C 8- U. Jerinabi & P. Santhi

FINANCIAL INCLUSION AMONG TRIBALS

IN NILGIRIS DISTRICT

*Dr.U.Jerinabi

**Dr.P.Santhi

ABSTRACT

Financial inclusion is delivery of banking services at an affordable cost to the vast

section of disadvantage and low income groups in a fair and transparent manner.

Financial exclusion is excluding people without the access of affordable credit, saving,

insurances, assets and money and bank advices. The financial excluded section largely

comprises marginal farmers, landless labourers, oral losses, self employed and

unorganized sector enterprises, urban slum and oral losses, self employed and

unorganized sector enterprises. Urban slum dwellers, migrants, ethnic minorities and

socially excluded groups, senior citizens and women. Tribals are the one of the excluded

sector in financial inclusion. This study was conducted in tribal dominated place of

Nilgiri district. A total of 220 tribals were selected randomly to study the status of

financial inclusion among tribal and to study the credit and saving behaviour and to

assess the level of awareness about no frills account and also to know the awareness level

of the respondent on the financial inclusion services offered by the banks. The results has

shown that majority of the respondents had a bank account and it was observed that most

of the account holders had awareness about no frills account, but their awareness level

about the banking services was low. The analysis of the results indicated that socio-

economic factors such as age group, gender, education, type off occupations, family

monthly income of the respondents were found to be the most important for opening the

bank account. It also give a detailed account of socio-economic factors that influence

respondents awareness levels about no frills account. It was also observed that there is a

significant difference in the respondents level of awareness of financial services of banks

before and after opening an account. Besides this the strategies for financial inclusion

among the tribals was also discussed.

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Financial inclusion and infrastructure should go hand in hand for all around tribal

development to take place so as to ensure that villages have access to health education

shelter, information technology and insurance apart from credit behaviour.

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* Dr.U.Jerinabi, Associate Professor in Commerce, Avinashilingam Deemed University

for Women, Coimbatore-641043

** Dr.P.Santhi, Associate Professor in Commerce, Avinashilingam Deemed University


2

FINANCIAL INCLUSION AMONG TRIBALS

IN NILGIRIS DISTRICT

*Dr.U.Jerinabi

**Dr.P.Santhi

INTRODUCTION

In India the focus of the financial inclusion at present is confined to ensuring a

bare minimum access to a savings bank account without frills, to all. Internationally, the

financial exclusion has been viewed in a much wider perspective. Having a current

account/saving account on its own, is not regarded as an accurate indicator of financial

inclusion. There could be multiple levels of financial inclusion and exclusion. At one

extreme, it is possible to identify the ‘super-included’, i.e., those customers who are

actively and persistently courted by the financial services industry, and who have at their

disposal a wide range of financial service and products. At the other extreme, we may

have the financially excluded, who are denied access to even the most basic of financial

products. In between are those who use the banking services only for deposits and

withdrawals of money. But these persons may have not enjoyed the flexibility of access

offered to more affluent customers.

DEFINITION FOR FINANCIAL INCLUSION

“Financial Inclusion is the process of ensuring access to appropriate financial products

and services needed by vulnerable groups such as weaker section and low income groups

at an affordable cost in a fair and transparent manner by mainstream Institutional

players”. The Committee on Financial Inclusion (Chairman: Dr.C.Rangarajan, 2008).

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* Dr.U.Jerinabi, Associate Professor in Commerce, Avinashilingam Deemed University

for Women,Coimbatore-641043

** Dr.P.Santhi, Associate Professor in Commerce, Avinashilingam Deemed University


3

THE SCOPE OF FINANCIAL INCLUSION CAN BE EXPANDED IN TWO

WAYS

Through state- driven intervention by way of statutory enactments

Through voluntary effort by the banking community itself for evolving various strategies

to bring within the ambit of the banking sector the large strata of society.

When bankers do not give the desired attention to certain areas, the regulators

have to step in to remedy the situation. This is the reason why the Reserve Bank of India

is placing a lot of emphasis on financial inclusion.

FINANCIAL INCLUSION MODEL

Bank – Self Help Groups Linkage Model

This is one of the most popular and successful Model being incorporated and

followed by all public and private sector bank. Now-a-days the bank may perform the

role of formation of shapes in the case of the Direct linkage model. The bank are also

responsible for granting credit to the SHG in a quantum proportional to the saving bank

devices the following benefits from the SHG implementations.

