ROLE OF STATE BANK OF INDIA IN FINANCIAL INCLUSION

PROGRAMME
WITH SPECIAL REFERENCE TO NANDED DISTRICT

Synopsis Submitted to
Swami Ramanand Teerth Marathwada University Nanded (M.S.)

for the registration of degree of

DOCTOR OF PHILOSOPHY
in Management

Research Scholar
Miss Leena Omprakash Zanwar

Research Guide
Dr. H. S. Patil
Asst. Professor,
School Of Management Science,
S.R.T.M.U.N.
Sub Centre – Latur

June 2016

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INTRODUCTION TO STUDY

India has a long history of banking development. After Independence, the

major focus of the Government and the Reserve Bank was to develop a
sound banking system which could support planned economic development
through mobilization of resources/deposits and channel them into productive
sectors.

State Bank of India, largest and strongest nationalized bank in India ranks
top among first five banks world-wide. SBI is an Indian public sector bank
&financial service company having its major presence in country as well as
in various nations across the world-wide. It is primarily a government owned
corporation & its head quarter is in India.

The number of commercial Banks in a country provides an opportunity for

the people of that country to participate in the formal financial system and to
utilize financial services of formal financial system. Larger the number of
commercial banks, larger the scope for bringing people in to formal financial
system provided if banks provide suitable financial products and services.

Rangarajan committee (2008) defined financial inclusion as, "the

process of ensuring access to financial services and timely and adequate
credit where needed by vulnerable groups such as weaker sections and
low income groups at an affordable cost.”

Financial inclusion is a buzzword now and has attracted the global attention
in the recent past. In India, it is a new concept. More than 70% of our
population lives in the rural areas. Financial inclusion is a necessity for a
country where a large chunk of the world’s poor resides. Access to finance
by the poor and vulnerable groups is a prerequisite for poverty reduction,
employment, economic growth and social cohesion. Further access to
finance will empower the vulnerable groups by giving them an opportunity
to have a bank account, to save and invest, to insure their homes or to
partake of credit and there by facilitate them to break the chain of poverty.
Financial inclusion refers to a process that ensures the ease of access,
availability and usage of the formal financial system for all members of an
economy. An inclusive financial system has several merits. It facilitates
efficient allocation of productive resources and thus can potentially reduce
the cost of capital. In addition, access to appropriate financial services can
significantly improve the day-to-day management of finances.

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 The financial inclusion emphasizes on conversion of unbanked area into
banked one. Having a bank account does not mean financial inclusion.
Financial inclusion is the process of ensuring access to appropriate financial
products and services needed by all section of society in general and
vulnerable groups such as weaker sections and low income groups in
particular, at an affordable cost and in a faire and transparent manner by
regulated mainstream institutional players. Financial inclusion is a critical
for achieving inclusive growth in the country. It can help in reducing the
growth of informal sources of credit (such as money lenders), which are
often found to be exploitative. Thus, an all-inclusive financial system
enhances efficiency and welfare by providing avenues for secure and safe
saving practices and by facilitating a whole range of efficient financial
services.

An inclusive financial system facilitates efficient allocation of productive

resources and thus can potentially reduce the cost of capital. This system
enhances efficiency and welfare by providing avenues for secure and safe
saving practices and by facilitating a whole range of efficient financial
services like easy day to-day management of finances, safe money transfer
etc. The govt. of India as well as the banking industry has recognized this
imperative and has undergone fundamental changes over the last two
decades. In fact, in order to address the issues of financial inclusion, the
Government of India constituted a “Committee on Financial Inclusion”
under the Chairmanship of Dr. C. Rangarajan. Not only in India, but
financial inclusion has become an issue of worldwide concern, relevant
equally in economies of the underdeveloped, developing and developed
nations. Building an inclusive financial sector has gained growing global
recognition bringing to the fore the need for development strategies that
touch all lives instead of a select few.

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REVIEW OF LITERATURE

RBI (2005) proposed financial inclusion based on the business facilitators/

business correspondent model, adapting the Brazilian success story in India.
In 2005, efforts were made enabling banking services to reach the rural areas
through credit facilities. While the banking network started expanding in the
rural areas, there were still a majority of the population in rural areas without
having access to banking services. The reasons behind these are: declining
productivity of the rural branches of SCBs, digression of RRBs from their
social objective of reaching out to the masses and the fragility of the
cooperative credit structure. The report also identified supply and demand
side reasons for the lack of penetration of banking services in the rural areas.
The report mainly focused on further acceleration of efficient and effective
delivery of credit to the rural farm and non-farm sectors and in order to
achieve this, the suggestions provided by the committee in the report were
broadly based on the three models such as business facilitator model,
business correspondent model and microfinance model.

