Financial Inclusion is a process that ensures the ease of access, availability and usage of formal financial system for all members of the Society. Financial Inclusion and levels of human development move closely with each other. A comparison of Index of Index of Financial Inclusion (IFI) values with Human Development Index (HDI) shows that all countries with high and medium IFI also have high HDI.

Financial Inclusion is an important priority of GoI/RBI/Banks and its aim is to ensure access to basic financial products and services needed by financially excluded populace and low-income groups at an affordable cost in the context of inclusive growth and development.

Need for Financial Inclusion

		70% of Indian population (more than 75 crore people) live in 6 lac villages
		Nearly 50% of rural India does not have bank account.
		33,000 rural bank branches cater to 6 lac villages (<6%)
		National average of 1 bank branch per 14000 population. Ratio is much adverse in under banked/ unbanked geographies. There are about 300 under banked districts in the country.
		Lack of financial literacy- biggest hindrance in country’s economic growth.
		Inclusive Growth –not possible without outreach to unbanked villages

A number of policy measures have been taken for achieving the objective of Financial Inclusion. The Government of India has formulated a Financial Inclusion Plan (FIP 2010-12) wherein in the first phase around 73,000 unbanked villages having population of 2000 and above, as per 2001 census, are to be brought under banking services by March 2012.  These villages are to be covered by engagement of Business Correspondents or by opening of new bank branches.

Banks are supposed to provide at least four products to financially excluded populace under the ambit of Financial Inclusion.

		A basic No-Frills banking account with Overdraft Facility.
		A Remittance Product for Electronic Benefit Transfer and other remittances.
		A Pure Savings Product ideally a recurring or a variable recurring deposit.
		Entrepreneurial Credit such as General Credit Card, Kisan Credit Card.

Government's Efforts to reach financially excluded populace

		Nationalization of Banks
		Introduction of Lead Bank Scheme
		Incorporation of Regional Rural Banks
		Branch Expansion 8000+ (in 1969) to 89,000 (Present) spread across the length and breadth of country
		Service Area Approach
		Self Help Group linkage programme.
		Priority Sector Lending requirements (For Priority Sector – 40%, Agriculture 18%, Advances to Weaker Section – 10% etc)
		Adopted ICT based model thru Business Correspondent for ensuring door step delivery of financial products and services.
		Road Map for providing banking services in unbanked villages with a population of more than 2000 by March 2012. About 73,000 such unbanked villages were identified and allotted to various banks through State Level Bankers’ Committee.
		Simplified Branch Authorisation: Banks are now permitted to freely open branches in Tier 2 to Tier 6 centres (with population up to 99,999 as per census 2001) under general permission, subject to reporting.
		Opening of Branches in unbanked rural centres: Banks have been mandated to allocate at least 25% of the total number of branches to be opened during a year to unbanked rural centres.

SBI’s Financial Inclusion Initiatives
State Bank of India has been involved in extending banking facilities to the unbanked areas of the country much before it was made mandatory for banks to be active in financial inclusion programs. SBI has an exclusive setup to pursue activities in this area since 2005. SBI has always given   priority to rural banking and never considered this activity as an obligation but treated this as a business opportunity. SBI has all along been expanding its network in the rural and semi urban areas by opening good number of branches in these areas.

SBI has some 13,793 branches across the country and of these as much as 5,244 are in rural areas, which is 38% of the total number of branches. Again as much as 29% of the branches are located in semi-urban areas. SBI has pan-India presence; it functions as lead bank in 14 states, most of which are in difficult regions of the country, like the North Eastern states, Andaman and Nicobar, etc. It is setting up self help groups wherever possible so that the financially excluded could be brought under the ambit of banking.

STATE BANK’S RURAL FOOTPRINT	March ’10	March ‘11	February’ 12
Total domestic branches	12,545	13,542	13,839
Rural branches	4,735	5,128	5,262
% of Rural branches to total	38	38	38
No. of BC outlets	12,355	20,763	29,286

SBI adopted Business Correspondent (BC) model some six years ago and today the number of outlets is more than 29,000.  The BCs constitute a huge support structure for the bank in its financial inclusion efforts.

All products offered through Business Correspondent (BC) channel are technology enabled. Savings Bank, RD, remittance & SB-OD facilities are the products offered through BC channel.