Bank MFI Linkage Model

MFI are to be seen as the Last mile the connecting link to the vast of the financial

sector. They have developed technology that bank do not have. If bank get into the

business of organizing groups and all they won’t be able to do it effectively.

MF – NBFC Model

MF – NBFC is new category of non banking Finance company in Providing

Micro Finance service to the rural, Semi- rural, Urban poor. MF – NBFC should be

defined as a company that provides thrift, credit, Micro Insurance, remittances and other

financial services up to a specified amount to the poor in rural, urban, semi urban areas.

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MF- NBFCs are excepted to be larger with a stronger capital base and more height

regulated.

Post Office Model

Apart from saving, deposit, money transfer, Parcel sending etc. Post officers are

also engaged in new services like granting retail credits or selling Insurance Products

either directly or on behalf of commercial banks. Further Financial Services can be also

offered with Public plus Private sector, Partnership with distribution taken care of Post

offices, Postal banks let us many such models followed in various countries battler and

before that let us find out low post offices can be an effective inter-me diary for

disturbing financial services.

FINANCIAL EXCLUSION

Financial exclusion is the lack of access by certain consumers to appropriate, low

costs, fair and safe financial products and services from mainstream provides.

Financial Exclusion becomes of more concern in the community when it applies

to lower income consumers and those in financial hardship.

STATEMENT OF THE PROBLEM

Financial exclusion is excluding people without of affordable credit, savings,

insurance assets and money and bank advices. The financial excluded section largely

comprises marginal framers, landless laboruers, self employed and unorganized sector

enterprises, urban slum dwellers, migrants, ethnic minorities and socially excluded

groups, senior sector and women. Tribal is the one of the excluded section is financial

inclusion. To achieve greater financial inclusion, financial services should reach the poor

of socially excluded groups particularly tribals Micro finance banks and other financial

institution has played a vital role in filling up this gap. This study helps us to know the

financial inclusion position, awareness level, towards no frills account and saving and

credit behavior of the tribal.

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OBJECTIVES OF THE STUDY

To assess the level of financial inclusion among the selected tribals.

To study the awareness of the selected sample about no frills account and the

financial services offered by the bank.

To find out the steps taken by the banks in the area of financial inclusion.

SCOPE OF THE STUDY

In this context an attempt has been made to analyze financial level of tribal viz.,

the in terms of financial status of the respondents. This study creates an awareness level

for no frills account, SHGs and banking facilities. The overall results that emerge from

the study would provide a scope for the respondents whether they have an account and

the uses of financial services.

HYPOTHESIS FRAMED

There is no significant relationship between socio-economic factors of the

respondents with

H1 having a bank account

H2 purpose for opening an account

H3 awareness about no frills account

RESEARCH METHODOLOGY

The present study was intended to assess the level of financial inclusion among

the tribal people in Nilgiris district and also to study their awareness about no frills

account and to find out the strategies followed by the banks to make the excluded people

to include.

According 220 tribals from four villages namely (i.e.) New Kotagiri, Kolikarai

Arakodu and Kokkodu in Nilgiris district were randomly selected for the study.

Structural interview schedule was used to collect information from the respondents.

Percentage was used to analyse data on demographic characteristics, level of financial

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inclusion and the awareness level of the respondents about no frills account while chi-

square test was used to find out the relationship between socio-economic factor of the

respondents and the level of financial inclusion status and respondents awareness about

no frills account, SHGs and its benefits and paired ‘t’ test was used to find the significant

difference in the respondents level of awareness of financial services of banks before and

after opening an account.

RESULTS AND ANALYSIS

The purpose of financial inclusion is delivery of banking services at and affordable costs

in a fair and transparent manner to the vast section of disadvantages and low income

groups. Data analysis usually involves reducing accumulated data to a manageable size

developing summaries looking for patterns and applying statistical techniques. The

frequency distribution of tabulated data revealed the following results.

1. SOCIO-ECONOMIC STATUS OF THE RESPONDENTS

More than (36.8 per cent) of the members were above 50 years. It is observed that

(85.0 per cent) of the respondents were male. Majority of the respondents were

completed only primary level (21.8 per cent).

