International Workshop on Enhancing delivery Govt. to People Payments for Rural Area 29 th November 2012.

International Workshop on Enhancing delivery

Govt. to People Payments for Rural Area

29th November 2012

Madhya Pradesh Model

Paradigm Shift for

Financial Inclusion

Dr Aruna SharmaACS, RD, Panchayat & Social Justice

Understanding Financial Inclusion

• Financial Inclusion is an opportunity and not an obligation.

• Providing easy and hassle free access to financial services.

• For poor it means creating access to affordable banking including micro credits, savings, loans, insurance, remittances and financial advice.

Challenges in Madhya Pradesh

Janpad Panchayat Seoni Malwa

RRB

CCB

Bank Post Office

Nationalised Bank

Developing MP Model of FI

• Limitations in the present directions of RBI and Ministry of Finance- Speaks about population norm.

• Paradigm shift- From Population to Geographic distance.

• Banks/Post Office/Other Financial Institutions taken on board through SLBC.

Re Engineered Fund Flow

Paradigm shift from Population to Distance

Bank-wise Shadow Area Villages

Model Ensures

• Brick and mortar structure of financial point within 5 km.

• Cleaning of Accounts.• Updating of data of beneficiaries of various Social

Sector Schemes.• Pension schemes based on recurring deposits can be

developed under this model.• Banks to branch out like granting loans, financial

literacy drive, selling of insurance etc.

The Service Area Banks have onerous task to reach out through

Ultra Small Banks

The confidence of beneficiary when the banner reflects name of the Bank and is brick and

mortar (100sq feet space provided in E-Panchayat Bhavan).

State Government facilitating

• To banks to set up Ultra Small Bank.• Providing Rent Free Accommodation in each

Panchayat.• Separate e-Panchayat Room for USB.• Fully furnished room with free internet

connectivity.

Issues with Banks

• RBI has already agreed for geographical distance approach

• The definition of unbanked areas• Need that SLBC approves the list of opening

branch in unbanked rural banks• SMALL BANK norm as business proposition to

be understood by the banks.

Issues with Post Office• Old instruction of post office having account only in

District HQ commercial bank: resulting in two months of delayed payments due to late clearance of cheque.

• The new order to open Account in nearest Commercial Banks to be executed immediately

• Non-Core banking/Computerization• Cash carry limits to be enhanced

Issues with UID

• UID enables to only identify the individual as declared by him/her

• Biometrics for payment is the only issue• Monitoring requires family data i.e. family to

be provided 100days of employment• MP Model propose to use combination of NPR

and UID

Issues related to MORD

• The system of payment through banks in state of MP is 100%.

• Once account is opened it should be multi-purpose for all the schemes of the Government/Financial Inclusion:- payments, housing subsidy, pensions, fertilizer subsidy, food-subsidy etc.. Along with enabling factor for deposits etc..

The Model in Action

Case Study of district.• T+3 system an integrated model of ongoing

initiatives by various financial institutions.• T+3 system for NREGS workers to enable them

to received payment within 3 days.• Android based facilities to generate e- Pay

Orders.

Vast Distances in Balaghat District

The Model in Action

Accounts Status as on September 2012

Out come

Time taken for cheque to be credited in GP Account

Time taken for Payment to Labour

The Smiling Faces

The Smiling Faces

THANK YOU