15-12-2012, 12:17 PM
ROLE OF BANKS IN ACHIEVING FINANCIAL INCLUSION: A CASE STUDY OF STATE BANK OF MYSORE IN MYSORE DISTRICT
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Introduction:
Increasing Globalization has resulted in increasing remittance throughout the world. The updated technology can no long more exclude the people from the view point of utilization. Today, the banking industry has shown tremendous growth in volume and complexity. As banking services are in the nature of public good it is essential that availability of banking and payment services are provided to entire population in an egalitarian manner. In India, focusing on inclusive growth, financial inclusion has been used as one of the major component to achieve this stipulated target.
Financial Inclusion has become a buzzword internationally – even in developed financial markets there are concerns about those excluded from the banking system. The barriers to access to formal banking system have been identified as relating to culture, education (especially financial literacy), gender, income and assets, proof of identity, remoteness of residence and so on. Efforts are being made by the authorities – especially banking regulators to improve access to affordable financial services through financial education, leveraging technology and generating awareness.
In India the focus of the financial inclusion at present is confined to ensuring a bare minimum access to a savings bank account without frills, to all. Internationally, the financial exclusion has been viewed in a much wider perspective. Having a current account / savings account on its own, is not regarded as an accurate indicator of financial inclusion. There could be multiple levels of financial inclusion and exclusion. At one extreme, it is possible to identify the ‘super-included’, i.e., those customers who are actively and persistently courted by the financial services industry, and who have at their disposal a wide range of financial services and products.
Financial exclusion:
Financial exclusion refers to a process whereby people encounter difficulties accessing and/or using financial services and products in the mainstream market that are appropriate to their needs and enable them to lead a normal social life in the society in which they belong.
Bank nationalization in India marked a paradigm shift in the focus of banking as it was intended to shift the focus from class banking to mass banking.
The rational for creating Regional Bank was also to take the banking services to poor people. Though, in India, half of the population still unbanked. The data provided by the committee on Financial Inclusion had measured the extent of exclusion i.e., 51.4% of farmer households are financially excluded from both formal /informal sources.
Significance of the study
In India, financial inclusion first featured in 2005, when it was introduced by K.C.Chakraborthy, the deputy Governor of the RBI. Since, in order to meet the 100% financial inclusion in India both fiscal and monetary actions have been undertaken by the Government of India as well as Reserve Bank of India. The fiscal action like MG-NREGA has greater potential to link the banking services to the poor. In India, almost half of the country is unbanked. Therefore, there are ample opportunities to achieve financial inclusion in India and we can make entire population bankable. The present study is focused on the efforts of State Bank of Mysore towards financial inclusion in Mysore district. To know the level of financial inclusion in the district a multi dimensional approach is used in this study.
Literature Review:
With a view to evaluate the objectives of the study, it was considered desirable to have an idea of the findings of some of the earlier research studies and the methods adopted therein. In this part a brief review is made of the previous studies, which are focused on financial inclusion and performance of financial institutions.
MINAKSHI RAMJI (2009) in the study on “Financial Inclusion in Gulbarga, Finding Usage in Access” examined that bank accounts have been typically opened to receive government assistance mostly under the MG-NREGP. The awareness among rural with respect to use of banking services remain low. Therefore, the government programs like MG-NREGP have the greater potential to include large number of households access to accounts not often lead to usage. After the drive force to achieve financial inclusion in Gulbarga, NO FRILL ACCOUNTs were restricted to those needing bank accounts for wage payments under the MG-NREGP scheme only. The BC model provides doorstep delivery of banking services, encourage non-official users of bank accounts make greater use of their accounts. Finally the researcher concluded that the driving effort for financial inclusion in Gulbarga failed to reach a number of people. The access does not mean usage, simply opening bank account without training and marketing may result in additional cost for banks without any benefits to the community.
