A Case Study
Giridharan Raghunathan (413/17)
Pappu is a migrant labourer from Bihar who lives at Uttam Nagar west. He like thousands of others does not have access to formal banking and is often at the mercy of the informal ways of savings and remittances. One day he learns about a mini savings bank account, a joint initiative by Eko India Financial Services and SBI. So he approaches the customer service point, who also happens to be his next door chemist. All he needs is a mobile phone and an identity proof. The chemist helps him fill the account information form and explains to him that all transactions are conducted by simply dialing, without hassles of composing an sms. Pappu is now a proud bank account holder. He proceeds to make a deposit. To his surprise he finds that making a deposit is as simple as making a talk time recharge. The customer service point transfers account to Pappu’s account by simply dialing. Pappu has made his first deposit. Sometime later in Bihar, Pappu’s brother remembers that he needs to buy fertilizers for the crops. So he promptly rings up Pappu who promises to send him the money immediately. Pappu transfers the amount again by simply dialing. His brother is a happy man indeed to receive the money so easily and so quickly.
The above story is one of the many happy customers of the Simplibank service offered by Eko India Financial Services. Eko India Financial Services Pvt. Ltd (Eko), a Delhi based financial services company was founded to serve the section of the population which was financially excluded. The company believed that a basic saving account is important for financial inclusion. Eko realized that people from financially excluded communities owned mobile phones and the mobile penetration in India was rising rapidly. The company decided to develop its product based on mobile phone. It chose to use mobile phones as the mode of communication between banks and the end users.
Financial inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. As banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of the public policy. The term "financial inclusion" has gained importance since the early 2000s, and is a result of findings about financial exclusion and its direct correlation to poverty. Financial inclusion is now a common objective for many central banks among the developing nations.
Scope of Financial Inclusion
The scope of financial inclusion can be expanded in two ways viz., by state-driven intervention through statutory enactments (For example in the US, the Community Reinvestment Act and making it a statutory right to have bank account in France) and through voluntary effort by the banking organizations to create strategies which involve bringing together a large section of the society within its customer base.When the Banks do not pay attention to some sections, it is the responsibility of the Government and the Central Bank to help the situation. That is the reason why the Government is placing more importance on financial inclusion.
Financial Inclusion should be looked at from a very wide perspective. If a person has just access to a current/savings bank account without any extra frills, it is not regarded as a good indicator of financial inclusion. There are many levels of financial inclusion and exclusion. It is possible to identify easily the extremes of the gambit of inclusion and exclusion.
At one end, there are the ‘super-included’ who have access to a wide range of financial services and products. This section of customers is regarded as the...