial services to the doorstep of people. Finance availability is not an end in itself, but a means to an end. Our ultimate aim is to get a constant source of income for poor. So that there will be demand for financial services. If banks do not take initiatives to penetrate into the rural market, there will be other players who are willing to, provided there is a demand for it. Here, supply driver financial inclusion doesn’t work.Cost factorThe results of most of the earlier initiatives were on the lower side. Based on NSSO reports, the share of institutional credit to farmers declined from a peak of 69.4 percent in 1991 to 56 percent in 2012. That is farmers dependence on non-institutional loans has gone from 30% to 44%. The availability of finance is needed, but not sufficient enough for the reduction of poverty. High-cost financial inclusions have rarely enthused rural households.According to Kamaljit Rastogi (Head of products, FINO, a key service provider in the micro-banking industry), opening a bank account itself is a huge challenge. It has taken around four to five years to make a noticeable impact on this respect. The biggest problem lies in the sustainability of these accounts. According to available data, nearly 70% of such accounts are inoperative after opening. Banks should not just stop at opening an account for the rural people. Banks should understand their needs, create awareness among them and help in their economic upliftment. How do they recover the costs? They need to offer multiple products like savings, remittances, insurance, and loans over this channel to make sufficient money to make the whole network sustainable.3 | P a g eIlliteracyIn India, the literacy rate is almost 73% only. If we take the states such as Bihar, Rajasthan, Utter Pradesh, Madhya Pradesh and Jharkhand, where the majority of financial inclusion has to be done, the literacy rate is around 60% only. Even though institutions are trying to give all the information through mobile messages, illiterate people need the help of other to get the meaning of it. This puts them into a threat of insecurity. This will, in turn, keep illiterate away from financial inclusion. Here the privacy of poor people is breached. Sometimes BCs are giving same PINs for all the customers to make his/her job easy. It is very important to note that not only big corporates are concerned about data breaches, even these people are concerned in their own way even though we estimate the cost of data loss is almost zero.Moneylender’s influenceDespite persistent efforts by institutions to implement financial inclusion, moneylenders are flourishing in the same sector. In India, 30% of total banking business is accounted by moneylenders. This leads to a question, does interest rate really matter in this segment?These questions lead to the need for grass root level research. That is, if interest rates matter, then why people are not shifting to banking rather than seeking from moneylenders. Not only banks, there is a well-structured financial network of cooperatives, MFIs, self-help groups. Is it only due to ease of doing business or some other factors influence the same?Failed Business Correspondent (BC) modelBC model was introduced in 2006. The aim was to provide banking services to poor at very reasonable cost. MC model played a very critical role in fetching a large number of Jan-Dhan accounts. But BC model was unable to provide various basic banking services for rural poor.Reserve Bank has asked banks to open at least one branch in every village with a population of 2000 or more. But according to 2011 census, almost 96% of villages have pollution less than 1000.The compensation given for BC agents in the form of the commission is very less compared to that of insurance and mutual fund agents. Lending activities of Banks through BCs are very less. The main activity of BC model is opening new accounts, but after a while, this opportunity is getting exhausted (particularly after implementation of Jan-Dhan scheme)4 | P a g eThreat from PPI (Prepaid Issuers)Banks have been partnered with agents in creating BC networks to offer services such as remittance. Customers recognize the agent through the signage and remit money by paying legitimate fees and taxes. After each such transactions, the remitter will receive a mobile-friendly receipt as a proof.PPIs can offer services such as mobile top-ups, railway ticket bookings, utility bill payments, etc. Now, apart from these PPIs can also provide domestic money transfer services. But now some PPIs have started poaching banks’ BC agents. Because of this, banks’ efforts in building-wide BC network go waste.Physical branches, a solution?If we take the case of a village having a population of around 1000, if we can implement Jan-Dhan based account opening for all, there will be around 1000 accounts. Any number of accounts more than 500 cannot be served properly by BC model, instead, there is a need for Brick and mortar branch. If our system is able to open these branches in the villages, we might be able to tackle the situation.Again the difficulty is how to ensure 1000 accounts under one branch where there are various financial players with many more savings, deposits, loan instruments. There comes the need of the day, financial integration among the services and different players. Under close examination, even more than one branch of different banks or financial institutions can spoil the functioning of both of them. This type of an integration should be taken under state-level Bankers Committee.The sustainability of the services can be ensured only through the demand-driven economy. So, the government should pool all the rural development programmes to an integrated scheme which can ensure a permanent source of income for poor, through the employment of the rural people. Even though variations will be there, this can ensure a demand-driven financial inclusion, which is the current need for developing India.Need for single authorityPresently, there are a number of regulatory authorities which takes the responsibility of financial inclusion. RBI, NABARD – National Bank for Agriculture and Rural Development, SEBI – Securities and Exchange Board of India, MUDRA bank are some of them. All re thinking that this much number of authorities can ensure financial inclusion of India. But the truth is that there is no fixed responsibility on a single institution or the responsibilities are not divided properly. If we take the present conditions, NABARD has a widespread presence across the country. It can be the most suitable single authority to take this responsibility. But NABARD is not well equipped to head this mammoth task. Still can give a try through phased manner, which gives further hope to Indian financial inclusion.

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