Banking Awareness
Financial Inclusion In India
Shikha Adya
February 3, 2016
An act of offering financial services to a weaker section or low income bearing parts of the community at an affordable cost is known as Financial inclusion. This works in the counterpoint of financial exclusion where such finance-related services are out of range or unavailable.



Guidelines on Financial Inclusion:

From “One District to many Banks” model has shifted to One district many banks leader bank”. The freshly updated guidelines are to implement EBT for the low value accounts and leading its funds to rarely serve very low bearing areas.

Define EBT:

Reserve bank of India (RBI) adopted the “Bank led Model” for applying Financial inclusion in many distinct areas with low priced and effective services. By utilizing multiple delivery channels including intermediary low-cost brick or mortar structures, branchless banking through Business Correspondents. Other models like rural ATMs, Mobile vans, etc. also handles all over the villages.

Usage of EBT:

The central and State Government has institutionalized several welfare schemes like social security, pensions, Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS), National old Age Pension (NOAPS) insurance scheme etc. for the benefits of the poor.

Payments in such welfare scheme are being made directed either in Kind/cash or through indirect subsidies like PDS. Such payment are being routed by the Government through various agencies. The success of the welfare scheme/state Benfits Transfer must ensure timely disbursal of the benefits without any leakage.

About the New Model:

Keeping in view the need to spread the banking habits to all the villagers, it is advised that “One District many banks –One leader bank” Model must be adopted henceforth for EBT implementation. In this model, all the banks present in the district participate in EBT, though for administrative convenience he state Government deals only with one leader bank. State Government shall designate the leader bank, in consultation with the Regional office of RBI and the SLBC, who will obtain the funds from the State Government and in turn will arrange to transfer funds interbank transfer to other banks for credit to the accounts of ultimate beneficiaries account on a commission basis.

Scenario in India:

In India, this is a newly launched scheme. As an experiment, in 2007 Andra Government launched this process in two districts to analyze its effect and benefits related. New technologies were seemed to take in practice like Biometric Smart Cards and Pocket Service Terminals. Analyzation and identification of its benefits were carried out by business correspondents as Third-party non-bank entities contracted by financial institutions.

By its tremendous success and for the welfare of village based group of people, Traditional payment system in India known as Electronic Benefit Transfer (EBT) has put forward promptly by providing Biometric smart cards in a rural section of society. Since then, EBT has become a powerful tool and primary in function for distributing social security pensions and salaries throughout India.

Coming up in 2009, the Orissa government signed a memorandum of understanding (MoU) with SBI for setting up an EBT scheme for National Rural Employment Guarantee Act (NREGA) at large. For the purpose of delivering payments, wages and other related social security benefits to beneficiaries, it comes in leading role.

At first under the “One District Many Banks” model, it has been launched in Bellary, Gulbarga and Chitradurga districts ok Karnataka followed by another Model “One District One Bank” model for another three districts. The major benefits connected with EBT was it save time and send the payment of pension beneficiaries at their doorway.

Today, more than 1.2 billion people involved in banking and banking system introduced when even water has not reached yet. Is this not a way to success …

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