Introduction and Research Methodology Chapter 1 Introduction and Research Methodology

Chapter -1 Introduction and Research Methodology Chapter 1 Introduction and Research Methodology

Index: . 1.1 Introduction 1.2 Importance of the study 1.3 Statement of the problem 1.4 Relevance of the study 1.5 Objectives of the study 1.6 Scope of the study 1.7 Limitations of the study 1.8 Statement of Hypothesis 1.9 Research Methodology 1.9.1 Research design 1.9.2 Environmental scan (Secondary Data) 1.9.3 Primary Data 1.10 Techniques of Analysis 1.11 Review of Literature 1.11.1 Books 1.11.2 Reports 1.11.3 Address 1.11.4 Articles 1.12 Chapter Scheme 1.13 References Chapter 1 Introduction and Research Methodology

1.1 Introduction: India is among the ten fastest growing economies in the world . The Indian economy has been growing at a steady rate of 8.5 % to 9% over the last five years. From an annual average growth rate of 3.5 % during the 1950 to 1980, the growth rate accelerated to 6% in the 1980s and 1990s and 9% in 2004 to 2008^* However, these positive trends are accompanied by a paradox- the 'other' side of India of poverty and inequality. Despite of substantial progress in various fields, it is disheartening that handful of populace is still languishing in the vicious circle of poverty and is cast aside.'"A shocking 30-35% of India's total population still lives below the poverty line . Poverty, accompanied by low health and nutrition levels, high infant mortality and illiteracy, is almost uniform in both rural as well as urban areas. 'As per the Indian definition of income needed to acquire food to provide the minimum required calories (2100 for rural adults and 1800 for urban adults), roughly 26% of population falls below the poverty line. According to annthpr definition of poverty- those living on less than $1 per day- 40% of )n fall below poverty line'*, sixty five years after independence, these are statistics and questions about the effectiveness of our policies and efforts

v'erty is not the only problem faced by poor, but another characteristic of their financial exclusion. Financial services actively contribute to the 1 ''onomic development of the society. These leads to social safety net £ ue people fi^omeconomi c shocks. But in India, almost half the country i' . per NSSO Survey 59'" Round, some key statistics regarding the exte.a of financial inclusion in India are as follows: 1) 41%) of the Indian population is unbanked (80 million households). Out of this, 40 % is unbanked in urban areas and 60 % in rural areas. Only 14% of adult population has credit accounts with formal financial institutions. 2) Out of the 203 million households in India, 147 million households are located in rural India. Out of these rural households, 89.3 million households are famer households. 66 percent of farmer households are marginal farmer households. 3) 51.4%) farmer households (45.9 million out of 89.3 million) are financially excluded from both formal and informal financial sources. 4) 27% farmer households have access to formal sources of credit. Among non- cultivator households nearly 80% do not access credit from any source North- East, Eastern and Central India account for 64% of all financially excluded farmer households in India. 5) Overall indebtedness to formal finance sources is 19.66% in these three regions. Geographically, 256 districts (out of 640 districts) representing 40 % of total districts in India, spread over 17 states and 1 UT have critical credit exclusion thresholds in respect of access to formal credit. 6) The proportion of people having some form of life insurance cover stands at 10% and people with any form of non-life insurance cover stands at less than 1%. There are only 3.1 policies per thousand people in India (2007) In short, exclusion is staggering whichever parameter one chooses to look at. The above statistics underline the desperate need for financial inclusion. The correlation between financial inclusion and economic growth has long been widely recognized low financial inclusion impedes economic growth. Access to easy and affordable credit by the disadvantaged social groups is acknowledged as a key criterion for poverty alleviation and reducing social inequity. The need for financial inclusion has always been recognised in the policy framework for the development of the formal financial system in India. In fact the decision to nationalise the private banks in 1969 indicates that financial inclusion has been in existence in a disguised form in the Indian economy.

The RBI has continuously stressed the need for financial inclusion and has undertaken number of financial inclusion initiatives right from 1960s till date. 1. Focus on increasing credit to the neglected economy sectors and weaker sections of society 2. Development of the rural banking ecosystem including RRBs, rural and semi- urban branches Implementation of the social contract with banks 3. Lead bank scheme launched for rural lending 4. Branch licensing policy to focus on expansion of commercial bank branches in rural areas 5. Establishment of National Bank for agriculture and Rural Development (NABARD) to provide refinance to banks providing credit to agriculture. 6. SHG-Bank linkage program launched by NABARD 7. The term Tinancial Inclusion' introduced for the first time in RBIs Aimual Policy Statement for 2005-06. 8. Banks asked to offer 'no-frills account', General credit card facility at rural and semi-urban branches 9. Know Your Customer (KYC) norms simplified 10. Banking Correspondent and Banking Facilitator concept introduced to increase out-reach 11. 100 percent financial inclusion drive launched 12. Restrictions on ATMs deployment removed The last seven years have seen a renewed thrust on financial inclusion in India. Initiatives like the SHG-Bank linkage program have resulted in millions of Indians participating in the formal financial ecosystem resulting in marked improvements in their lives. There has been a huge upsurge in micro finance initiatives with some micro finance institutions (MFI) acquiring national footprints. Greater financial inclusion often leads to an increase in economic prosperity which has a positive influence on inclusive growth.

1.2 Importance of the study: The XI five year plan (2007-2012) of India aimed at achieving a new vision of growth- "Towards faster and more inclusive growth"^. The regional imbalances and inequitable distribution can be corrected by means of inclusive growth. The term 'Inclusive Growth' emphasises ensuring that the economic opportunities created by growth are available to all - particularly the poor- to the maximum possible extent. Inclusive growth is a growth phase by which all sections and all regions of the economy are benefitted. An inclusive growth is not possible without financial inclusion. Financial inclusion is desirable for many reasons:

1. It facilitates efficient allocation of productive resources. 2. It brings about improvement in day to day management of financial resources. 3. It can reduce the growth of informal sector which is often exploitative. 4. It is a precondition for accelerating growth and reducing income disparities and poverty. 5. It enables economically and socially excluded people to protect themselves against economic shocks. 6. It is crucial to reduce poverty. Greater access to finance can help poor to build their assets and support income generating activity. 7. It is also important in achieving the Millennium Development Goal of eradication of poverty. 8. It is essential for fostering economic growth in a more inclusive maimer. Globally, financial inclusion drive gained a momentum lately as is reflected in various projects, reports and research being conducted by the international organisations like the World Bank and IMF. In India too, financial inclusion efforts have gained a reasonable prominence. The XI five year plan envisions inclusive growth as the key objective. Various initiatives have been undertaken by RBI towards fulfilling the objective of financial inclusion. Though much work has been done about financial inclusion at national level, the initiatives of the Public Sector Banks and Agricultural Credit Co-operative Banks in inclusive growth has not been studied at micro level. Hence researcher has selected the proposed topic for the study.