GOI (2008) examined financial inclusion as a delivery mechanism providing

financial services at an affordable cost to the vast sections of the
disadvantaged and low-income groups. The recommendations of the report
focused on the following areas. First, financial inclusion should include
access to mainstream financial products. Second, banking and payment
services should be available to the entire population without discrimination.
Third, promotion of sustainable development and generation of employment
in rural areas should be a priority. Fourth, financial inclusion must be taken
up in a mission mode and thereby suggested the constitution of a National
Mission on Financial Inclusion (NMFI) in order to achieve universal
financial inclusion within a specific time frame. Fifth, the Committee also
recommended for the constitution of two funds with NABARD – the
Financial Inclusion Promotion and Development Fund, and the Financial
Inclusion Technology Fund for better credit absorption capacity among the
poor and vulnerable sections of the country and also for proper and
appropriate application of technology in order to facilitate the mandated
levels of inclusion. In short, the report provided an understanding of one of
the best ways to achieve inclusive growth through financial inclusion.

Mandira Sarma,Jesim Pais ,Sept 2008”Financial inclusion and Development:

Across country Analysis” they find out that level of human development and
that of financial inclusion are strongly positively correlated, income as
measured by per capita GDP is an important factor in explaining the level of
financial inclusion in a country. they find that income inequality, adult
literacy and urbanization are also important factors.
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Prof. N.S Rao, Mrs. Harshita Bhatnagar,”Vol 5, issue3, Sept 2012, Financial
Inclusion: Issues and Prospects” they found out that that financial inclusion
shows positive and beneficial changes because of intensity change and
technology changes.

Josiah Aduda and Elizabbath Kalunda Vol 2,no6,2012 ,“ Financial Inclusion

and Financial Sector Stability With Reference To Kenya: A Review of
Literature” This paper studied that enhanced measures of financial inclusion
which include both access and usage should be applied, since access and
usage are not the same but supplementary. Informal financial services should
also be included as they play a big role in developing countries.

THE PROBLEM STATEMENT

Services Extended through ‘Financial Inclusion’

Financial products and services provided to the people through financial
inclusion are:
1 Service facility
2 Overdraft facility
3 Payment and remittance services
4 Low cost financial services
5 Cheque facility
6 All kinds of commercial loan
7 Electronic fund transfer
8 Credit and Debit Cards access
9 Access to financial markets
10 Financial advice
11 Insurance (Medical insurance)
12 Micro credit during emergency
13 Entrepreneurial credits

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Reasons for “Financial Exclusion”
Financial exclusion is a serious concern among the low-income households
as well as small businesses, mainly located in semi-urban and rural areas. It
is the unavailability of banking services to people living in poverty.
According to K. C. Chakraborty “Financial Exclusion” is the lack of access
by certain consumers to appropriate, low cost, fair and safe financial
products and services from mainstream providers”. There are 3 types of
exclusions: (a) people who do not have any access to a regulated financial
system; (b) people who have limited access to banks and other financial
services; and (c) individuals who have inappropriate products.

Financial exclusion can make poor people vulnerable to loan sharks. It

breeds poverty and hinders overall development of a country. It not only
widens the “Rich-Poor divide”, it also leads to “Social exclusion”. There are
a variety of reasons for financial exclusion. The reasons are:
1Lack of banking facility in the locality (i.e. geographical exclusion
including a rural-urban divide);
2 Financial illiteracy;
3 Nonchalant attitude of the staff;
4 Cumbersome documentation and procedures;
5 Unsuitable products;
6 Language;
7 Feeling uncomfortable by a section of population in visiting a bank
branch;
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8 Lack of awareness and initial inhibitions in approaching a formal
institution;
9 Low incomes/assets;
10 Distance from branch and branch timing;
11 Fear of refusal.

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OBJECTIVES OF THE STUDY

1. To discuss about the conceptual aspects of financial inclusion.

2. To point out the reasons for financial exclusion.
3. To highlight the measures taken by SBI for promoting financial inclusion.
4. To analyse the financial inclusion through SBI operating in Nanded
Disrtrict.

SIGNIFICANCE OF THE STUDY

Emerging economy like china, Indonesia, the Philippines, India and

Malaysia are expected to grow by double digits annually by the year
2030(PR Newswire, 6th September 2000)2. The present scenario of Indian
economyis growing, and the rate of growth is more than many other
developed countries, but what we need is a uniform growth; the condition of
the poor people in our country should also be improved at a faster rate.
Commercial banks play a vital role in the economic development of our
country. According to the RBI guidelines, banks in India should implement
financial inclusion policy to enter vulnerable groups, by providing adequate
financial services and by mobilizing their small savings. Thus the present
paper aims to throw lights on the role of commercial banks in the financial
inclusion programme.

SCOPE OF THE STUDY

The present study covers the different aspects of Financial Inclusion

Programme under State Bank Of India. The study is important in the Nanded
to find out the strategic trend of Financial Inclusion Programme under SBI
such as problem faced in district related to financial services.

LIMITATION OF THE STUDY

1.The study and the research will be limited to the Nanded geographical
region only.
2.The research will be carry out analytical study of the Financial Inclusion
Programme under SBI.
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THE METHODOLOGY:-
The methodology which will be used for carrying out the report will be used
as follows:-

Types of data sources:-

For present research work primary as well as secondary data will be used.
Research will be broadly classified into two sections, various statistical tools
will be used to suggest & analyses the primary and secondary data.

1.Tools of collecting primary data:-

The information will be collected directly from the managers of the banks,
borrower, lenders and employees of the banks.