Majority of the respondents were agricultural labour (35.9 per cent). It is noted

that (73.2 per cent) of the members were belonging to family monthly income of below

Rs.5000 (table 1)

2. FINANCIAL INCLUSION STATUS OF THE RESPONDENTS

The financial inclusion status of the selected tribals is discussed under the

following headings.

a. Have a Bank Account

It is observed that out of 220 surveyed respondents 66.8 per cent are having bank

account 33.2 per cent of respondents are not having the bank account.(table 2)

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b. Reasons for Not Having Bank Account

Regarding the reasons for not having a bank account 60.3 per cent of respondents are

not having money to open a bank account, and 20.5 per cent of respondents are lacking

through the distance. There are 6.8 per cent of respondents are due to the lack of saving.

5.5 per cent of respondents are under the lack of awareness. There are 4.1 per cent of

members are lacking through advice 1.4 per cent of respondents are not having proper

identity cards, and 1.4 per cent of respondents are under lack of knowledge. (Table 2)

3. AWARENESS LEVEL OF THE RESPONDENTS ABOUT NO FRILLS

ACCOUNT

More than 62.7 per cent of the members were aware of no frills account. It is observed

that 100 per cent of the members were not using no frills account though they were aware

of no frills account. About (47.6 per cent) of the members were known about no frills

account through the source of media. (Table 3)

4. AWARENESS LEVEL OF THE RESPONENTS ABOUT FINANCIAL

SERVICES OFFERED BY BANKS BEFORE AND AFTER OPENING AN

ACCOUNT

Majority (71.4 per cent) of the respondents were not familiar about deposits and

saving before opening an account, whereas (53.7 per cent) of the members were

well familiar about deposits and saving after opening an account.

It is noted that (40.1 per cent) of the members were not familiar about pass books

and cheque before opening an account, whereas (49.0 per cent) of the respondents

were well familiar about pass books and cheques after opening an account.

More than (61.2 per cent) of the respondents were not familiar about loans and

interest rates before opening an account, whereas (62.6 per cent) of the

respondents were well familiar about loans and interest rates after opening an

account.

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It is noted that (63.9 per cent) of the respondents were not familiar about ATM

and credit card before opening an account, whereas (51.7 per cent) of the

members were well familiar about ATM and credit cards after opening an

account.

Majority (61.2 per cent) of the respondents were not familiar about insurance

schemes before opening an account, whereas (51.0 per cent) of the respondents

were well familiar about insurance schemes after opening an account. (Table 4)

Paired‘t’ test has been applied to find out the significant difference in the level of

awareness about financial services before and after opening an account.

Paired ‘t’test result revealed that the calculated value of t-test (32.262) greater

than the table value (2.610) at (one per cent level) hence there is a significant difference

in the respondent’s level of awareness of financial services of banks before and after

opening an account. (Table 5)

STRATEGIES FOR FINANCIAL INCLUSION

The strategies for financial inclusion of the respondents are discussed under the

following headings.

1. Banks Should Include Excluded Sector

It is determined that (40.5 per cent) of the respondents are flexible in bank service

sector, (22.3 per cent) of the respondents are based on simple and speed. There (20.07 per

cent) of the members need more instruction and (6.4 per cent) of the respondents prefer

on small product size. (Table 6)

2. Separate Departments Focusing Excluded Sector

It is observed that out 220 respondents (56.8 per cent) of members are in need to

focus on separate departments for excluding sectors .The next highest (15.9 per cent) of

the respondents are highly needed in focusing on separate departments for excluding

sector. The third highest member (15.0 per cent) of respondents is neutral. The fourth

highest member (9.5 per cent) is under the category of not need for excluding sectors.

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There are (2.7 per cent) of the respondents are under the category of certainly not needed.

(Table 6)

3. Interest Rate Close to 25 Per cent

Among the sample 220 members, (77.7 per cent) of the respondents disagree with the

interest rate. There are (15.0 per cent) of the member who strongly disagree. (3.2 per

cent) agree with the interest rate. There are (2.7 per cent) of the respondents are neutral

and (1.4 per cent) of members strongly agree with the interest rate. (Table 6)

Chi square test has been used to test the hypothesis framed

H1 there is no relationship between the socio economic factors of the

respondents and having a bank account

It is noted that there is no significant relationship between age group, education of

the respondents and having a bank account.