1.3 Statement of the problem: • Globally it is estimated that 2 billion people are currently excluded from access to financial services from formal sector. Of the six lakh villages only 30,000 villages have bank branches. In case of India, it has highest number of households (145 million) excluded from banking. Only little less than 20% of the population has any kind of life insurance and 9.6% of the population has non-life insurance coverage. Just 18%) have debit cards and less than 2%o have credit cards. In short, exclusion is staggering whichever parameter one chooses to look at. This excluded population has to be brought within the banking folds. The main reasons such as poverty, illiteracy and lack of information regarding banking are the major roadblocks that hold back financial inclusion. In order to find the extent of inclusion in Ahmednagar district and to find the probable solution to overcome the problem of exclusion in the district, researcher had selected the topic.

1.4 Relevance of the study: Relevance of the study is reflected in the following points: 1. By studying the people who are not included we would come to know the problems faced by poor in having access to banking field. 2. Various studies in Maharashtra regarding farmer's suicide by Indira Gandhi Institute, TATA Institute of Fundamental Research, Gokhale institute of Politics and Economics, Pune, Dr. Narendra Jadhav Committee have clearly stated that the victims committed suicide because they were unable to repay the debts they owed to money lenders. Lakhs of farmers committed suicide in Maharashtra and the reason somewhere was non access to bank finance. 3. The poor have to pay high interest rates even from 600 to 1000 percent on the loans borrowed from unorganised sector. They get trapped in the 'vicious' circle of poverty. 4. Government allocates a lot of money to the poor as subsidy which never reaches them due to many reasons. The subsidies can be directly rooted through banks. 5. Poverty reduction and poor people's employment would also depend on financial inclusion. 6. Financial inclusion is also related to social and economic inclusion. It means financial, social and economic inclusion is inter-related.

1.5 Objectives of the study : 1. To examine the Indian and global experiences of promoting financial inclusion. 2. To study the present situation of financial inclusion in India by analysing the branches in rural and urban areas. 3. To study the steps taken towards financial inclusion by Government of India and Reserve Bank of India. 4. To produce multidimensional indices of financial inclusion for Ahmednagar district at block level. 5. To explore complimentary or alterative policy approaches and practical initiatives to address the issue of financial inclusion.

1.6 Scope of the study : 1. Geographical scope is confined to Ahmednagar district. 2. Study covers the time period of 2005-2012 3. CBI and ADCC Banks have been selected by the researcher. 4. Study pertains to financial inclusion. Hence, theoretical scope covers history of Banking in India, financial inclusion- national and international experiences, profile of CBI and ADCC Banks and their initiative in bringing about financial inclusion. 5. Analytical study covers initiatives of CBI and ADCC Bank in inclusive growth of Ahmednagar district.

1.7 Limitations of the study : 1. Study is of CBI and ADCC Bank and is limited to Ahmednagar district only. 2. Responses generated from the respondents are based on their personal views. It may not be applicable as it is at other places. 1.8 Statement of Hypothesis: The study is based on following hypothesis: Ho': Person's level of financial inclusion is positively related to the level of income and level of employment Ho^: Person's level of financial inclusion is positively related to the banking penetration of the region Ho^: There is a significant level of relationship between number of accounts and person's level of literacy. Ho'*: Central Bank of India's performance regarding financial inclusion in Ahmednagar district is better than ADCC's performance. Ho^: Since the inception of inclusion programme the ranking of blocks as per index of financial inclusion has remained same.

1.9 Research Methodology : • The research was arranged in two parts running in parallel. Firstly, research into the direct experiences of financially excluded and secondly an evaluation of practical initiatives aiming to promote financial inclusion taken up by banks. Also multidimensional indices of financial inclusion are developed by combining three dimensions banking penetration, the availability of banking services and the use of the banking system. These dimensions are constructed by combining information on the number of accounts at banks, the number of bank outlets, GDP data and adult population. 1.9.1 Research design : A qualitative research design was adopted for the study. The research commenced in July 2010 with the topic exploration through secondary data analysis, hiformation gathered through secondary data analysis was used to formulate the interview guide. A series of meetings and discussions with the bankers were held m early 2011 and a follow up in November 2012 by using the interview guide. A survey through questionnaire was conducted m early 2012. 1.9.2 Environmental scan (Secondary Data): Initially, as a part of current study, researcher has completed an environmental scan of existing initiatives of various countries across the world and of Indian Government and RBI to address the problem of financial exclusion. Environmental scanning included: 1. Mining existing projects, reports, policy initiatives and programme information database. 7 2. Online research through major search engines. 3. Scanning websites. 1. Mining existing projects, reports, policy initiatives and programme information database: A natural starting point for a literature search on financial inclusion was the range of reports, academic database, policy initiatives and journals in Finance and Banking. The researcher has visited following institutes to get usefal information: Table No. 1.1 : Places visited S.N. Name of the Institute Place 1. National Institute of Banking Management Pune 2. Gokhale Institute of Politics and Economics Pune \ 3. Jaykar Library, University of Pune Pune 4. CD. Jain College Library (Research Centre) Shrirampur 5. Lead Bank Cell, the CBI Ahmednagar 6. Regional Office, the CBI Ahmednagar 7. Head Office, ADCC Bank Ahmednagar

Once relevant articles were located, the search strategy was extended by "Snowballing", that is, by obtaining copies of important papers and searching sources and related concepts mentioned in them. Two such papers were - C. Rangrajan's report on "Financial Inclusion" and M. Sarma's report entitled "Index of Financial Inclusion" - which proved as an important starting point for the snowballing process. 2. Online research through major search engines: Researcher conducted a variety of broad web searches utilising primarily the Google Internet Search Engine, Askjeeves Internet Search Engine, Mamma Internet Search Engine, Galaxy Internet Search Engine, Alvista Internet Search Engine, Galaxy Internet Search Engine, Electricmark Internet Search Engine and Goto Internet Search Engine and search terms including 'financial inclusion', 'financial exclusion', 'unbanked', 'economic growth'. 3. Scanning websites : Websites of various banks like ADCC, RBI, CBI were specifically visited. 1.9.3 Primary Data : 1.9.3.1 Sampling Frame : For the purpose of research only pubHc sector banks and agricultural co-operative credit societies are taken into consideration that too of Ahmednagar district only. Researcher had selected two banks- Central Bank of India and ADCC Bank for the purpose of study. Researcher had designated 14 blocks across Alimednagar district as priority areas. Researcher had decided to complete 28 key informant interviews- 2 interviews from each block. Researcher had reviewed these blocks and had further narrowed the scope by focusing on 4 blocks (28. 57 « 29%). While financial exclusion problem is more severe in rural families, researcher felt it was necessary in the current study to limit the sample to rural and semi urban areas so that results could be more easily generalized across the sampled population. 10% villages were selected fi-om each block. These 10% villages included4% having bank branches, 3% without bank branches but with population of more than 2,000 and 3% without bank branches and with population below 2,000.

1.9.3.2 Questionnaire: As mentioned earlier 10 per cent villages from each selected block (total 52 villages) were taken up for survey. These 10% villages included 4% having bank branches, 3% without bank branches but with population of more than 2,000 and 3% without bank branches and with population below 2000. Two sets of questionnaire were prepared for both- who are included and who are excluded. Questiormaire covered a brief written survey that asked respondents about their basic demographic information, information about current financial resources, and use of mainstream and alternative financial services, financial literacy and their own interest in financial learning. Total 520 respondents (10 respondents from each village) were covered.