Financial Inclusion Technologies:
The Business Correspondent (BC) channel in the Bank rides on the following technologies:

	(i)	Kiosk Banking: An internet based technology works on PC /Laptop, web camera, Finger print scanner and printer. This technology supports biometric authentication and real time online with Bank’s CBS system.
	(ii)	Mobile Rural Banking solution: This works on simple low cost phone of customers and CSP with PIN and OTP. Transactions are secured and online real time with Bank’s CBS. This is useful in the areas with higher mobile penetration and non-availability of other mode of connectivity.
	(iii)	Card based technology: This works on POS (Point of Sale) devices with biometric authentication, using mobile connectivity. Chip / Chip-less cards are issued to customers.
	(iv)	Cell phone messaging technology: This is PIN based messaging system and there is no biometric authentication.

	•	SBI has covered almost 100% of the 12900 villages allotted to it under the FIP 2010-12.
	•	SBI has cumulatively opened around 1.31 crore ‘No Frills’ accounts in 387 districts of 32 States/UTs. No Frills Accounts Opened By SBI Numbers Lakh
	•	To facilitate Electronic Benefit Transfer to the rural poor / low income group populace under the MGNREGS, Social Security Pension payments, etc.  Bank has opened about 27 lac accounts so far and disbursed more than Rs.225 crore in the current FY.
	•	More than 20 lac Self Help Groups (SHGs) have been credit linked so far with a credit deployment of Rs. 17,000 crore. SBI’s  market share in SHGs is about 26%. SHG-BANK LINKAGE PROGRAMME 31.03.2010 31.03.2011 29.02.2012 SHG Savings  (Rs. in Crores) 846 829 934 Groups Linked (Cumulative)  (No. in lakh) 17.12 18.94 20.29 Total Amount Outstanding (Rs. in Crores) 6,769 6,417 6,238
	•	SBI opened 250 new branches up to Jan.12 during the CFY 2011-12,out of which as many as 162 are in opened in rural and semi urban centers (Rural: 120 and Semi Urban: 42)
	•	As part of urban Financial Inclusion, Bank has established remittance facilities through Business Correspondents at New Delhi, Mumbai, Surat, Chandigarh, Bangalore, etc., to meet requirement of migrant population. Total remittances reached more than Rs.2700 crore in 60 lac transactions during CFY 12.
	•	SBI is one of the Registrars of UIDAI. After State Governments, SBI is the top enroller with more than 250 lac enrollments. The enrolment data will be used for opening ‘UID enabled’ accounts.
	•	Bank on wheels: It is a unique delivery model launched during the current financial year and helpful in providing good quality services to the rural customer at door steps. The BCs travel between the villages on Vans and visit the villages at pre-fixed days & times to cater to the needs of financially excluded populace. State Bank has covered about 850villages and opened more than 65000 accounts through 114 Bank on Wheels across the country. Bank on Wheels
	•	Financial Inclusion Centers (FIC) have been established to provide back-office support including visit to the CSPs to ensure compliance of instructions by the CSPs, verification of compliance with KYC norms by CSPs. SBI has established 112 FICs so far. This is an unique initiative of the SBI.
	•	Rural Self Employment Training Institutes (RSETIs): RSETIs offer free, unique and intensive short-term residential self-employment training programmes with free food and accommodation, designed specifically for rural youth. SBI has set up 104 RSETIs in its lead districts across the length and breadth of the country.
	•	100% financial inclusion is an ideal situation though difficult to achieve. Banks can reach out to remote areas, offer relevant products and services, thus facilitating financial inclusion. Banks / GoI/ other stake holders are creating a scalable infrastructure with the help of technology so as to reach out to even the remotest corners of the country. The basic thrust is on providing basic banking products and services like savings and loans, remittances and cash-in and cash-out products, to the excluded population and at the same time spreading financial literacy which is must for achieving inclusion.
	•	Financial inclusion is sometimes erroneously treated as synonymous with rural poverty. Concerns of urban poverty also need to be factored in and the needs of various groups as rickshaw pullers, construction workers, migrant workers, etc. must be factored in and products and services crafted as per their needs by the banking system to address urban financial inclusion. The needs of financially excluded urban population are different and revolve heavily around remittances to their native places. Government and Banks are alive to this and there has been significant liberalization in the approach of regulator as well. These steps focus to facilitate such remittances through access points that are easily accessible, technologically enabled and provide service at reasonable cost and on real time basis.