Rockstar of Financial Inclusion: Business Correspondent Model of India

About Author:  Jatinder Handoo is a social business enthusiast and a branchless banking practitioner. Currently works at FINO PayTech Ltd and is based out of Mumbai. He is reachable at [email protected]

India is a hot bed of financial exclusion. A country which houses nearly 16% of the global population  has more than 65% of its people outside the formal financial system (Global Findex 2012). The Indian banking system has adopted multiple approaches to make universal financial inclusion a reality right from early days Indian post-independence banking system. Be it bank nationalization in 1969 or formation of Regional Rural Banks. Formation of NABARD or fostering microfinance through Bank-SHG linkage programme in early 90’s. A shimmering ray hope was rekindled with the growth of JLG based microfinance, however later studies made it clear that the model is credit led, concentrated predominately in the southern region of India thus could not be seen as painting complete financial inclusion canvas.

Savings Video Documentary by CMF - How do poor people save?

Hi there blog readers

The year is coming to a close and as a member of the Knowledge Management team at CMF, I am really pleased at the kind of work that we at CMF are involved with. The month of November this year, proved to be a highlight as we focused entirely on the savings theme. From discussing various research papers which we blogged about, to finally taking all the theory and substantiating it along with video-graphical proof or instances from the field was a challenge in itself. If you have missed out on any of the Savings-related blog posts for the month of November - click on this link and you shall find them.

Savings, no matter how simple it sounds is a complicated case. It does not matter whether you hail from an economically strong section or a weak one - there is lot more involved apart from how one's occupation alone. Behavioral factors play a crucial role and this video presentation is an attempt in capturing that aspect.

This is a maiden attempt by Centre for Microfinance (CMF-IFMR) in capturing a unique theme like 'Savings'. We hope to see our readers' participation in the form of comments and even are open to any kind of feedback.

For now, from the KM Team, we can assure you to look forward for more of these kind of presentations in the future on various themes that deal with Financial Services for the Poor.

Merry Christmas to everyone out there !! :)

KM Team - CMF-IFMR

A Short Message from the Avaaj Otalo Project…

“Namashkar…

Welcome to the Agriculture Advisory and Agriculture Information service of Awaaj Otalo. Today we will discuss….”

If you were a Gujarati (treatment) cotton farmer in the Sayla or Chotila taluka district in Surendranager, each Wednesday you’d be receiving a call on your mobile phone that would begin with the above message (in Gujarati, of course) with the voice of our Agriculture expert, Tarun Pokiya.

The voice behind AO: Tarun teaching me about cotton in a field in Sayla

A ride to remote reality

So far I’ve only had the chance to read blogs written by others. This is going to be my maiden blog of my maiden field tour. This was not only a wonderful and educative exposure, but also had a lot to offer in terms of beautiful sights and surprise encounters.

I learnt 2 weeks in advance that I would have to spend a month in Andhra Pradesh, conducting a small pilot study. I was very thrilled, mainly because I finally had an opportunity to go to the field, to work at grass root level and acquire new management skills but also because I would get to tour AP, which is famous for its scenic beauty. When I set off for the tour, I had a volley of thoughts grappling inside me, an unusual feeling mixing fear of the unknown and latent excitement about the outing.

I would like to share some stories with you from my experiences to show that sometimes, even on the field one can mix work and pleasure!!

Photo: A village in Andhra Pradesh

Understanding Agricultural Credit and Financing

Its been a while since I have written a post here and last time I wrote - it was on the savings theme - a whole month of reading, talking, discussions and two SPARK sessions (usual literature/study review presentations at IFMR Research). I am still working on a video documentary meant for the Savings theme - should be done in a week or two perhaps. This is when I started spending time on a topic that has been mentioned here before: agricultural financing. 

The first document I have come across is this: Link - Agricultural Credit in India: Status, Issues and Future Agenda. This document has a very comprehensive breakup of how India's policy on agricultural credit has come to be right from the colonial period. Yes, it is outdated, however seeing how the government has come to play a massive role in shaping up agricultural credit and its features in India - a question rises in my mind. Did the Government do a mistake by regulating too much of it? This idea or question is partially because of watching this interesting documentary on how Government's should not be involved in regulating industries. For those of you who would be interested in what Friedrich Hayek (exponent of classical liberalism) has to say about the role of Government, I suggest you watch this documentary - Link

As you can see from the history of agricultural credit in the previous document, there was a time when people relied heavily on money-lenders and not on co-operatives - should that have been allowed to evolve? We cannot change the past, however we can change the direction we are headed now if we understand the past really well, at least I like to think so. Do watch out for more in the coming days on the topic of Agricultural Credit and Financing.

Morning reality check

A headline in yesterday's New York Times illustrates once again the gap between two Indias: The one we live in, urban India, where the roads might be bumpy and the power sometimes unreliable, but where people walk the streets freely, have access to information, schools and jobs. And on the other hand rural India, a world apart. The cut-off isn't this strict of course, and there are obviously a variety of situations in both Indias, rich and poor people everywhere; noone would dare denying the dramatic importance of urban poverty, while some rural areas have recently observed notable growth and prosperity.

But what distinguishes remote rural areas from the India we experience on a daily basis is without a doubt the isolation in which they live. Far from most traveled roads, some localities live in almost complete autarky, cut from any political or economic reality of contemporary India. Ruled by their local government bodies, they live in an age that we would think has long gone, where men order, women serve, and villages work as units closed from the rest of the world.

Why Government’s Rush to Use Aadhar-linked Benefit Transfers Could Derail the World’s Largest Unique ID Project

A few days ago, Prime Minister Manmohan Singh declared that from January 1^st, the government would start using Aadhaar linked bank accounts to transfer government benefits under 29 schemes in 51 districts across 16 states, taking on an unprecedented challenge. But is the program ready for implementation yet? It seems not. This announcement comes in the face of several problems evident in a pilot run in Rajasthan and mounting political pressure to give the green light to possibly try and fix the central government’s image in the face of recent allotment scams.

The project started enrolling citizens 2 years ago and plans to cut leakages in government transfers by verifying identities through biometric information recorded under the Aadhaar database, eliminating fraudulent claimants and using an electronic benefits transfer (EBT) system to deliver refunds to applicants directly.

In a speech in March, the prime minister stated that the program will “help implement the public welfare schemes launched by the UPA government in a more effective way. Complaints are received often that gas connections, diesel, fertilizers etc. which are provided on subsidized rates don’t reach the people… These benefits could be made to reach people through direct cash transfer to the beneficiaries. We will ensure through Aadhaar numbers that money reach the right person”.