1.9.3.3 Selection of Sample : 1. Selection of Banks : There are 15 banks in Ahmednagar district where financial inclusion plan has been initiated. Table No. 1.2 : List of banks 1. Central Bank of India 2. State Bank of India 3. Bank of Maharashtra 4. Union Bank of India 5. Bank of Baroda 6. Indian Overseas Bank 7. AllahbadBank 8. Bank of India 9. Dena Bank 10. Syndicate Bank 11. Canara Bank 12. Punjab National Bank 13. IDBI 14. Corporation Bank 15. Ahmednagar District Central Co-operative Bank (ADCC)

Out of these 15 banks, researcher has selected two banks (10%) - Central Bank of India and Ahmednagar District Central Co-operative Bank (ADCC) for the purpose of study. The method of sampling used is stratified sampling method. Banks are divided as PSBs and Co-operative banks. Sampling is 10% of universe size i.e. 10%) of 14 PSBs (one bank) plus ADCC Bank. Also convenience sampling method is used. The Central Bank of India being the lead bank and also with large number of bank branches and ADCC being the apex bank of Ahmednagar district have been selected for study. 2. Selection of Block (Tehsil): Ahmednagar district is geographically largest district of Maharashtra state. For administrative purpose Maharashtra Government has divided the district into 14 blocks. The district is divided into two parts i.e. North and South divisions of Ahmednagar district. Out of 14 blocks 2 blocks from each divisions were selected i.e. total 4 blocks (28. 57 « 29%) out of 14 blocks were selected for the purpose of study. Table No. 1.3 : Selection of Blocks Division of Selected Special Characteristic of Selected Ahmednagar Block Block (Reason for Selection) Plateau region, industrialised area and North Shrirampur Ahmednagar 100% irrigated due to MulaPravara. District Akole Tribal hilly area, irrigated and rural block. South Shrigonda 100% irrigated, agriculture oriented block. Ahmednagar District Pamer Drought prone, industrialised area. Total 04 Source: Primary Data

10 Purposive sampling technique of non- probability sample was used by the researcher for selection of Blocks. The main objective behind selection of above Blocks was variety of characteristics which will facilitate in depth study of the topic. Selection of villages: Four blocks were selected for the purpose of study. These four blocks have total 521 villages: Shrirampur- 54 villages, Akole- 191 villages, Shrigonda- 141 villages and Pamer- 135 villages. For in-depth study, the researcher has selected 10% villages from each block. Table No. 1.4 : Selection of villages Selected Total number Total number of Block of villages selected villages (10% of total villages) Shrirampur 54 05 Akole 191 19 Shrigonda 141 14 Parner 135 14 Total 521 52

Purposive sampling method was used by researcher for selection of villages for study. Under Financial Inclusion Plan under implementation, habitations with population of 2000 and above, as per 2001 census, are being taken up for provision of banking services. Hence, the selected villages included 4% having bank branches, 3% without bank branches but with population of more than 2000 and 3% without bank branches and with population below 2000.

11 Table No. 1.5 : List of villages selected

Villages without bank branches Villages Total Block with bank Population above 2000 Population below 2000 Villages branches Village Population Village Population Shrira- Ukkalgaon Gondhvani 3,866 Kuranpur 1,395 05 mpur Shrirampur Mamdapur 5,267 Kotul PimpalgaonNipani 2,704 Ghatghar 1,282 Samsherpur Dongargaon 2,813 Ghumari 1,605 Ganore Djamangoan Pat 2,403 Jahagirdarwadi 1,156 "o Shendi KeliRumhanwadi 2,149 KalasKh. 1,502 19 < Akole Nimbral 2,505 KeliKotul 1,027 Kalas Bk. Sugaon Bk. 2,435 Kombhalne 1,264 Rambhodi - - - - Shrigonda Chikhali 3,012 Yavati 1,521

C3 T3 Belwandi Chimbhale 4,439 Vadgaon 1,305 S o Mandavgan Deulgaon 2,607 Vadali 1,730 14

!/3 Kolgaon Doraje 2,095 Math 1,338 - Ghargaon 5,446 Pisora Bk. 1,567 Parner Kalas Bk. 3,651 Kinhi 1,201 Sune LoniMawala 2,715 Mandve 1,589 i Alkuti Randhe 2,451 Palwe Bk. 1,290 14 OH Vadzire Shirapur 2,771 Rayatale 1,520 Venkute 2,750 Shirapur 1,098 Total IT''' 18 '"""'WM' :/ :. ;':52:,::

4. Selection of respondents: For the purpose of primary data collection the respondents were divided into two - financially included and financially excluded. Researcher has selected 10 respondents fi-om each village (i.e. 10 x 52 = 520 respondents), 5 financially included (bank account holders) and 5 financially excluded (non-bank account holders). Simple random sampling method was used for the selection of financially included respondents and purposive sampling method was used for the selection of financially excluded respondents.

1.10. Techniques of Analysis: In order to analyse and interpret data, the researcher has used simple mathematical and statistical tools like percentage and proportion in order to make 12 primary data easily understandable. Also statistical techniques such as Coefficient of variation, Regression Equation, Scatter diagram has been uses.

1.11 Review of Literature The review of literature helps to understand the importance, background and present situation related to the subject for the research work. In this chapter, an attempt has been made to take a review of available literature published in the form of books, journals, thesis and newspaper. Several studies have covered the importance of financial inclusion, the causes of exclusion, the advantages of inclusion to the citizens and to the economy, financial literacy, and several elements of financial inclusion. Few studies have also highlighted the financial inclusion status globally, the extent of financial inclusion in India at national level, at state level and at district level. While browsing through the literature, it is observed that many researchers/ scholars have extensively and excellently reviewed the global strategies of financial inclusion which provides a valuable insight for India. The literature review is made through various books, articles, national and international journals, reputed daily newspapers. The literature review mainly focuses on variety of case studies as well as thoughts of esteemed researchers on the issue of financial inclusion. It also gives an idea about the successful models undertaken globally which can prove out to be a useful strategy for India for bringing about 100 percent financial inclusion.

