Exploring Financial Inclusion Initiatives by banks in India: A Case Study of a Commercial Bank

- Jasmine Gupta, Vice President - Kotak Mahindra Bank and Research Scholar, B. K. School of Business Management, Gujarat University

Abstract:

Financial inclusion (FI) means providing access and usage of financial services at affordable costs to rural and urban poor people, who have not been able to participate in the mainstream financial system. By 2014, about 53 percent of adults had an account at a bank or other financial institution in India as per the 2014 Global Financial Inclusion (Global Findex) database report. However the launch of a National Financial Inclusion Mission in August 2014 - Pradhan Mantri Jan Dhan Yojana (PMJDY) led to millions of accounts getting opened in a short span of time.

In order to understand the financial inclusion initiatives taken by banks and challenges faced by them, a case-study of Dena bank has been undertaken through In-depth Expert Interviews. Dena Bank’s core strategy under financial inclusion is the innovative financial inclusion products developed by the bank. Dena Shakti for loans to women, Dena Kisan Gold Credit card, loans for CNG/LPG kits in auto rickshaws, etc. ranging from Rs. 10000 to Rs. 25000 have helped in catering to the needs of the financially excluded segment to a large extent. Dena Bank’s Financial Literacy efforts are commendable as can be learnt from the story of two farmers’ lives saved by timely intervention of Credit Counselling Centre of Dena Bank by preventing them from doing suicides and guiding them on borrowing and regularising repayments.

Dena Bank used a Business Correspondent (BC) model where the BC Agents with Hand-held devices are allotted FI villages. Bank has introduced Kiosk based financial inclusion solution in urban locations. These kiosks have small laptop, biometric device and printer, which is working on web-based solution and interface with the Financial Inclusion Gateway. The Bank faces challenges in terms of inoperative accounts, fluctuations in connectivity, high attrition rate of BC Agents and reconciliation issues. Thus, the case study unveils many challenges faced on the operational front in implementing financial inclusion.

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