tag:blogger.com,1999:blog-41434092639428812612024-03-14T06:26:38.396+05:30Champions of Financial Inclusion [CoFI]CoFI is a flexible coalition of multistakeholders ranging from sections of the Civil society to Business community, State actors to financial inclusion evangelists in order to make complete financial inclusion a reality across the world and empower poor to mitigate risks which arise chiefly out of poverty.Champions of Financial Inclusionhttp://www.blogger.com/profile/12124533311941840738noreply@blogger.comBlogger29125tag:blogger.com,1999:blog-4143409263942881261.post-49138874339871003152012-02-11T02:06:00.002+05:302012-02-11T02:18:45.769+05:30<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"><span style="color: #660000; font-family: Verdana, sans-serif; text-align: left;"><b> Financial Literacy : An Idea whose time has come</b></span></div><div class="separator" style="clear: both; text-align: justify;"><span style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;"><br />
</span></div><div class="separator" style="clear: both; text-align: justify;"><span style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;">Time has come when </span><em style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;"><a href="http://en.wikipedia.org/wiki/Financial_literacy">financial literacy</a></em><span style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;"> has rightly occupied the centre-stage among the supply side institutions -- </span><em style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;"><strong>banks, insurance institutions, MFIs</strong></em><span style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;">, policy makers, </span><strong style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;"><em>national governments, financial regulators, civil society organisations</em></strong><span style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;">, and end users, that is </span><strong style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;"><em>bottom & middle of the pyramid populations</em></strong><span style="font-family: 'Franklin Gothic Book', sans-serif; text-align: left;">. </span></div><div style="margin-bottom: 0in; text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYhE2wySiNz-s3DSpVPCZ88AQBDCi2jevKgYaRcPlh47vHh6OAZvHb5e1BCiUs78qtgAd0qDQQ1eqpj51YnTx0rPOMJz1A87L94cay6yAWn_j2ymiV31op2E71smNLWf8d76bzg7KMtYPq/s1600/FL1.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYhE2wySiNz-s3DSpVPCZ88AQBDCi2jevKgYaRcPlh47vHh6OAZvHb5e1BCiUs78qtgAd0qDQQ1eqpj51YnTx0rPOMJz1A87L94cay6yAWn_j2ymiV31op2E71smNLWf8d76bzg7KMtYPq/s1600/FL1.jpg" /></a></div><span style="font-family: 'Franklin Gothic Book', sans-serif;">Although the concept is defined usually at convenience by stakeholders, but its broad contours remain same, that is the ability to take informed deisions, make choices leading to empowerment. A few in industry view it as a corporate social responsibility, marketing strategy or a compliance requirement. However, this shall not arrest our intellect to the cliched statements and the GOOD part is: there is atleast running thread across different players.</span></div><div style="margin-bottom: 0in; text-align: justify;"><span style="font-family: 'Franklin Gothic Book', sans-serif;"><span style="color: black;">While the concept may still be far from a universally accepted definition unlike <a href="http://www.nabard.org/pdf/report_financial/full%20Report.pdf">financial inclusion, </a>the<a href="http://www.oecd.org/home/0,2987,en_2649_201185_1_1_1_1_1,00.html"> OECD</a> defines it as '</span><span style="color: black;"><i>the process by which financial consumers/investors improve their understanding of financial products, concepts and risks, and through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being</i></span><span style="color: black;">'.</span> </span></div><div style="margin-bottom: 0in; text-align: justify;"><span style="font-family: 'Franklin Gothic Book', sans-serif;">There are good intentions & genuine concerns about vast groups of population still unaware of institutional banking concepts and the know-how to make informed decisions. This makes them vulnerable to exclusion from mainstream socio-economic framework. </span></div><div style="margin-bottom: 0in; text-align: justify;"><span style="font-family: 'Franklin Gothic Book', sans-serif;">Measures are being adopted across the world to systematically reduce financial exclusion; Indian policymakers brought a policy change in the way banking services were delivered particularly in rural India. In 2006 the <a href="http://www.rbi.org.in/home.aspx">RBI</a> eased up the delivery model and made it possible for banking and financial service providers in India to reach out to end customer through <a href="http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/68417.pdf">business correspondents</a>. </span></div><div style="margin-bottom: 0in; text-align: justify;"><span style="font-family: 'Franklin Gothic Book', sans-serif;">Business correspondent guidelines encouraged banks & other formal fnancial institutions to engage with entities like <a href="http://www.fino.co.in/">FINO</a> which is a pioneer in agent led banking platform designed to propel benefits of financial inclusion to the bottom of the pyramid. FINO has a completely different expression on financial literacy. </span><br />