1.11.1 Books : 1. Deepali Pant Joshi (2011) in her book, "Financial Inclusion Imperative and Sustainable Approaches", stated that it is worthwhile to have a look at the international experience in implementing policies for financial inclusion and examining their relevance to India. Cross country analysis of financial inclusion initiatives indicated that the more developed a society is, greater is the thrust on empowerment of the common man and low income groups. Author has suggested that India with its tremendous intellectual capital can better leverage information and communication technology (ICT) and technology based solutions for achieveing inclusive growth. 2. The book 'Portfolios of the Poor' (2009) documents the variety of ways in which poor households 'push' and 'pull' money on a daily, weekly or seasonal basis; how from time-to-time they act as microfmanciers, loaning funds out to friends and family when they have disposable funds; and how they are in turn subjects of credit from local shops, employers and moneylenders. The variety of financial tools used by poor people is what surprises most readers of 13 this carefully researched and vividly written book. Without finance, people would be relegated to a hand-to-mouth existence. For poor people with little income security, finance (understood as the ability to transfer value over time, space and people) is a necessity. 3. While microfinance has helped millions of people worldwide climb out of poverty, hundreds of millions remain destitute because they are unable to get the resources they need to take the first step. Vikram Akula in his book 'A Fistful of Rice: My Unexpected Quest to End Poverty' (2010) presents an innovative approach to reduce poverty in India by providing socially secured micro loans in rural areas with money raised from large capitalist financial concerns for an excellent rate of return and better security than most conventional investments. 4. C. K. Prahlad seeks to solve global poverty by turning the bottom of pyramid from victims of globalization to the beneficiaries through consumerism. In 'Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits' (2004) Prahlad explains that we can create inclusive capitalism, and all of our technology, managerial know how and investment capacity can make a huge contribution to the problem of pervasive global poverty. Prahlad has suggested that we can mobilize the investment capacity of large firms. Prahlad writes that the challenge is to find new and creative approaches to convert poverty into an opportunity for all concerned.

5. A. P. J. Abdul Kalam in 'Target Three Billion: Innovative Solutions Towards Sustainable Development' (2011) highlights the issues prevailing in rural India and suggests measures to improve standards of living. It focuses on the inclusive development project called PURA (Providing Urban Amenities in Rural Areas). The book plans to improve the standard of living amongst the poor rural population through voluntary campaigns such as community participation and entrepreneurship. 6. 'Speeding Financial Inclusion' by Sameer Kocchar, (2009) is based on the first ever nationwide multi- stakeholder study entitled 'National Study on Speeding Financial Inclusion' which was undertaken by Skotch Development Foundation. Apart from giving recommendations in the form of a roadmap to speed up the process of financial inclusion, the study has also sought to determine the viability and cost effectiveness of the Business Correspondent (BC) model and has identified several options to make the model viable. The author also emphasises the need for financial literacy as critical for sustaining 14 financial inclusion and to revisit the aims of financial inclusion so as to ensure reduction of financial disparity and equal distribution of fruits of growth. 7. In 'Microfmance and Financial Inclusion' (2012), S. Teki and R. K. Mishra has pointed out that financial inclusion is instrumental to the inclusive growth process and sustainable economic development of India. There has been increasing awareness and realisation that financial services hold the key to mainstreaming the poor and disadvantaged with the development of the country. The book provides a solution for poverty eradication by combining financial inclusion, microfmance and special financial institutions striving for providing access to financial services to the poor. 8. 'The Little Data Book on Financial Inclusion' is a pocket edition of the Global Financial Inclusion Database, published in 2012 in measuring financial inclusion. The Global Findex Database by AsliDemirgruc- Kunt and LeoraKlapper. It provides 47 country -level indicators of financial inclusion summarised for all adults and disaggregated by key demographic characteristics- gender, age, education, income, and rural and urban residence. The book also includes summary pages by region and by income group aggregates. Covering 148 economies. The indicators of financial inclusion measure how people save and borrow, make payment and manage the risk.

9. K. G. Karamakar, G. D. Banerjee, N. P. Mahopatra (2011) in 'Towards Financial Inclusion in India', provided an indepth analysis of the various pillars of financial inclusion such as micro- remittance, micro- savings, micro- credit and micro- insurance. The book stresses on financial literacy and counseling, which are core to the achievement of financial inclusion. The authors dwell upon the difficulties faced by vulnerable groups like women, tribals, weavers and rural populace while trying to access financial services. The book also analyses inclusion measures like ICT interventions, post office model and payment mechanisms.

10. In Financial Inclusion for Inclusive Growth, (2013) A. Rajmani Singha has made an attempt at providing a comprehensive and value oriented strategies for financial inclusion for inclusive growth. There are thirty research papers contributed by scholars from within and outside the country. The book provides deep information about financial inclusion and inclusive growth, financial inclusion and microfinance, financial inclusion and commercial banks, financial inclusion and ICT, financial 15 inclusion and micro insurance, financial inclusion and rural development and financial inclusion and entrepreneur ship. 11. Sameer Kocchar, R. Chandrashekher, K. C. Chakrabarty and Deepak Pathak (2009) have compiled in their book 'Financial Inclusion' the results of field visits and action research across India spread over last 10 years. These were conducted by Skoch Consultancy Services with recently added support fi-om Skoch Development Foundation. The compilation focuses on various facets of financial inclusion ranging from opening up of no- frills accounts to micro- credit to financial literacy, while emphasising the role of process changes, technology enablement, capacity building and outreach. It looks at examples of local bodies, post offices and tele-centres having been used effectively. It also provides a model for inclusive development.

1.11,2 Reports : 1. The 2011 Global Financial Inclusion (Global Findex) Database, fianded by the Bill and Melinda Gates Foundation, measures how adults in 148 countries save, borrow, make payments and manage risk. It is the first public database of demand side indicators that consistently measures individuals' usage of financial products across countries and over time. Global Findex aims to enable policymakers and researchers to construct and evaluate policies based on a sound understanding of the behaviours that characterise individuals' use of financial products. 2. 'Financial Access 2011: An Overview of the Supply- Side Data Landscape' by CGAP presents an overview of the landscape of financial inclusion data, with a focus on supply- side data. The report is divided into five parts. The overview of this report (Part 2) discusses the landscape of financial inclusion data, with a presentation of key- demand and supply- side data sources and a brief look at the findings. Part 3 provides a discussion of supply- side data, with information on country- level data. Part 4 focuses on the gaps in financial inclusion data and recommends ways these can be addressed by different stakeholders. The final section of the report offers the perspectives of leading experts on financial inclusion data. Their first hand experiences and reflections provide insights on why data are important and how the creators and users of data can make progress, both in data collection and in the use of data to further financial inclusion.

16 Financial inclusion 2020 Synthesis Report (Oct 2013):Accion puts forth the question 'Can the world achieve global financial inclusion by 2020?' Throughout 2013 the many participants in FI 2020 came together in asking this question to build a shared vision for the future of financial inclusion and develop a conmion roadmap guiding how to achieve it. In this report, with the insights from this collaboration, we look at what financial inclusion is, why it matters, and why we're confident it can be achieved in the foreseeable future. According to Littlefield, Elilzabeth; Helms, Brigit; Porteous, David (2006), "Financial Inclusion 2015: Four Scenarios for the future of Microfinance", the breadth of financial inclusion in a region or a country is usually measured by the percentage of people in the region who have access to bank accounts. This is primarily because a bank account enables poor households to perform important financial functioning such as saving money safely outside the house, accessing credit, making loan or premium payment and transferring money within the country. Thus, although a bank account covers only one aspect of financial inclusion, it may determine access for many other financial services.

According to U. Thorat, 2006, in her report 'Financial Inclusion and Millennium Development Goals, Economic developments in India : analysis, reports, policy documents', benefits of financial inclusion according to the Deputy Governor of the Reserve Bank of India are: Establishment of an account relationship can pave the way to the customer availing of a variety of savings products, loan products for consumption livelihood and housing. The account can be used for making small value remittances at low cost and making purchases on credit. The same banking account can also be used by State Governments to provide social security services like health and calamity insurance under various schemes for the disadvantaged. It is often felt that some contribution should be made by the beneficiary so that he has some stake. However, the deterrent is that the cost of collection of the premium that can be more than the premium itself If however it is collected through a no frills account, the cost is practically nil. From the bank's point of view, having such social security cover makes the financing of such persons less risky and hence can be covered by the loan component. Reduced risk means more flow of fiandsa t better rates.

