Role of regulators in intensifying financial access to the untouched segment of society in developing country

2020 ◽  
Vol 4 (1) ◽  
pp. 8-14 ◽  
Author(s):  
Vinay Kandpal
Keyword(s):  
Low Income ◽  
Rural Areas ◽  
Financial Services ◽  
Banking Services ◽  
Reserve Bank ◽  
Investment Opportunities ◽  
Important Barrier ◽  
Ministry Of Finance ◽  
Ease Of Access

India is a country with diversity noticeable in each division of life as well as financial services. The current study examines the initiatives taken by the Ministry of Finance and Reserve Bank of India (RBI) to intensify the accessibility to investment opportunities in financial instruments for the poor or deprived section of society, the initiatives taken in past, present scenario and to recommend the initiatives for the longer term. Households living in rural areas or having low income usually lack access to banking services or financial services. It is tough for these families to save and to arrange financial resources for the longer term. The ease of access and usage of the financial services and products influences the economic health of the individuals as well as of the state. It has been analyzed that the most important barrier towards accessibility of financial service is the psychological and the profitability of banks. There is a requirement for a robust, dynamic research-based business model with regard to an innovative, digitalized and sound economic system.

scholarly journals FINANCIAL INCLUSION: A PRELUDE TO ECONOMIC STATUS OF VULNERABLE GROUP

2016 ◽  
Vol 4 (12) ◽  
pp. 147-154
Author(s):  
Mukesh Kumar Sharma
Keyword(s):  
Low Income ◽  
Rural Areas ◽  
Financial Services ◽  
Financial Stability ◽  
Financial Inclusion ◽  
Current Status ◽  
Easy Access ◽  
Resource Base ◽  
Banking Services ◽  
The Government

India is a country where a sizeable amount of population lives in rural areas. They are engaged in agriculture and allied activities. Most of the people living in rural areas are poor. They do not have any access to the banks. The awareness and access of the poor to the banking services is important for the alleviation of the poverty. Their access to the banking services will contribute a lot to the growth and development of our country’s economy. Financial inclusion is a great weapon to overcome the financial backwardness as well as the establishment of good governance.It broadens the resource base of the financial system by developing a culture of savings among large segment of rural population, disadvantaged group and plays an essential role in the process of economic development. The Government of India and the Reserve Bank of India (RBI) have been making concentrated efforts periodically to overcome such vicious problems by promoting Financial Inclusion, being one of the important national objectives of the country. Since first phase of nationalization (1969) GoI continuously promoting financial inclusion through self-help groups, no frills account, simplification of KYC, Business correspondents etc., but no palpable effect could be seen in the plight of these financially vulnerable people. To mitigate this long drawn financial sufferings, Prime Minister Narendra Modi announced a new scheme in his Independence Day speech on 15th Aug 2014 called Pradhan Mantri Jan DhanYojana (PMJDY). Mission of PMJDY is to ensure easy access of financial services for the excluded section i.e. weaker section and the low income group. This effort will certainly go a long way in promoting economic growth and reducing poverty, while mitigating systematic risk and maintaining financial stability. This article focuses on the RBI, GoI initiatives, current status and future prospects of financial inclusion in India on the basis of facts and data provided by various secondary sources. It is concluded that financial inclusion shows positive and valuable changes.

scholarly journals Information Asymmetry and Trust: A Framework for Studying Microfinance in India

2005 ◽  
Vol 30 (4) ◽  
pp. 77-86 ◽  
Author(s):  
M S Sriram
Keyword(s):  
Social Networks ◽  
Transaction Costs ◽  
Rural Areas ◽  
Financial Services ◽  
Imperfect Information ◽  
Informal Networks ◽  
The Poor ◽  
The People ◽  
Financial Transactions