<span style="font-family: 'Franklin Gothic Book', sans-serif;"><br />
</span></div><div style="margin-bottom: 0in; text-align: justify;"><span style="font-family: 'Franklin Gothic Book', sans-serif;">In addition to delivery of financial services, FINO realised the gap in the system and came up with its strategically aligned<a href="http://trainingcentral.mobi/fino/mod/resource/view.php?id=18"> Financial Inclusion Education Academy </a>(FIEA) to bring behavioral changes amongst the target group, which in turn, has enabled people to seek for right products and services.</span></div><div style="margin-bottom: 0in; text-align: justify;"><span style="font-family: 'Franklin Gothic Book', sans-serif;">For FINO, financial literacy is an engine that will aid achieving comprehensive financial inclusion and hence financial freedom. Viewed from this standpoint, FINO has significantly established a positive correlation between financial literacy and the ability to make informed decisions. This is a boon to the inclusive growth agenda.</span></div><div style="margin-bottom: 0in;"><span style="font-family: 'Franklin Gothic Book', sans-serif;"> more in next post..........</span></div><div style="margin-bottom: 0in;"><span style="font-family: 'Franklin Gothic Book', sans-serif;"><i><span style="font-size: xx-small;"><b>P:S : </b>This is the first part of three blogs series on Financial literacy<b> </b></span></i></span></div><div style="margin-bottom: 0in;"><span style="font-family: 'Franklin Gothic Book', sans-serif;"><br />
</span></div><div style="margin-bottom: 0in;"><span style="font-family: 'Franklin Gothic Book', sans-serif;">- <b><i>By Shilpi Yadav and Sarthak Luthra.</i></b></span></div></div><div class="blogger-post-footer"><script type="text/javascript">
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</div><div class="MsoNormal" style="text-align: justify;">Business correspondents are agents who can be hired by banks to provide a subset of banking services in places where it is not commercially or physically viable to set up branches in the present condition. Due to low margins in the proposed structure, for banks as well as BC, a lot of revisions to eligibility criteria have been made over the years where technology in the form of ICT has played a lot of role in bending the minds of review committees to bring these changes.</div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;">Earlier, only NGOs, Microfinance Institutions set up under Society or Trust act, Societies registered under Mutually aided Co-operative Societies Acts or the co-operative Societies Acts of States; Section 25 companies and post offices. Later in April 2008, specific details like holding pattern in the Section 25 companies by profit making companies was appended.</div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;">It was also observed (Rangarajan Committee) that for achieving sufficient numbers in the financial inclusion meter, BCs have to be placed in many villages which will be almost impossible if locally settled retired Government servants like postmasters, school teachers, ex-servicemen etc are not deputed/hired as BCs. Further it was suggested that NBFCs may be allowed to act as BCs providing limited services like savings and remittance on behalf of bank. </div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">BCs are required to play a role from creating awareness, to selling the product to being the point of service for those customers throughout shoulder the responsibility. However looking forward, the question outstanding is whether organized service providers like telecoms a better option than hiring individual BCs. Choosing an organized retail and telecom over hiring individual BCs has its upside and downside, which needs to be analyzed carefully before selecting any option. The major advantages of a using telecom sector and organized reatils as BCs are:<span style="font-family: Symbol;"><span style="font: normal normal normal 7pt/normal 'Times New Roman';"> </span></span></div><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;"><br />