17 6. Goland , Bays and Chaia J, (2010) in their report 'Global Financial Inclusion-Fall 2010" published that Financial inclusion will provide poor individuals with the opportunity to improve their standard of living; it can enable companies, especially financial-services providers, to do good while gaining access to many profitable new customers in dynamic and high-growth markets. For countries, it has the potential to stimulate economic activity and improve the overall quality of life of their citizens. The potential for positive social and economic impact is tremendous. For countries, it has the potential to stimulate economic activity and improve the overall quality of life of their citizens. 7. Financial exclusion according to Sinclair, McHard, Dobbie, Lindsay and Gillespie (2009) in 'Understanding Financial Inclusion 'can result from a range of five barriers namely, access exclusion which is caused by limited availability of or difficulty in securing appropriate services secondly condition exclusion resulting from conditions such as deposit or balance levels requirements and identify requirements and thirdly price exclusion caused by unaffordable charges for services or penalties. Fourthly, marketing exclusion occasioned by the way in which products are promoted, their image or mode of delivery and finally self-exclusion resulting from disengagement as a result of negative experiences or discouragement.

8. The promotion of an inclusive financial system is considered a policy priority in many countries. While the importance of financial inclusion is widely recognised, the literature lacks a comprehensive measure that can be used to measure the extent of financial inclusion across economies. MandiraSarma has attempted to fill this gap by proposing an index of financial inclusion (IFI) in her paper 'Index of Financial Inclusion' (2010). The IFI is a mulfi- dimensional index that captures information on various dimensions of financial inclusion in one single digit lying between 0 and 1, where 0 denotes complete financial exclusion and 1 indicates complete financial inclusion in an economy. The proposed index is easy to compute and is comparable across countries.

9. Report on 'CRISIL Inclusix : An Index to Measure India's Progress on Financial Inclusion' (2013) is India's first comprehensive measure of financial inclusion in the form of an index. It is a relative index that has a scale of 0 to 100, and combines three very critical parameters of basic banking services- bank penetration (BP), deposit penetration 18 (DP), and credit penetration (CP)- together into one single metric. For each of these parameters, CRISIL evaluates financial inclusion at the national/ state/ regional/ district level vis-a-vis a defined ideal. A CRISIL Inclusix score of 100 indicates the ideal state for each of the three parameters. CRISIL Inclusix follows a robust, transparent, and yet easy to understand approach. Its methodology is similar to other global indices, such as UNDP's Human Development Index. An important design element of CRISIL Inclusix is the use of non monetary parameters. This implies that the index uses parameters that focus only on the 'number of people' whose lives have been touched by various financial services, rather than on the 'amounts' deposited or loaned. This helps negate the disproportionate impact of a few high- value figures on the overall picture. 10. RBI's Report of the Committee on 'Comprehensive Financial Services for Small Business and Low Income Households' (2014) has suggested providing a universal bank account to all Indians above the age of eighteen years and has recommended a Vertically Differentiated Banking System with Payment Banks for Deposits. The way to ensure inclusion has been priority sector lending, which mandates 40 percent of each bank's lending be to weaker sectors. The RBI panel now recommends raising this share to 50 percent. The committee has desired that the Reserve Bank should issue regulations on suitability, applicable specifically for individuals and small businesses, to all regulated entities within its purview so that the violation of such regulations would result in penal action for the institution as contemplated under the relevant statues through a variety of measures, including fines, cease- and- desist orders and modification and cancellation of licences.

1.11.3 Address : 1. In a speech "Financial inclusion - a consumer centric view" by Speech by Dr SubirGokam, Deputy Governor of the Reserve Bank of India, at the Vlth V Narayanan Memorial Lecture, Kumbakonam, 21 March 2011 it was mentioned that we need to take fully into account various behavioural and motivational attributes of potential consumers for a financial inclusion strategy to succeed. In this sense, it is no different from any business strategy development exercise. The social costs and consequences of badly conceived and executed inclusion strategy could be enormous. We need to bring all relevant knowledge and experience into the development of the strategy in order to

19 maximize the possibility of it succeeding. Understanding what the potential consumer needs and why he needs it is one such knowledge input. 2. Dr. Rakesh Mohan in his address on "Economic Growth, Financial Deepening and Financial Inclusion" at the Annual Bankers' Conference 2006, at Hyderabad on Nov 3, 2006 has mentioned that there is currently a clear perception that there are a vast number of people, potential entrepreneurs, small enterprises and others, who are excluded from the financial sector, which leads to their marginalisation and denial of opportunity for them to grow and prosper. He concluded that financial inclusion will strengthen financial deepening and provide resources to the banks to expand credit delivery. Thus, financial inclusion will lead to financial development in our country which will help to accelerate economic growth.

3. According to Leeladhar, V., Deputy Governor, Reserve Bank of hidia, in his Commemorative Lecture at the FedbankHormis Memorial Foundation on December 2, 2005 at Emakulam. To sum up, banks need to redesign their business strategies to incorporate specific plans to promote financial inclusion of low income group treating it both a business opportunity as well as a corporate social responsibility. They have to make use of all available resources including technology and expertise available with them as well as the MFIs and NGOs. It may appear in the first instance that taking banking to the sections constituting "the bottom of the pyramid", may not be profitable but it should always be remembered that even the relatively low margins on high volumes can be a very profitable proposition. Financial inclusion can emerge as commercial profitable business. Only the banks should be prepared to think outside thebox! 4. Keynote Address by Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India at the Armual National Seminar titled 'Financial Inclusion of Urban Poor' conducted by the American India Foundation at New Delhi, on January 28, 2013, he mentioned that bringing the urban poor into the mainstream of the financial system can act as an important gateway for financial inclusion. Rolling out of an irmovative financial product, delivered through a user friendly channel, is central to achieving financial inclusion. This has to be seamlessly integrated with a strategy to improve the financial literacy of the targeted groups. Only then will we be able to avoid the problem

20 of low level of transactions in the newly opened accounts, which we are currently facing in our financial inclusion efforts in the rural areas. As I have always maintained, technology has to be the bulwark around which our financial inclusion efforts have to be developed. Innovative ICT solutions have to be leveraged to provide door step services of specifically designed products at place and time convenient to the targeted population group. Disbursement of bank loans in association with well meaning NGOs and also involving them in proper monitoring/ hand holding of beneficiaries can result in poverty alleviation for a large number of people. 5. In "Opportunities and challenges of financial inclusion", remarks by Dr Louis Kasekende, Deputy Governor of the Bank of Uganda, at the National Microfinance Conference, organized by the Association of Microfinance Institutions in Uganda (AMFIU), Jinja, 5 May 201 lit was concludedthat new technology especially in the area of electronic money transfer and agency banking are destined to drive most of the future efforts aimed at financial inclusion. A lot of care must therefore be taken to build sufficient risk-mitigation and regulatory mechanisms that ensure safety of savers' funds but at the same time promoting further advances to avoid stifling technological development.