A. Questionnaires and surveys:-

This will include range of response questions, close ended questions,
providing limited answer to specific responses or a numerical scale.

B.Interview:-
This will be include people to interview, develop the interview questions
including open-ended questions and close ended questions & carefully
eliminating leading questions.

C.Sample size :- The sample size of Taluka is 8 of Nanded district.

The 240 Respondent will be selected from selected villages from selected
talukas of Nanded District.
8 Taluka * 3 village * 10 Respondent = 240

D.Sampling technique:-
The study will be using simple random sampling. All these data will help in
formulating as very comprehensive case study. All sample units will be
personally contacted & interviewed.

2.Tolls of collecting secondary data:-

Various statistical tools will also be used to analyses the secondary data are
as follows:-

A.Document review:-
Obtaining the actual forms & operating document correctly being used.
Review blank copies of form & samples of actual completed forms.

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B.Observation :-
Analyzing annual report & press releases, verifying the statement made
during the interviews.

C.web search :-
The information related to the Nanded district will be studied from internet
to other published papers.

D.Various policies from commercial banks will be dealt in details by

referring various government publications & reference book, journals,
published data from time to time.

E.Research of journals, periodicals, technical materials, electronics/ internet

search, professional meetings, seminars and discussion, site visits etc.

F.Sampling like records, reports, operational logs, data entry documents,

complaints & various types of forms.

HYPOTHESIS

1 Hypothesis 1:-
Null Hypothesis :- There is no significance difference between measures
taken by SBI and Expansion of financial inclusion.
Alternative Hypothesis :- There is significance difference between measures
taken by SBI and Expansion of financial inclusion.

2. Hypothesis 2 :-
Null Hypothesis :- There is no significance relationship between financial
inclusion programme conducted by SBI and increase in economic and social
change of low income people.
Alternative Hypothesis :- There is significance relationship between
financial inclusion programme conducted by SBI and increase in economic
and social change of low income people.

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CHAPTER SCHEMA:-

The following will be chapter schema of Research Report.

Chapter 1 :- Introduction and Research Methodology

Introduction to Study
Present Trend
Statement of Problem
Objective and Importance of Study
Scope and Limitation of the Study
Methodology
Hypothesis

Chapter 2 :- Review Of Literature and Research

Chapter 3 :- Theoretical view of Financial Inclusion

Meaning of Financial Inclusion
Financial Inclusion & Financial Exclusion
Role of SBI in Financial Inclusion Programme

Chapter 4 :- Profile Of State Bank Of India In Financial Inclusion

Programme

Chapter 5 :- Data Interpretation , Data Analysis and Interpretation

Population
Determination of Sample Size
Instrument of Sample Size :- 1. Primary Data 2. Secondary Data
Method of Data Collection : 1. Questionary 2. Interview
Method of Data Presentation
Questionaries result in percentage
Statistical Tool
Testing Hypothesis

Chapter 6 :- Findings and Suggestions to improve the situation and

Conclusion

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CONCLUSION

The purpose of this study is to understand and analyze the Financial

Inclusion Programme taken by State Bank of India .The researcher will be
broadly present the a view on the concept and emergence of Financial
Inclusion in Nanded subsequently progressing with the perspective of
financial inclusion.

A comprehensive exercise for understanding and validating the effectiveness

of financial inclusion of SBI on the basis of the primary and secondary data.

REFERENCE

1. Chakrabarty K.C (2011), "Financial Inclusion and Banks: Issues and

Perspectives", Reserve Bank of India Bulletin November issue, Reserve
Bank of India
2. Chakrabarty K.C (2006)” Indian Bank: A Case study on Financial
inclusion” Reading on financial inclusion published by IIBF& Taxman, New
Delhi
3. Dev, M.S. (2006), "Financial Inclusion: Issues and Challenges",
Economic and Political Weekly, Vol.41, pp. 4310-4313
4. Dr A Sarkar (2013) Financial Inclusion Part 2 Fostering sustainable
Economic growth in India, The Indian Banker Volume 8 No 5
5. Dr,S Valli Devasena &Dr,M Gurupandit(2010),Financial Inclusion and
Banking services, Third concept, An International Journal of Ideas Volume
24,No 284
6. Reserve Bank of India "Report on Financial inclusion”
7. Rangarajan, C., Report of the Committee on Financial Inclusion, Ministry
of Finance, Government of India, 2008
8. R Devaprakash(2010) Tackling Financial Exclusion Operational and
Strategic Choices, The Indian Banker, Volume 5,No 9
9. Sarma Mandira (2010), Index of Financial Inclusion, Discussion Paper
10-05, Jawaharlal Nehru University, India.

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BIBLIOGRAPHY

The bibliography and annexure will be given at the end. It is hoped that this
research will be open new avenue of Analytical Study On Role State Bank
Of India In Financial Inclusion Programme With Special Reference To
Nanded District.

Research Guide Research Scholar

Dr. H. S. Patil Ms. Leena Om. Zanwar
Asst. Professor,
School Of Management Science,
S.R.T.M.U.N.
Sub Centre – Latur

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