Faisal

FINANCIAL INCLUSION – AN EVALUATION OF INITIATIVES AND IMPACT IN AGRICULTURE WITH SPECIAL REFERENCE TO PALAKKAD DISTRICT IN KERALA

Presented by

FAISAL.C

(Reg.no.2011 R 1390)

FINANCIAL EXCLUSION Inability of some social groups to access financial

system It can be geographical exclusion ,exclusion on the

ground of charges ,exclusion due to ignorance and self exclusion

CAUSES OF FINANCIAL EXCLUSION Terms and conditions Identity requirements Psychological and cultural barriers Banker’s approach

WHO ARE EXCLUDED Marginal farmers Land less labours Self employed and unorganised sector enterprises Urban slums Migrants Senior citizen and women Large pockets of population in north east, eastern and central

region of India

FINANCIAL INCLUSION It means the delivery of banking services at an affordable

cost to the vast sections of disadvantaged and lower income group.

Task is not easy since rural house hold are illiterate, poor and unorganised

In UK only 12% household are unbanked. In Australia 3% have lack of account But in South Africa only 4% have bank account

In India after nationalisation of commercial bank shift focus from class banking to mass banking

New branch authorisation policy of RBI encourage to open new branches

Micro finance and SHG also play greater role

TOOLS OF FINANCIAL INCLUSION

A no frill banking account for making and receiving payment

A saving product suited to the pattern of cash flows at a poor house hold

Money transfer facility Small loans and overdraft for productive personel and

other purpose Micro insurance (Life and non life )

AGRICULTURE FINANCE IN PALAKKAD

Palakkad known as ‘rice bowl of Kerala’ Net cultivated area is 284 lakhs hectares Major crops are Rice, Coconut, Groundnut, Cotton,

Sugarcane, Pepper, Banana, cashew nuts ........ Etc

AGRICULTURE FINANCING INSTITUIONS Co-operative sector banks like Kerala state co-operative

banks, Palakkad district co-operative banks, various primary agriculture societies

Nationalised banks like SBT, SBI,Canara bank

Punjab national bank etc Unorganised financial instituions

STATEMENT OF THE PROBLEM

NSSO (National sample survey organisation) data reveals that 45.9 million farmers in the country (51.4%) are not possible to access any formal financial services.

Commercial banks are slowly coming to appreciate the business potential in financial inclusion and also need better involvement

Banks and other financial institutions can also take some efforts on their own to improve the inclusive growth of people.

OBJECTIVES OF STUDY

To analyze the impact of financial inclusion among the sample respondents

To evaluate role of financial institution among farmers

To consider the role of borrowing in agriculture activities

To recognize financial services provided by different financial institutions

To study role of government and NGO’s in promotion of financial inclusion

RESEARCH METHODOLGY

Research design The study will cover Palakkad District was

deliberately selected for the study because it is one of the district was identified by SLBC Trivandrum, to implement the “pilot project on 100 per cent financial inclusion” by opening `no frills' account or zero balance accounts especially for the poor.

Population Out of total of 845181 workers 348299 i.e.

41% are agricultural labour’s so it is relevant to study the impact of the financial inclusion on agriculture in Palakkad district.

Sample size A sample size of 120 farmers over palakkad

district taken for detailed analysis Sample techniques Simple convenient sampling method is used

for selecting the sample element. The researcher may make use of any convenient base to selected required number of sample

Data collection method Both primary and secondary data were

required for the study. The primary data will collected from 120 selected SHG and farmers with the help of a pre-tested structured interview schedule. Secondary data were collected from, published reports and websites.

Analytical tool used Simple percentage method, chi-square

analysis used to draw useful conclusion with all the available data obtained through the administration of questionnaire. The data were computerized in order to study the financial inclusion among framers

LIMITATIONS OF THE STUDY Illiteracy of farmers affect collection of data The research study was limited to palakkad

district only Study is conducted with limited size of 120

farmers Limited geographical location and Personnel

bias of respondents affect generalization The study had time constraint as the time

was only a period of six month As the study was vast area of study, the cost

should also be wide but due to cost constraint the whole area was not able to be covered.

CHAPTER SCHEME CHAPTER I

Deals with introduction and design of study which involve general introduction, statement of the problem, objectives of the study, scope of study, research methodology, limitations of this study and chapter scheme

CHAPTER II

Involve review of literature which involves theoretical background and examination of previous study in this field.