6. "Banking on technology", a comments by Mr AnandSinha, Deputy Governor of the Reserve Bank of India, at the seminar for directors of banks on "IT governance, technology management and data warehouse/CRM cyber security", organised by the Institute for Development and Research in Banking Technology (IDRBT), Hyderabad, 13 May 2011.That banks need to take a disciplined approach to IT architecture, create standardised platforms, and wring more business value from technology investments. It is here that IT Governance plays a very significant role. Adoption of appropriate IT solutions for moving towards acquiring information from the customer centric perspective along with account- or product-centric perspective would place the banks at a competitive advantage. The banking industry relies on technology; to run their systems efficiently, effectively and securely as also to move ahead of its competitors. It is here that methodologies of technology management will play a significant role. The Data Warehouse solution in banks must be implemented in an iterative maimer and to maximise its benefits, it must be used creatively.

21 7. In "Furthering Financial Inclusion tlirough Financial Literacy and Credit Counselling", address by Dr.K.C.Chakrabarty, Deputy Governor, Reserve Bank of India at the launch of Federal Ashwas Trust on November 30, 2009 in Kochi, Kerala it is mentioned that lack of awareness is major stumbling block in initiatives of Financial Literacy and Credit Counselling, it is necessary to give wide publicity to the concept of credit counselling and the free availability of such services. Effectively utilizing the various mass communication channels and leveraging information technology would assume importance in this context. 8. "Sustainable financial inclusion" by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the Alliance for Financial Inclusion (AFI) Data Workshop, Lanai Kijang, Kuala Lumpur, 22 June 2010, it is concluded that the successful implementation of policy work in the area of financial inclusion requires the availability of quality data. The fact that this area still remains relatively unexplored, compared to the availability of data for corporate business, financial markets and other more sophisticated aspects of finance, clearly suggests that much work remains to be done. The magnitude and scope of the topic also requires a diverse group of policymakers to collaborate on a long-term basis. The establishment of a working group to improve the quality of financial inclusion data is therefore most timely, and will benefit policymakers in making better and more informed policies, as well as tracking the outcome of policy initiatives. In addition, it may also serve to increase the visibility new issues areas which are currently not being given sufficient priority by policymakers.

1.11.4 Articles : 1. In an article 'Financial Inclusion: An Overview', NirupamMehrotra, Dr. V. Puhazhendhi, Gopakumaran Nair G and Dr. B. B. Sahoo (2009) states that the process of economic growth, especially when it is on high growth trajectory, must strive to encompass participation from all sections of society. Lack of access to finance for small/ marginal farmers and weaker sections of the society has been recognized as a serious threat to economic progress especially in developing countries. Moreover, prolonged and persistent deprivation of banking services to a large segment of the population leads to a decline in investment and has the potential to fliel social tensions causing social exclusion. In this paper an attempt has been made to

22 calculate Financial Inclusion Index at state as well as district level. The values of Financial Inclusion Index (FII) showed that there has been a relative improvement in the status of financial inclusion between the period 2002 and 2006. In 2002, 378 districts (72 per cent) were in the lowest grade, however, in the year 2006, 330 districts figured in the lowest grade. Most of these districts have moved to the next grade where the FII ranges between 0.20 and 0.40. 2. M. Yunus (2011), in 'Vision 2050: A Poverty-Free World Social Business - A Step Toward Creating A New Global Economic Order' (2011) states that poverty, is not created by poor people but is an external imposition created by the theoretical framework and concepts we have formulated and by deficiencies in the system we have built and the institutions and policies we have designed. He gives this example of financial institutions - "they refiise to provide financial services to nearly two-thirds of the world's population. For generations, they claimed that it could not be done because the poor are not creditworthy, and everybody accepted that explanation". Thus our thinking, models and policies have to be redesigned to get to a new paradigm in thinking.

3. As commented by Kamath, R., Mukherji, A., and Sandstrom, M., (2010) in their article " Accessing Institutional Finance: A Demand Side Story of Rural India", the issue of financial exclusion is very diverse and in this paper we have tackled only the credit aspect of it. Savings, insurance, remittances and other broad-based financial services are also important. The basis for the provision of any financial service however lies in understanding characteristics of the financially excluded, so that at the very least, their needs can be incorporated. This analysis is a step in that direction - to clearly identify for us the key beneficiary groups towards whom financial inclusion policies need to be targeted. 4. Ravichandran, K. and Alkhathlan, K. in their article "Financial Inclusion- a Path towards India's Future Economic Growth" (2009) concluded that very few people have access to banking services. They have mentioned barriers to financial inclusion from demand and supply side. According to them, low incomes and assets, lack of awareness, illiteracy, social exclusion are the barriers from demand side while the distance from bank branch, cumbersome banking procedure, branch timings, documentation, language, lack of cooperation of bank officials, high transaction costs are the barriers

23 from supply side. The article also discusses Bank- SHG. Bank- MFI, MFI- NBFC and bank post office linkage models were discussed and new models like rural- student banking model and RBI- Education institute linkage models were proposed. 5. Swapan Kumar Roy (2012) in his article "Financial Inclusion in India: An Overview" mentioned that the banking industry in India has undergone dramatic changes. Previously the banks would target the rich customers. As a result, the have-nots or the bottom-line customers of the pyramid were ignored. They belonged to low-income group and had to take resort of moneylenders or informal lenders for taking advance/loan at exorbitant rate of interest. This situation cannot uplift the poor people and makes them destitute in the long run. Access to finance, especially by the poor and vulnerable groups, is an essential requisite for employment, economic growth, poverty alleviation and social upliftment. Here lies the importance of financial inclusion. In this article he has highlighted the pros and cons of financial inclusion in India.

6. Dr. Md. Ezazul Islam and Md. Salim Al Mamun (Dec 2011), in their working paper "Financial Inclusion: The Role of Bangladesh Bank" stated that recent global financial crisis identifies the weaknesses of financial markets routed in institutional flaws like absence of good credit appraisal, risk management etc. An efficient and organized financial sector can contribute to economic growth through savings mobilization and capital formation. Governments and central banks have an important role to play to avoid pervasive market failures and financial inclusion could help overcome frictions in the market mechanism by expanding coverage to poor and underprivileged people. 7. Swapan Kumar Roy (2012) in his article "Financial Inclusion in India: An Overview" mentioned that the banking industry in India has undergone dramatic changes. Previously the banks would target the rich customers. As a result, the have-nots or the bottom-line customers of the pyramid were ignored. They belonged to low-income group and had to take resort of moneylenders or informal lenders for taking advance/loan at exorbitant rate of interest. This situation carmot uplift the poor people and makes them destitute in the long run. Access to finance, especially by the poor and vulnerable groups, is an essential requisite for employment, economic growth, poverty alleviation and social upliftment. Here lies the importance of financial

24 inclusion. In this article he has highlighted the pros and cons of financial inclusion in India. 8. According to Rupambara (2007), in her article, "Financial Inclusion of the urban poor: Issues and Options", with rapid growth of urbanisation, social engineers have been compelled to give attention to providing financial services to meet the savings, credit, remittance and other financial requirements of the urban poor and not so poor engaged in the informal/unorganised sectors. Financial inclusion should not begin and end with opening of bank accounts. In fact, product innovation in financial services keeping in view their life cycle needs is the need of the hour. Rolling out of an innovative financial product, however, should not be undertaken without adopting a systematic approach that involves conducting market research on the financial needs, developing a proto type, analysing the associated risks, pilot testing of the product, etc. For improved efficiency and better risk management, innovative ICT solutions have to be leveraged to provide banking services at the doorstep of the excluded groups.