RESEARCH GAP
Financial inclusion is intended to connect people to banks with consequential benefits. Ensuring that the financial system plays its due role in promoting inclusive growth is one of the biggest challenges facing the emerging economies. In India, both monetary and fiscal policy has been working towards inclusive growth vis-à-vis financial inclusion. The earlier works on financial inclusion were focused only on the banking coverage rather than usage behavior. There were few studies been made on account of financial inclusion in Karnataka and very rare studies in Mysore district which used a single dimension i.e., banking penetration. But access to banking services does not mean usage. Financial services should channelize through increasing marketing operation. Thus, the present study aims to use the multidimensional approach to analyze the financial inclusion in Mysore district. Identifying the level of financial inclusion in Mysore district and analyze the trends and issues by considering different dimensions is a key researchable issue in this empirical study.
Nature and sources of data:
The study is based on both primary and secondary data. The data is compiled from the households by direct interview. The data on different aspects like sources of income of households, number of account holders in the family, level of knowledge on banking habits, transaction, credit and debit records, insurance ,information on ATM card, MG-NREGA , transport facility is collected in a precise manner.
Scope of the study: Secondary data on SBMs performance in Mysore district for the year 2011 is collected from the various sources. Two taluks of Mysore district H.D.Kote and Mysore taluk have selected for the study. The rational is H.D.Kote which is recognized as most backward taluk in Mysore district and Mysore taluk is most developed as per HPCFRRI report.
A PROFILE OF STATE BANK OF MYSORE
STATE BANK OF MYSORE was established in the year 1913 as Bank of Mysore Ltd. under the patronage of the erstwhile Govt. of Mysore, at the instance of the banking committee headed by the great Engineer-Statesman, Late Dr. Sir M.Visvesvaraya. Subsequently, in March 1960, the Bank became an Associate of State Bank of India. State Bank of India holds 92.33% of shares.
The Bank has grown progressively, right from its inception and has declared uninterrupted profits from the beginning. "MYSORE BANK", as it is popularly known, is constantly committed to serve its customers.
Branch network
The Bank has a widespread network of 707 branches (as on 31.03.2011) and 22 extension counters spread all over India which includes 6 Small and Medium Enterprises Branches, 4 Industrial Finance branches, 3 Corporate Accounts Branches, 6 specialized Personal Banking Branches, 10 Agricultural Development Branches, 3 Government Business branches, 1 Asset Recovery Branch and 8 Service Branches, offering wide range of services to the customers
Business Profile
Total deposits of the Bank as at the end of March 2011 is Rs.43225 Crores and the total advances stood at Rs. 34442 Crores which include export credit of Rs. 1260 Crores. The Bank is a major player in foreign exchange dealings also and has achieved a merchant turnover of over Rs 34342.96 Crores and a trading turnover of over Rs 37658.49 Crores for the year ended March 2011.
RESULTS AND DISCUSSION
The heritage district Mysore is well known for its historical and cultural remarks. Mysore district comprises 1350 revenue villages and currently 42 banks are working throughout the district. The number of bank branches is 360 in that 52 branches have been established through the SBM. In order to achieve the financial inclusion in rural area, SBM nominated 5 Business Correspondents to increase the banking habits in rural populace. In Mysore district, 298 ATMs are established for customer service in that 70 ATMs that is about (70/298 %)are established by the SBM.
Financial inclusion has become a top task due to the emergence of inclusive growth strategy. SBM is the lead bank in the district and serves all communities in an egalitarian manner in order to uplift the economic condition of marginalized communities in the district. It advanced 2,229 lakhs for SC and ST communities in the total advancement of 3, 6036 lakhs during March 2012. It is working together with Self Help Groups and nearly 2, 8743 Self Help Groups have been linked with SBM in Mysore district.
DEPOSITS
Total Deposits increased from Rs.38880 crores in March 2010 to Rs.43225 crores in March, 2011 registering a growth of over 11% (Rs.4345 crores). The focus was predominantly on CASA deposits which grew by over 21%. The Bank continued to restrict the growth of bulk deposits. Cost of Deposits declined to 5.56% from 6.01%, mainly owing to increase in CASA share from 31.06% to 33.97%.