</div><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;"></div><ul><li>Large and widespread network already setup</li>
<li>Ease of policy compliance with the hiring Bank</li>
<li>Established processes to easily monitor and evaluate and implement cash management system</li>
<li>Likely to continue as an agent for longer period than independent individuals</li>
</ul><br />
<div class="MsoListParagraph" style="text-align: justify;">But there are certain disadvantages that need to be taken care of while hiring these organized retails</div><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;"></div><ul><li>Adoption of Double Selling practice: because of thin margin, only if they buy their products, only will they provide banking service</li>
<li><span style="font-family: Symbol;"><span style="font: normal normal normal 7pt/normal 'Times New Roman';"> </span></span>Information Security of Customers: The data can be used by the company for its own benefit</li>
<li>Volatility of the industry (telecom) can shut down operation of entire area/reason which can affect continuity of BC service</li>
<li>Less attention to business: since it is not the main business, they can tend to ignore the business opportunities handling double pressure</li>
</ul><br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCfzTHPZOI9zjwCzAoUdmn-Ky8XKbAHGAbxWFnyxN3DymWjpRXJxiBa__uvFJlHRP5naeJqy5tUym4W4ulVAlknlldOrgpbhPn4DJ2I4sckxdoNMenz-fSl3Nrpo1xQdIqCXo6qUyThdDO/s1600/tel.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCfzTHPZOI9zjwCzAoUdmn-Ky8XKbAHGAbxWFnyxN3DymWjpRXJxiBa__uvFJlHRP5naeJqy5tUym4W4ulVAlknlldOrgpbhPn4DJ2I4sckxdoNMenz-fSl3Nrpo1xQdIqCXo6qUyThdDO/s320/tel.jpg" width="320" /></a></div><div class="MsoNormal" style="text-align: center;"><br />
</div><div class="MsoNormal" style="text-align: justify;">However, it is to be kept in mind that setting up a BC network not only requires conquering geographical challenges which the Telcos and organized retails have achieved, but a dedicated human resource that keeps financial inclusion as priority. Additional backend, training et al would mean additional initial and continuous investments that these new entrants have to make to play BC to any bank or Govt. <br />
<br />
</div><div class="MsoNormal" style="text-align: justify;">It is important to shield the burning candle from winds outside, the risks for using telcos and organized retails needs to be carefully identified, their impact quantified and to put into place proper mitigation plans before they are hired as BCs.</div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;">-Chitra Nayak</div><div class="blogger-post-footer"><script type="text/javascript">
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</div><div class="MsoNormal" style="text-align: justify;"><span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;">Swabhinman is the new Financial Inclusion Program that Government of India is planning to roll in the year 2011. The program targets opening of 5 crores no-frills accounts by March 2012 spanning over select 73,000 villages. The plan is not just to open accounts, but to keep them active by regular transactions. The basic idea here is to spread financial literacy while achieving financial inclusion. Government plans to use handheld computers and banking correspondent model to achieve scale and efficiency in the program. <o:p></o:p></span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: inherit;"><span style="color: black;">In an interview about Swabhiman, Shri K.V. Eapen, the joint finance secretary of India told media that banks are </span><span class="apple-style-span"><span style="color: black;">expected to popularize the electronics benefit transfer (EBT) scheme for efficiency of the program. EBT is mode through which the government currently makes payments to the workers involved in various public welfare schemes. Thus, Swabhiman will provide a platform for banks to launch their products and services like small overdraft facility, remittance, small loans and small deposits to the rural poor.