In recent times, microfinance has emerged as a major innovation in the rural financial marketplace. Microfinance largely addresses the issue of access to financial services. In trying to understand the innovation of microfinance and how it has proved to be effective, the author looks at certain design features of microfinance. He first starts by identifying the need for financial service institutions which is basically to bridge the gap between the need for financial services across time, geographies, and risk profiles. In providing services that bridge this gap, formal institutions have limited access to authentic information both in terms of transaction history and expected behaviour and, therefore, resort to seeking excessive information thereby adding to the transaction costs. The innovation in microfinance has been largely to bridge this gap through a series of trustbased surrogates that take the transaction-related risks to the people who have the information — the community through measures of social collateral. In this paper, the author attempts to examine the trajectory of institutional intermediation in the rural areas, particularly with the poor and how it has evolved over a period of time. It identifies a systematic breach of trust as one of the major problems with the institutional interventions in the area of providing financial services to the poor and argues that microfinance uses trust as an effective mechanism to address one of the issues of imperfect information in financial transactions. The paper also distinguishes between the different models of microfinance and identifies which of these models use trust in a positivist frame and as a coercive mechanism. The specific objectives of the paper are to: Superimpose the role of trust in various types of exchanges and see how it impacts the effectiveness of repeated transactions. While greater access to information fosters trust and thus helps social networks to reduce transaction costs, there could be limits to which exchanges could solely depend on networks and trust. Look at the frontiers where mutual trust cannot work as a surrogate for lower appraisal costs. Use an example in the Canadian context and see how an entity that started on the basis of social networks and trust had to morph into using the techniques used by other formal nonneighbourhood institutions as it grew in size and went beyond a threshold. Using the Canadian example, the author argues that as the transactions get sophisticated, it is possible to achieve what informal networks have achieved through the creative use of information technology. While we find that the role of trust both in the positivist and the coercive frame does provide some interesting insights into how exchanges with the poor could be managed, there still could be breaches in the assumptions. This paper identifies the conditions under which the breaches could possibly happen and also speculates on the effect of such breaches.

scholarly journals Postal Bank in Ukraine: The Need and Risks of Creation

2021 ◽  
Vol 6 (521) ◽  
pp. 228-234
Author(s):  
D. M. Hladkykh ◽  
Keyword(s):  
Rural Areas ◽  
Financial Services ◽  
The State ◽  
Resource Base ◽  
Banking Services ◽  
Post Offices ◽  
Banking Market ◽  
Target Segment ◽  
Banking Institutions ◽  
Financial Monitoring

The article is aimed at substantiating the feasibility of creating a specialized postal bank in Ukraine, to define the list of related risks and possible directions for their reduction. The following key risks that hinder the establishment of a postal bank in Ukraine are identified: risk of lack of full control over the directions of investment of accumulated deposits of the population on the part of the NBU; liquidity risk; risk of non-compliance by the postal operator with economic standards that are mandatory for banking institutions; risk of capital deficit; risk of inability to support the postal operator with refinancing; risk of mass withdrawal of deposits by customers; risk of insufficient competence of «Ukrposhta» employees to comply with the requirements of financial monitoring; risks associated with the collection of large amounts of cash; risk of further growth of the share of the State-owned institutions in the banking market; risk of shortage of funds to close the agreement on the purchase of «Ukrposhta» by an already operating bank. Possible directions of minimization of these risks are proposed, in particular: implementation of key elements of successful experience in the banking services market of JSPPB «Aval»; defining as the target segment of clients of the new postal bank of the pensioners, who are currently customers of post offices, and as the basis of its resource base – the future pension and current accounts of individuals; use by «Ukrposhta» of the so-called «agency» model of financial services provision; association of «Ukrposhta» and «Oschadbank» into the State-owned Postal Bank; development of a list of key performance indicators for employees and branches of the new postal bank; development of a list of measures directed towards significantly improving the level of qualification of personnel of «Ukrposhta» branches; installation of POS-terminals and payment terminals in all post offices located in rural areas; establishment of individual economic standards for the new postal bank for the period of its full adaptation to activities in the banking market.

scholarly journals ROLE OF TECHNOLOGY IN FINANCIAL INCLUSION IN INDIA

2021 ◽  
pp. 1-5
Author(s):  
Arun.K.V
Keyword(s):  
Rural Areas ◽  
Financial Services ◽  
Business Models ◽  
Formal System ◽  
Financial Inclusion ◽  
Handheld Devices ◽  
Mobile Banking ◽  
Major Step ◽  
Banking Business

Technology and financial inclusion are the popular coinage in banking parleys in the country. While technological upgradation and mobile banking are catching up so fast, financial inclusion is tardy. Financial inclusion is a major agenda for the Reserve Bank of India (RBI). Without financial inclusion, banks cannot reach the un-banked. It is also a major step towards increasing savings and achieving balanced growth. The reach the country is having with technological progress mobile banking has the potential to emerge as a game changer in terms of costs, convenience, and speed of reach. Business models of banks, telecom operators and other stakeholders need to converge. However, the banking industry’s penetration to un-banked areas is still found sluggish. The role of the Indian banker is challenging. At one end of this spectrum lies the demand to achieve financial inclusion as nearly 50 per cent of the population is yet to be covered under the formal system of banking and at the other end lies the task to fulfil the needs of the existing customers. The first priority for banks is to adopt core banking solution (CBS), including all regional rural banks (RRBs). Next, a multi-channel approach using handheld devices, mobiles, cards, micro-ATMs, branches and kiosks can be used. However, it should be ensured that the transactions put through such front-end devices should be seamlessly integrated with the banks’ CBS. In rural areas, where accessibility is a problem, banks are using the microfinance network and business correspondents and facilitators to bring more people under the ambit of banking services. Capitalising on the huge untapped potential in smaller towns and cities and rendering financial services to this segment of people poses a big challenge. Few banks have explored technology solutions to increase the scale of their microfinance portfolios, with the use of smart cards and core banking solutions. KEYWORDS- Technology, Financial Inclusion, Core Banking, Business Correspondents