CHAPTER III

Includes profile of study CHAPTER IV

Deals with analysis and interpretation of study which is collected by using pre structured questioner

CHAPTER V

Conclude with a summary of findings and recommendations in last chapter

FINDINGS only 67% of respond have a bank account and

only 33% of have no bank account with any financial institutions

25% of people open account for saving money 30% open account for request a loan 33% open account for to get remittance from debt relief schemes 8% open account for to provide remittance and 4% open account for some other purposes like to remittance from Mahatma Gandhi employment assurance schemes etc.

25% of persons are helped by agriculture officer to open an account 18% peoples are helped by village or panchayath officer 21% helped by their neighbors 25% are helped by friends and relatives 8% are helped by bank officials and 3% helped by others

42% of people have not enough money to open account 8% people have no banks in this area 2% people have no point for cash receive or paid 13% of people feel that it is a lengthy process 32% people believe that it is not important to me 3% people have some other reasons

8% of people had refused to open account because of no identity requirement 25% of people had refused because of bad credit history 13%of people refused due to had to have minimum amount 50% of people refused to open account because of agriculture is not a trusted activity and 4% people refused due to some other reasons.

75% of people aware about availability of special agricultural loans but 25%not aware about the availability of such things

25% of users are do not use account 9% are use once in a month 25%are use once in a quarter 16%are used in a half year 9%are used once in a year 16%are used frequently through the year

30% farmers are borrowed from banks 8%from their relatives 17% from friends 42% from money lenders and 3% from others.

59% of peoples using banks for borrowing due to low interest rates 25%use bank because trust worthiness 8% used because of loan is arranged or offered by bank and 8% used because of some other reasons.

17% of people anxiety about agricultural debt 50% people fairly anxiety 25%not anxiety and 8% not sure about such matter

25% of people is use other sources of borrowing because of small amount of availability 30% because of no security or guarantee 17%becouse of local availability 8% because of convenience 17%becouse of know lender or collector 3%becouse of some other reasons

17% of people faced problem of time consuming 50% face negligence from borrowers 17% faced problem of guarantee requirements 8% faced problem of accessibility 8% faced problem of only big amount offered by borrowers

75% of respondent are not using any financial product or services but 25 % use financial product and services.

8 % people have agricultural insurance 92 % have no agricultural insurance

33% of believe that insurance is too expensive 50% people not bothered about it 8% believe that no need for it 6% believe that no insurance person come to door still now and 3 % persons have some other reasons.

To find out the relation ship between type of account and reason for opening account

conduct chi-square analysis the result is that is no significant relationship between type of account and reason for opening account

To find out the relation ship between reason for not having bank account and refusing of bank account conduct chi-square analysis the result is that there is no significant relationship between reason for not having bank account and refusing of bank account

To find out the relation ship between anxiety about agricultural debt and working of agriculture credit counseling centers conduct chi-square analysis the result is that there is significant relationship between anxiety about agriculture debt and working of agriculture credit counseling centers.

SUGGESTIONS Every bank should be forced to establish a

customer care /May I help you Counter at every branch so that new customer should be guided and relevant information is provided

To increase the awareness, there is a good scope of having financial literacy cell or credit counselling centres in each taluk so that it can take care of uneducated/illiterate farmers

Every bank should be made to offer No frill saving account with basic services without terms & conditions which are class/group specific but are applicable to all

Private sector should be involved in process of financial inclusion and they should be made realise that it is not only a business opportunity for them but corporate social responsibility too

creation of awareness among farmers about various insurance products, bringing all crops in all areas under insurance cover, low premium rates, simplified procedure for settlement of claims, village to be made as the base unit for assessment of crop damage, providing cover to farmers for all types of risks including weather insurance is very essential

The Financial Institutions may open up separate setup through personnel professionally qualified preferably under Social welfare or similar academic areas. This set up may provide counselling in other areas too like education ,health, sanitation, civic rights etc. which can enable small and other vulnerable segments of farming community look for, beyond financial inclusion, inclusive growth.

Strengthen agency banking (micro finance institutions, business facilitators and business correspondents). Our very old post offices will be an ideal channel to pursue the future long term goals of agency banking especially in rural India. A Post Office Card Account may be created for those who are not able or unwilling to access a basic bank account

Increase coverage under mobile banking and satellite banking and develop new platforms. Recent developments from private players like Nokia, which has introduced Nokia Life Tools for agriculture, should be targeted as potential partners in achieving such goals.

CONCLUSION

Financial inclusion especially among farmers is not a onetime effort; it is an on-going process. It requires a major mind-set change in the minds of every individual involved – banker, bureaucrat, regulators etc.,

As observed by Dr. Yunus, “…….basic ingredient of overcoming poverty is packed inside each poor person. All we need to do is to help this person to unleash this energy and creativity.... Only place in the world where poverty will exist will be in the museums and no longer in human society.”

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