<o:p></o:p></span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;">Swabhiman, though is in planning stage, has some assured benefits for the common man. A common man can now be included in the organized financial sector without the tedious paperwork. It will not only ensure availing of a variety of financial services at doorstep but also easy enrolment to all public welfare schemes. <o:p></o:p></span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: inherit;"><span class="apple-style-span"><span style="color: black;"> </span></span><span style="color: black;">Reaching out at such a grand scale can face a number of challenges that are meticulous in nature. Ranging from connectivity of handheld devices, geographical connectivity to literacy rate of the population can raise issues in smooth implementation of the program. But, tackling these challenges and bottlenecks is now expected from Indian Government. <o:p></o:p></span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;">Government has surely come a long way since the days of implementing public welfare schemes without proper consideration of ground level realities. This means, the earlier top down approach of govt. towards development is now becoming more and more area specific approach. Increase in variety of work in MG-NREGA, implementation of SGSY- Special plan, launch of RIDF from NABARD et al are examples of the recent changes that can be seen regarding change in approach of the govt.. These kind of changes are a proof to Governments increased concern and involvement in solving the individual ground level problems which were earlier oblivious at the centre level. <o:p></o:p></span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;">Thus, with a fool proof plan, GoI is all set to launch Swabhiman that will ensure smiles on the faces of those who are still unbanked.</span><o:p></o:p></span><br />
<span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></span><br />
<span style="color: black;"><span class="Apple-style-span" style="font-family: inherit;">By Chitra Nayak</span></span></div><div class="blogger-post-footer"><script type="text/javascript">
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</div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: #1f497d; font-size: 12.0pt; mso-themecolor: dark2;">It</span></span><span class="apple-style-span"><span style="color: black; font-size: 12.0pt;"> ha</span></span><span class="apple-style-span"><span style="color: #1f497d; font-size: 12.0pt; mso-themecolor: dark2;">s</span></span><span class="apple-style-span"><span style="color: black; font-size: 12.0pt;"> </span></span><span class="apple-style-span"><span style="color: #1f497d; font-size: 12.0pt; mso-themecolor: dark2;">been </span></span><span class="apple-style-span"><span style="color: black; font-size: 12.0pt;">pointed out that s</span></span><span class="apple-style-span"><span style="color: #2f3746; font-size: 12.0pt;">ince the issue of the ordinance two months ago, collections of microfinance institutions in Andhra Pradesh have dropped. Also, microfinance institutions are also struggling with liquidity crunch due to reduced bank lending and lessened equity infusion in the sector.</span></span><span class="apple-style-span"><span style="color: #1f497d; font-size: 12.0pt; mso-themecolor: dark2;">(</span></span> Follow the article at: <a href="http://www.microfinancefocus.com/ap-microfinance-news/ap-govt-may-pass-microfinance-bill-tuesday?quicktabs_4=2">http://www.microfinancefocus.com/ap-microfinance-news/ap-govt-may-pass-microfinance-bill-tuesday?quicktabs_4=2</a>)<span class="apple-style-span"><span style="color: #2f3746; font-size: 12.0pt;"> As quoted in Business Standard- </span></span><span class="apple-style-span"><span style="color: black; font-size: 12.0pt;">Spandana’s CEO Ms. Padmaja Reddy said that many MFIs will close down their businesses. Operating costs would increase and profits margins would spread thin, she added. The company's recoveries have fallen to 30-50 per cent in the last two months and no fresh group loans have been given.</span></span> (follow the news at<span style="color: #1f497d; mso-themecolor: dark2;">: </span><a href="http://business-standard.com/india/storypage.php?autono=418396">http://business-standard.com/india/storypage.php?autono=418396</a>)<span class="apple-style-span"><span style="color: #1f497d; mso-themecolor: dark2;"><o:p></o:p></span></span></div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt;">While the bill is seen as disturbing <span style="color: #1f497d; mso-themecolor: dark2;">to microfinance</span> institutions, it is anticipated by <span style="color: #1f497d; mso-themecolor: dark2;">the </span>stakeholders that reduction in the number of repayment collection meetings per month to 1 will reduce a lot of overhead charges of travelling to the client centers which in-turn can either be seen as profit for the institution or, a factor for reducing the overall interest rate. It is also believed that this bill is, in a way, empowering the clients- especially the rural women<span style="color: #1f497d; mso-themecolor: dark2;">.