f i nanc i a l i nc lu s i on i n i nd i a
25
be treated as the bank’s cash and the responsibility for
insuring this cash should rest with the bank.
Clearly, at the heart of the financial inclusion thrust
are the activities of the BCs and the quality and content
of their relationship with the customers and the banks.
In the following sections bankers’ perspectives on the BC
model and the new arrangement for their functioning
under the PMJDY are discussed. A fuller discussion of
BC models, the viability of BCs, their relationship with
existing institutions and channels of financial services
for a similar clientele, viz., Primary Agricultural Credit
Society (PACS), Regional Rural Banks (RRBs), microfi-
nance institutions (MFIs) and SHGs and the prospects
for the future is carried out in Chapter 3.
2.1.3 Financial Literacy
An integrated approach has been adopted for achieving
financial inclusion through financial literacy. As part
of RBI’s financial literacy strategy the financial literacy
centres (FLCs) and rural branches of Scheduled Com-
mercial Banks are advised to undertake financial literacy
activities in the form of awareness camps at least once
a month. For this, the Reserve Bank has devised model
architecture for conducting the financial literacy camps
in three stages starting with generating awareness in
the first stage, account opening in the second stage and
monitoring the usage of accounts in the third stage. In
order to ensure consistency in the messages reaching the
target audience of financially excluded people by the
FLCs, the Reserve Bank has issued comprehensive finan-
cial literacy material consisting of a Financial Literacy
Guide, a Financial Diary and a set of 16 posters which
is now available in 13 languages. The Reserve Bank has
advised all banks including RRBs to use the financial
literacy material as standard curriculum to impart basic
conceptual understanding of financial products and
services.
A review of the progress made by FLCs reveals that
514 centres were added during 2012–14 taking their
total number from 428 as at end of March 2012 to
942 as at end March 2014. These FLCs are creating
awareness about banking products and services through
indoor and outdoor activities. During the year 2013–14
over 3.8 million persons participated in these activities.
A quick study of FLCs conducted in 46 districts of
23 states in October 2013 covering 730 participants who
had attended financial literacy camps during the last
year revealed that almost all the participants (99 per cent)
had got linked to the formal banking system. Savings
account (89 per cent) was the most used banking product
and 44 per cent of the participants had availed of credit
products.
2.2 BANKERS’ ROLE AND PERSPECTIVE
ON FINANCIAL INCLUSION
2.2.1 Role of banks
Financial inclusion has been positioned as a
bank-led
model with the Department of Financial Services and
the Reserve Bank of India directing the course of the
engagement of the banking community, primarily the
scheduled commercial banks and regional rural banks
(RRBs).
The spectacular growth numbers in the parameters
being tracked by FIPs would appear to suggest that
the financial inclusion project is on track. Appendices
2.1 and 2.2 give details of bank-wise achievements and
initiatives aimed at financial inclusion. Banks have made
notable, sporadic, efforts at innovation in support in the
introduction of technology, financial literacy and other
methods of expanding outreach. An illustration of the
range of financial inclusion innovations of selected banks
is given in Box 2.1 below.
However, despite the impressive increase in the many
parameters of financial inclusion—number of rural bank
branches, number of basic bank accounts, number of
KCCs and GCCs, number of ultra-small branches and
FLCs—there is lack of satisfaction with the progress that
has been achieved. As stated by the then RBI Deputy
Governor in an address delivered to the 35th SKOCH
Summit the central bank is concerned about quality of
financial inclusion, since the number of transactions in the
accounts opened continues to be miniscule (Chakrabarty
2014). The poor governance of the financial inclusion
framework and the lack of accountability at the levels
of boards and senior of management of banks were seen
to be the reasons for the apparent underperformance of
the inclusion project. Banks need to develop appropriate
business and delivery models in line with their business