It is inferred that there is a significant relationship between gender, type of

occupation, family monthly income and having a bank account. Hence the null

hypothesis is accepted in case of age ,education of the respondents. Where as it is

rejected in case of gender, type of occupation, family monthly income of the

respondents. (Table 7)

H2 there is no significant relationship between socio economic factors of the

respondents and purpose for opening an account.

It is noted that there is a significant relationship between age group and awareness

of no frills account. Hence the null hypothesis is rejected.

It is proved that there is no significant relationship between gender, education, and

type of occupation, family monthly income and awareness of no frills account.

Hence the null hypothesis is accepted. (Table 8)

H3 there is no significant relationship between socio economic factors of the

respondents and awareness level about no frills account.

It is observed that there is a significant relationship between type of occupation and

awareness of SHGs and its benefits. Hence the null hypothesis rejected.

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It is inferred that there is no significant relationship between age group, gender,

education, family monthly income and awareness of SHGs and its benefits. Hence

the null hypothesis is accepted. (Table 9)

SUGGESTIONS AND CONCLUSION

Suggestions to the Respondents

Tribal people should have much absorptive capacity to understand the financial

services and the operation to be done.

Low income people should have an account or access other financial services.

Suggestions to the Banks

Banks should conduct awareness programmes among tribals so that the account

holders and non account holders are made aware of the facilities offered by no

frills account, SHGs and other banking services.

Banks should provide general credit card, ATM, overdraft facilities along with no

frills account to encourage the account holders to actively operate the accounts.

The accessibility of banking services is poor on an account of various constraints

such distance, no money, low income and difficulty to understand the banking

services.

Suggestions to Government

Government should take various steps regarding a greater focus on credit rather

other financial services like saving and insurance although banks and financial

institution and co-operative did provide facilities.

Government must conduct generation camp on financial services like no frills,

SHGs and its benefits for opening an account to all the socially excluded groups.

Government should introduce new scheme to bring the socially excluded groups

to be included in the financial sectors by offering low interest rates, credit

facilities, low premium insurance, schemes, pension scheme and promote self

help group.

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CONCLUSION

Financial inclusion and infrastructure should go hand in hand for all round tribal

development to take place so as to ensure that villagers have access to health

education, shelter, information, technology and insurances apart from credit

behaviour. The development on tribal should give a great ability to improve the

standard of living.

TABLE – 1

SOCIO – ECONOMIC PROFILE OF THE RESPONDENTS

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Socio-Economic FactorsRespondents

Number Per cent

Age (years)