9. In an article "Financial Education" by P R Ravi Mohan (2008), it is stated that while financial inclusion, a known concept in Indian banking system, essentially addresses the access and availability of financial services, the financial literacy on the other hand ensures better usage of these services. Although inclusion and literacy are two sides of the same coin, the latter is more relevant to users of banking services even in urban and metro areas. The paper discusses the concept, importance and promotion of financial literacy. 10. In an article "Rural Banking Strategies for Inclusive Growth" by Anarender A. Reddy (2010), the author has reviewed the current scenario of rural banking and examined the developments in rural banking in the post-liberalisation period. The paper highlighted the transformation in reaching the rural sector by commercial banks in a competitive atmosphere and its impact on rural / priority sector lending. Paper suggested a new approach to banks to reach wider population in rural areas by establishing mobile-banks / representatives / agents who operate on commercial basis rather than just by self-help groups. These agents/representatives work on commission basis and hence self-motivated and cost effective in assisting banks in service provision/deposit.

25 11. In her article "Financial Inclusion: A Must for Financial Stability" Pratima Trivedi (2008)has mentioned that Indian economy in general and banking services in particular have made rapid strides in recent past. But still a sizeable section of population remains excluded from even the most basic services by the financial sector. All out efforts are needed as financial inclusion truly lifts the standard of life of poor. But in the chase for profitability, there is an obvious need to reduce operational costs. In this process, there is a natural exclusion of several sections of the society from the financial net. Several issues relating to financial inclusion, their reasons, steps taken in India to improve financial inclusion and IT solution for financial inclusion are discussed in this paper. 12. Rajdeep Sahrawat's (2010) paper on "Financial Inclusion - From Obligation to Opportunity" highlights that achieving sustainable financial inclusion will require a systemic effort which leverages technology, regulatory framework and appropriate business models cohesively. It is not a preserve or responsibility of one sector and will instead require game-changing innovations which more often than not occur at the intersection of different sectors e.g. banking and telecom. The growing ubiquity of IT and proliferation of wireless communication coupled with falling hardware and mobile phone costs provides a unique opportunity to deliver mainstream financial services to the poor at the required scale and affordability by leveraging ICT. Author has also suggested that through collaboration, the post offices can become a low cost distribution channel for the products and services of the financial institutions. Post offices can also host POS machines in a secure environment which can be accessed by the poor through smart cards. If the financial sector can also help in increasing the IT adoption in the post-offices, it will fiirther increase the efficiencies of the post-office based distribution channel.

13. The paper "Financial Inclusion in India: Integration of Technology, Policy and Market at Bottom of the Pyramid" by Jatinder Handoo (2010) vividly describes various technology led models of financial inclusion - particularly branchless, which have mushroomed in India for last few years, the changes in regulatory environment and customer expectations due to multiple options available. Finally the paper sums up with an open ended question what does future hold for millions un(der) served in India and how does technology, banking

26 and public policy could better address the developmental question of financial exclusion. 14. Cole, S., Sampson, T. And Zia, B. (2009) in their Harvard Business School Working Paper 09-117, "Money or Knowledge? What Drives Demand for financial Services in Emerging Market?" have tried to answer the question 'Why is demand for formal financial services low in emerging markets? Using original survey data from India and Indonesia, writers at the first instance have concluded that financial literacy is a powerful predictor of demand for financial services. To test the relative importance of literacy, they then implemented a field experiment offering randomly selected households financial literacy and finally concluded that financial literacy programme has no effect on the likelihood of opening a bank savings account, but do find modest effect for uneducated and financially illiterate households. On the other hand, small subsidy payments have a large effect on the likelihood of opening a savings account. These payments are more than two times cost effective than the financial literacy training.

15. Rachana (2011) in her paper, "Financial Inclusion and Performance of Rural Cooperative Banks in Gujarat" has examined financial inclusion in rural areas, satisfaction level of rural poor towards banking services and has assessed the performance of the banks which are working in the rural areas. According to Rachana, in India, the focus of the financial inclusion at present is confined to ensuring a bare minimum access to a savings bank account, without fi-ills, to all. This is not an end in itself Also she has mentioned that through RRBs and PACs have good coverage but most of them are running into losses and therefore commercial banks should seize this opportunity rather than look at it as a social obligation. 16. Gupta, D. and Gupta, P. (2008), in their paper "Mother Tongue Friendly e- Delivery Banking Channels in India- Ultimate Solution for its Popular Usage" have mentioned that increasing proliferation of mobile services and ATMs in iTiral areas of India has created a new opportunity to attain financial inclusion and thus is an effective tool to provide financial services to the unbanked areas. They have further mentioned that this task can be better handled by Public Sector Banks in India. 17. Paul and Sura (2006), in their paper, "Efficacy of Regional Rural Banks (RRBs) in India: a Conventional analysis" have tried to assess the growth pattern of RRBs, the credit distribution and geographical 27 distribution of RRBs. They have concluded that the overall position of RRBs in India is not quite encouraging. The poor credit-deposit ratio is still making dent on the desired functioning of RRBs. Since the RRB is supposed to be a bank for poor people, government should spread the branches of RRBs at grass root level to provide such banking service to the really needy rural people and to take corrective measures to raise the credit-deposit ratio of the bank that would make RRBs relevant in the rural India. 18. According to Prof Ramkrishnan, P.(2010), in his paper "Best Practices in Financial Inclusion" said that the essence of Financial Inclusion is to ensure that a range of appropriate financial services are available to every individual and all those who need these services are made to understand and avail them. Every citizen must be able to have his/her basic needs - access to food, clothing, and education, healthcare, shelter met. He further added that given the economic level of rural people and given the density of the population, conventional banking methods (brick and mortar) cannot cover all people in a cost effective maimer. IT needs to be part of the core infrastructure fordevelopment.

19. Monique Cohen and Candace Nelson(2011) in their paper "Financial Literacy: A Step for Clients towards Financial Inclusion", mentioned that fifteen years ago, 'financial inclusion' would likely have referred to an institutional issue such as portfolio growth, mirroring a common question "How many clients do you have?" Today the term is more centered on clients, encompassing both access (the institutional responsibility) and use ~ clients' ability to choose and use the services available to them. It implies financial capability. Financial education is essential to both of these overlapping concepts. Yet, fifteen years ago, few in the developing world had ever heard of financial education. Today, it is coming to your TV; your bank will send text messages reminding you to save; local newspapers run weekly financial advice columns; governments are mandating that financial institutions publish transparent product prices.