scholarly journals PROPERTY-SYNDICATION INVESTMENT V PROPERTY SCAM: WHO DECIDES? A CRITICAL EXAMINATION OF THE REGULATION OF PUBLIC-PROPERTY SYNDICATION SCHEMES IN SOUTH AFRICA

Obiter ◽  
2021 ◽  
Vol 34 (2) ◽  
Author(s):  
Tanya Woker
Keyword(s):  
Financial Services ◽  
Essential Element ◽  
Critical Examination ◽  
Investment Portfolio ◽  
Public Property ◽  
Reserve Bank ◽  
Investment Opportunities ◽  
Full Picture ◽  
Vulnerable Consumers ◽  
The Individual

Building an investment portfolio is an important part of saving for retirement. This not only benefits the individual concerned but it also has benefits for the economy as a whole. Investment in property is regarded as an essential element of an investment portfolio and many investors have over the years invested in public-property syndications. Unfortunately such investments have proved to be very risky and there have been some spectacular failures with severe consequences especially for elderly, vulnerable consumers. There is a need to ensure that all investment opportunities are properly regulated and different aspects of property syndications are regulated by different regulators including the Reserve Bank, the Department of Trade and Industry, the newly established Consumer Commission and the Financial Services Board. There seems to be some confusion amongst regulators over which entity is ultimately responsible for ensuring that such investments are sound and reliable and that consumers can have faith that they are not investing in a scam. The fact that no one regulator is responsible for overseeing the full picture is problematic because it enables the unscrupulous to slip under the radar and avoid detection. This paperseeks to consider the question of which regulator is or should be responsible for regulating public-property syndications and to make some suggestions for reform going forward.

scholarly journals The Nexus between Mobile Money Regulation, Innovative Technology and the Promotion of Financial Inclusion in Zimbabwe

2021 ◽  
Vol 24 ◽  
pp. 1-33
Author(s):  
Howard Chitimira ◽  
Elfas Torerai
Keyword(s):  
Low Income ◽  
Rural Areas ◽  
Financial Services ◽  
Banking Sector ◽  
Regulatory Framework ◽  
Financial Inclusion ◽  
Innovative Technology ◽  
Technological Innovations ◽  
Mobile Money ◽  
The Poor

The advent of mobile money innovations has given people in rural areas, informal settlements and other poor communities an opportunity to participate in Zimbabwe's mainstream financial economy. However, the technology-driven money services have presented some challenges to the traditional banking sector in general and the regulation of financial services in particular. Firstly, most mobile money services are products of telecommunication corporations, which are not banks. Telecommunication companies use their network reach to provide mobile money services via mobile devices at a cheaper cost than banks across the country in Zimbabwe. As such, banks face unprecedented competition from telecommunications companies that are venturing into financial services. It also appears that prudential regulation of banks cannot keep up with the fast pace at which technological innovations are developing and this has created a disjuncture between the regulation and the use of technological innovations to promote financial inclusion in Zimbabwe. The Banking Act [Chapter 24:20] 9 of 1999, the Reserve Bank of Zimbabwe Act [Chapter 22:15] 5 of 1999 and the National Payment Systems Act [Chapter 24:23] 21 of 2001 have a limited scope in terms of the regulation of mobile money services in Zimbabwe. The Ministry of Finance and Economic Development launched the National Financial Inclusion Strategy (NFIS) 2016-2020 to provide impetus to the financial inclusion of the poor, unbanked and low-income earners in Zimbabwe. However, the NFIS appears to push more for bank-led financial inclusion than it does for innovation-driven initiatives such as mobile money services. This article highlights the positive influence of mobile money services in improving financial inclusion for the poor, unbanked and low-income earners in Zimbabwe. The article also seeks to point out gaps and flaws in the financial services regulatory framework that may limit the potential of mobile money services to reach more people so that they actively participate in the Zimbabwean economy. It is submitted that the Zimbabwean mobile money services regulations and the financial regulatory framework should be carefully amended in line with the recent innovations in mobile money to adequately regulate the use of mobile money services and innovative technology to address the financial exclusion of the poor, unbanked and low-income earners in Zimbabwe.