Below 25 8 3.6

26-35 41 18.6

36-45 53 24.1

46-50 37 16.8

Above 50 81 36.8

GenderMale 187 85.0

Female 33 15.0

Education

Illiterate 30 13.6

Primary 48 21.8

Secondary 37 16.8

High School 47 21.4

Higher Secondary 38 17.3

Graduate 17 7.7

Post Graduate 2 .9

Diploma 1 .5

Type of occupation

Agriculture 30 13.6

Agri. Labour 79 35.9

Dairy Farm 12 5.5

Traditional 25 11.4

Seasonal business 19 8.6

Petty business 10 4.5

Private jobs 30 13.6

Government 15 6.8

Family monthly income

Below Rs.5000 161 73.2

Rs.6000-10000 44 20.0

Rs.11000-15000 10 4.5

Rs.16000-20000 4 1.8

Rs.20000-25000 1 .5

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TABLE 2

HAVE A BANK ACCOUNT

ParticularsRespondents

Number per cent

Yes 147 66.8

No 73 33.2

Total 220 100.0

REASONS FOR NOT HAVING BANK ACCOUNT

Distance 15 20.5

No money 44 60.3

Lack of saving 5 6.8

Lack of awareness 4 5.5

Lack of advice 3 4.1

No identity cards 1 1.4

Lack of understanding 1 1.4

Total 73 100.0

TABLE 3

AWARENESS OF NO FRILLS ACCOUNT

Awareness Respondents

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Number Per cent

Yes 82 37.3

No 138 62.7

TOTAL 220 100.0

PURPOSE OF USING NO FRILLS ACCOUNT

PurposeRespondents

Number percent

No use 82 100.0

SOURCE OF KNOWING NO FRILLS ACCOUNT

sourcesRespondents

Number percent

Media 39 47.6

SHG 14 17.1

Bank 20 24.4

Others 9 11.0

TOTAL 82 100.0

TABLE 4

AWARENESS LEVEL OF THE RESPONENTS ABOUT FINANCIAL SERVICES

OFFERED BY BANKS BEFORE AND AFTER OPENING AN ACCOUNT

Awareness of Financial ServiceRespondents

Number Per cent

15

Deposits and saving – BeforeNot familiar 105 71.4

Just familiar 42 28.6

Deposits and saving – After

Not familiar 12 8.2


Well familiar 79 53.7

Pass book and cheque – Before

Not familiar 59 40.1



Pass book and cheque – After




Loans and interest rate – Before



Well familiar 3 2.0

Loans and interest rate – After

Not familiar 6 4.1



ATM and credit – BeforeNot familiar 94 63.9


ATM and credit – After

Not familiar 9 6.1



Insurance schemes – BeforeNot familiar 90 61.2


Insurance schemes – After

Not familiar 12 8.2



TOTAL 147 100.0

TABLE 5

CHANGES IN RESPONDENTS AWARENESS OF FINANCIAL SERVICES OF BANKS

BEFORE AND AFTER OPENING AN ACCOUNT

PAIRED SAMPLE‘t’ – TEST

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Paired Difference

‘t’

Degrees

of

freedom

SignificanceTable

valueMeanStandard

deviation

Awareness score

before opening an

account – Awareness

score after opening an

account

4.9728 1.8688 32.262 146 ** 2.610

TABLE 6

STRATEGIES FOR FINANCIAL INCLUSION

Banks should include excluded sectorRespondents

Number Per cent

Flexibility 89 40.5

Simplicity and speed 49 22.3

Small product size 44 20.0

Instruction 38 17.2

TOTAL 220 100.0

Separate departments focusing excluded sector

Respondents

Number percent

Highly needed 35 15.9

Need 125 56.8

Neutral 33 15.0

Not needed 21 9.5

Certainly not needed 6 2.7

TOTAL 220 100.0

Interest rate close to 25 per cent Respondents

Number percent

Strongly agree 3 1.4

Agree 7 3.2

17

Neutral 6 2.7

Disagree 171 77.7

Strongly disagree 33 15.0

TOTAL 220 100.0

TABLE 7

RELATIONSHIP BETWEEN SOCIO ECONOMIC FACTORS OF THE

RESPONDENTS AND HAVE A BANK ACCOUNT

Socio economic factors

Calculated value

Table value

Degrees of Freedom

Significance

AGE 2.607 9.488 4 NS

GENDER 4.101 3.841 1 *

EDUCATION 8.003 11.070 5 NS

OCCUPATION 24.704 18.475 7 **

MONTHLY INCOME

19.949 11.345 3 **

TABLE -8


RESPONDENTS AND PURPOSE OF OPENING AN ACCOUNT

Socio economic factors

Calculated value Table value Degrees of Freedom

Significance

AGE 4.983 9.488 3 **

GEDER 0.044 3.841 1 NS

EDUCATION 7.652 11.0700 5 NS

OCCUPATION

5.655 14.067 7 NS

FAMILY MONTHLY INCOME

3.858 7.815 3 NS

TABLE 9

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RESPONDENTS AND AWARENESS LEVEL ABOUT NO FRILLS ACCOUNT

socio economic factors

Calculated value

Table value Degrees of Freedom

Significance

AGE 6.142 15.507 8 NS

GENDER 1.052 5.991 2 NS

EDUCATION 17.491 18.307 10 NS

OCCUPATION 27.592 23.685 14 *

FAMILY MONTHLY INCOME

7.678 12.592 6 NS

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19

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Web Sites

www.mixmarket.org

www.cgap.org

www.rbi.org.in

www.banknetindia.com

www.crisil.com

www.microlinks.org

www.microfinanza.com

www.SMERA.in

www.povertytools.org

www.sprinkerlink.com

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http://www.sprinkerlink.com/

http://www.povertytools.org/

http://www.microfinanza.com/

http://www.microlinks.org/

http://www.crisil.com/

http://www.banknetindia.com/

http://www.rbi.org.in/

http://www.cgap.org/

http://www.mixmarket.org/

http://goworldBank.org/4YSZ5KS6CO

C 8- U. Jerinabi & P. Santhi

Documents

family monthly

unorganized

avinashilingam

socially excluded

low income

urban slum

annual bankers

socio economic