20. Katar Singh and RS Pundir (2000), in their paper "Co-operatives and Rural Development in India" have examined role of cooperatives in rural development of India. This paper characterizes and distinguishes co-operatives from other forms of organisations and highlights the important place they occupy in India's rural economy. It examines their contribution to rural development that is broadly defined as a set

28 of desirable societal goals such as increase in real per capita income, improved income distribution and equitable access to education, health care, and employment opportunities. It also identifies and briefly discusses some contemporary issues in the management of co operatives and outlines strategies for their resolution. The authors assert that despite their overwhelming importance in India's rural economy, most of the co-operatives suffer from a variety of internal and external problems. The major constraints identified by the authors include the lack of professionalism in management; an archaic co operative law, excessive control and interference by government; lack of good elected leadership; small size of business and hence inability to attain financial viability; lack of performance-based reward systems; and internal work culture and environment not congenial to the growth and development of co-operatives as a business enterprise. It is argued in the paper that rural co-operatives need to be democratically governed by Boards of Directors elected by their members in good standing, unshackled from the archaic co-operative laws, liberated from unnecessary government controls, and managed professionally, if they are to survive and grow in the new era characterised by deregulation, privatisation and globalisation.

21. Devendra Prasad Pandey and Amit Kumar Katiyar, (2010) in their paper "Financial Inclusion in Indian Scenario" concluded that in achieving inclusive growth in India, the financial inclusion will play a vital role and help the nation to drive away the not only the rural poverty but also the urban poverty in India. It is the duty of every Indian citizen to ensure that all the Indian will have bank account and everybody should take part actively in achieving 100% financial inclusion in India. 22. Mahajan, V. &Laskar, S. (2010), in their paper "Transition and Innovation in Rural Finance in India - A Call for Action in this Golden Decade" mentioned that improvements in technology such as core banking system software and hardware, tele-connectivity and biometric identification, are leading to a reduction in transaction costs. Finally, regulation is beginning to state inclusion as a goal. The authors are convinced that these efforts have reached a point where, with concerted action, it will become possible to achieve Universal Financial Inclusion (UFI) - by 2020. Thus this paper is a call for action and also suggests some details of how to go about achieving that goal. To do all these in a mission mode , we need to establish a

29 Nationwide Electronic Financial Inclusion System (NEFIS), authors argue that the resources, technologies and regulations are in place and this is the Golden moment pledge to achieve Universal Financial Inclusion - Sub-K-Liye! 23. In the paper by Laveesh Bhandari and Sumitha Kale (2008) titled 'Digital Payments and Financial Inclusion' enough emphasis has been given to the present scenario and the paper has brought out the importance of embracing technology as a cost effective measure to improve financial inclusion. Payments through mobile phones have been suggested as the most appropriate measure. The above review of literature helps to clear the concept of financial inclusion and also the related concepts are clarified. It also helps to understand various elements of financial inclusion. The review of literature on financial inclusion shows that in order to assess the extent of financial inclusion various authors, scholars and researchers have calculated indices on financial inclusion. But it is observed that these indices have been calculated at global, national and state level. CRISIL Inclusix has attempted to measure the index of financial inclusion at district level as well. But none of the scholars/ researchers has made an attempt to measure the extent of inclusion at taluka level. Also none of them have attempted to calculate the index of financial level at such micro level. Hence, the topic of present study where in the researcher has attempted to measure an extent of financial inclusion of Ahmednagar district and has calculated index at taluka level is totally new and untouched.

1.12 Chapter Scheme : The study is divided in seven chapters. Chapter first 'Introduction and Research Methodology' is introductory in nature. It gives a brief introduction about financial inclusion at global, national and district level. This chapter discusses the problem statement of the study, its objectives, scope and limitations. Also a detailed discussion about research methodology followed during the study period has been made in this chapter. The chapter also contains a thorough review of literature in which research based articles of esteemed researchers published in national and international journals are reviewed. Similarly number of reference books, articles in newspapers, magazines are also reviewed. Chapter second 'Conceptual Framework of Financial Inclusion' looks at conceptual framework of financial inclusion. In this chapter various dimensions of financial inclusion have been reviewed. What are the likely causes of low financial inclusion and what are various barriers to inclusion, elements and expected outcomes of financial inclusion are also highlighted. How poor people are trapped 30 in financial exclusion cycle is been reviewed in this chapter. Finally the chapter ends discussing various measurement approaches of financial inclusion and reviewing the indices developed by various committees and researchers for measuring financial inclusion. Chapter third 'A Retrospective of Financial Inclusion' briefly discusses the initiation of financial inclusion movement in India. A detailed discussion of banking sector development in India in the phased manner which was meant for cormecting the rural poor and deprived masses with the formal financial system which was nothing but step towards financial inclusion in a disguised form has also been made in this chapter. In India, financial inclusion drive gained a momentum lately only after 2005 when the XI plan aimed at achieving a new vision of growth- "Towards faster and more inclusive growth". We will then discuss the progress of Financial Inclusion Plan since 2005. Finally the current scenario of financial inclusion in India is also highlighted. Chapter fourth 'Financial Inclusion: Global Initiatives' takes a quick review of extent of financial inclusion in world. Also the chapter includes a review of iimovations and experiments being attempted in many countries. Many of these initiatives, in recent times, have drawn the attention of bankers, researchers, academics and policy makers. This chapter briefly captures such experiences and initiatives to provide cross country learnings and lessons for the way forward. Chapter fifth 'Profile of the Study Area' the research has given the profile of the study area and current status of financial inclusion in Ahmednagar district. With a view to know the profile of the study area along with its geographical and socio-economic conditions, it is appropriate to present the focus of study on understanding its development potentials and detailed information about the emphasis on the socio-economic profile of the study area. This chapter has two sections, the first section deals with the overview of Ahmednagar District in general and the second section particularly deals with the Index of Financial Inclusion (IFI) at taluka level. Chapter Sixth 'Analysis and Interpretation of Data' describes the methodology used to collect and analyze data, the actual data collected, and analyses of those data. The information about financially included population, financially excluded population and the bankers have been collected with the help of questionnaire and a detailed analysis of problems and prospects has been made in this chapter. Chapter Seventh, 'Summary, Conclusion and Suggestions' i.e. the current chapter, correlates the findings of the study with theoretical concerns of financial inclusion. Various conclusions drawn from the present study are also discussed which are then followed by the suggestions. 31 1.13 References : 1. International Monetary Fund Retrieved 2013. http://www.imf.org, p4 2. Mohan Rakesh, 'The Growth Record of the Indian Economy, 1950-2008: A Story of Sustained Savings and Investment', Keynote Address at the Conference "Growth and Macroeconomic Issues and Challenges in India" organised by the Institute of Economic Growth, New Delhi on February 14, 2008, http://rbidocs.rbi.org.in, p.2 3. Arunachalam Ramesh, 'Scoping Paper on Financial Inclusion: Considerations and Recommendations for UNDP', UNDP India, January 2008, p.l 4. Ibid 5. Approach paper to eleventh five year plan, planningcommission.nic.in ,p.65