scholarly journals A GLIMPSE INTO THE LEVEL OF FINANCIAL INCLUSION IN TRIPURA

2020 ◽  
pp. 1-5
Author(s):  
Sayan Saha ◽  
Kiran Shankar Chakraborty
Keyword(s):  
Financial Services ◽  
Composite Index ◽  
Secondary Data ◽  
State Level ◽  
Pilot Project ◽  
Financial Inclusion ◽  
Vulnerable Groups ◽  
Annual Reports ◽  
Banking Services ◽  
Reserve Bank

The term ‘Financial Inclusion’ signifies a process of ensuring delivery of financial services as well as banking services to the vulnerable groups at the point of need, adequately at an affordable cost. The concept of ‘Financial Inclusion’ was accentuated in 2003 by Kofi Annan, former General Secretary of United Nations. Such, efforts were undertaken by the Reserve Bank of India (RBI) in 2005 and the said policy as already mentioned in a pilot project was first implemented by Indian Bank. Probably, by implementing such policy resolution a vast section of the rural disadvantaged people in India was gradually coming under the ambit of formal banking services. The main aim of this paper is to assess the level of financial inclusion in Tripura based on composite Index. The study conducted in the four districts of Tripura state. The present study relies on secondary data. Secondary data collected from State Level Bankers’ Committee Reports, NEDFi databank, Economic Reviews and RBI Annual Reports. Through this paper Index of Financial Inclusion (IFI) has been used to assess the level of financial inclusion in Tripura.

scholarly journals Determinants of Financial Capability: A Situational Analysis for Namibia

2022 ◽  
Vol 7 (6) ◽  
pp. 7-13
Author(s):  
Asa Romeo Asa ◽  
Johanna Pangeiko Nautwima
Keyword(s):  
Rural Areas ◽  
Financial Services ◽  
Economic Inequality ◽  
Financial System ◽  
Financial Inclusion ◽  
Situational Analysis ◽  
The Poor ◽  
Development Agenda ◽  
Wide Range ◽  
Ease Of Access

It is imperative that if the poor in society benefit from the massive developments in the financial sector, then such a sector must be genuinely inclusive. It should meet the needs of all citizens with the potential to use such financial services productively. This paper scopes financial inclusivity as a process ensuring ease of access, availability, and usage of financial services by all members of society. To reduce socio-economic inequality, the poor in developing countries, like everyone else, need access to a wide range of financial services that are convenient, flexible, and reasonably priced. Therefore, financial inclusivity is sought to be significant towards the global development agenda as a tool for increasing the poor’s access to financial services, often cited as a mechanism that can help reduce poverty and lower income inequality. For many years, microfinance has been heralded as a mechanism for enhancing financial inclusion. It provides an avenue through which the marginalized and the poor can access and benefit from the formal financial system. Moreover, financial inclusivity is substantially evident in the rural areas among the poor, who have no collateral or credit history for participating in the legal financial system. As a result, financial inclusion is receiving increased attention as an essential tool for reducing aspects of socio-economic inequality characterized by the isolation of individuals and communities from formal financial services, like affordable and accessible credit.

Promoting Indigenous Financial Inclusion

2018 ◽  
Vol 9 (2) ◽  
pp. 1-11
Author(s):  
Michael D'Rosario
Keyword(s):  
Social Services ◽  
Financial Services ◽  
Potential Role ◽  
Banking Sector ◽  
Indigenous Communities ◽  
Financial Inclusion ◽  
Banking Services ◽  
Geographic Dispersion ◽  
Financial Exclusion

This article describes how the majority of Australia's indigenous communities live within isolated regions and are typically characterized by levels of disadvantage not evidenced within mainstream Australian society. While there are a number of reasons for the evidenced disadvantages, access to financial services and social services are acknowledged as key contributors. The article outlines the role of banking sector competition and changing banking structures on the exclusion of indigenous people from banking services. It is claimed herein that access, marketing, price, and self-exclusion all serve to promote financial exclusion. It is posited that forms of access exclusion such as bank branch access and geographic dispersion have served as the key structural impediments to indigenous financial inclusion. Specifically, this article considers the potential role of adaptive cellular technologies and community telecentres in addressing financial exclusion within indigenous communities. Detailing successful ‘social banking' models adopted in several developing countries, it is asserted that m-banking could serve as a powerful tool for inclusion.

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