</span></span><o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black; font-size: 12.0pt;">But the basic questions here go unanswered. Is the bill of transitory nature as was the MFI ordinance that had come out in October this year? Is this bill achieving a win-win situation for both customers and service providers? And the answers here are not so simple. There are a lot of elements at play while we ponder over the state of things. </span><span style="color: black;"><o:p></o:p></span></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVDeIBMzjj22oMC_16YYHRY8lwic7PyzjgxeHyMAmA_5rFNAZFdqG_KlXiwrRo37HsSWVB-GcwAEOTp0enRfsgPSWVxLnS4ZTlH66jLgvOEQA54ZT2EsYKzvEbM7gjvYjT7P0CbP7-xoQd/s1600/photo_10800_20091221.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVDeIBMzjj22oMC_16YYHRY8lwic7PyzjgxeHyMAmA_5rFNAZFdqG_KlXiwrRo37HsSWVB-GcwAEOTp0enRfsgPSWVxLnS4ZTlH66jLgvOEQA54ZT2EsYKzvEbM7gjvYjT7P0CbP7-xoQd/s200/photo_10800_20091221.jpg" width="200" /></a></div><div class="MsoNormal" style="text-align: center;"><br />
</div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black; font-size: 12.0pt;">A lot of discussions are taking place at state and centre over the scope of bill and its outcomes. Even slightest gestures of customers to political parties are changing the fate of microfinance without knowing. <o:p></o:p></span></span></div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt;">I believe, in a move to revolutionize the microfinance industry, a lot of bills and amendments have to be passed before a true balance between social good and profit making is achieved.</span><o:p></o:p></div><div align="right" class="MsoNormal" style="text-align: right;"><span style="font-size: 12.0pt;">-By Chitra Nayak<o:p></o:p></span></div><div class="blogger-post-footer"><script type="text/javascript">
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</span></div><div class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%;">Financial Literacy is the buzz word today. Many organizations are making serious efforts to promote it. A big information asymmetry exists which prevents many individuals to make informed choices about their current and future financial engagements. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%;"><br />
</span></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLk8NZCmXbxyCXzCd42ufC-EcxXOstiEoJX8RLw29yWRtzRUBSFx89aaQk-GHqqAv09IZaUG3y9WBEjNw1zltTqt96Pe5oZcPn-HiHBVhyphenhyphenuzuFpdeMhT9B5a_Cvz5crA7JQMlEWz3by51g/s1600/photo_13658_20100311.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLk8NZCmXbxyCXzCd42ufC-EcxXOstiEoJX8RLw29yWRtzRUBSFx89aaQk-GHqqAv09IZaUG3y9WBEjNw1zltTqt96Pe5oZcPn-HiHBVhyphenhyphenuzuFpdeMhT9B5a_Cvz5crA7JQMlEWz3by51g/s320/photo_13658_20100311.jpg" width="320" /></a></div><div class="MsoNormal" style="text-align: center;"><span style="font-size: 12.0pt; line-height: 115%;"><br />
</span></div><div class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%;"><br />
</span></div><div class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%;">Financial literacy is an informal understanding of risks and rewards involved in handling financial assets and liabilities. It is not a formal or certified education. It is the basic knowledge required to manage personal finance.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;"><br />
</span></b></div><div class="MsoNormal" style="text-align: justify;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;">Why is Financial Literacy Important<o:p></o:p></span></b></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;"><br />
</span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;">It is said that prevention is better than cure. Prevention of financial crisis is necessary than its cure to save the individual, and to save the nation. With credit being available hassle free in the market, the thin line between need and desire is vanishing. Therefore, it is important to have knowledge and related skills to calculate the consequences before investment. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;"><br />
</span></b></div><div class="MsoNormal" style="text-align: justify;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;">When and Who started Financial Literacy <o:p></o:p></span></b></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;"><br />
</span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;">There is no formal record of when was financial literacy started, but it has been gaining momentum in recent years. </span><span class="apple-style-span"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Arial;">Organization for Economic Co-operation and Development (OECD)</span></span><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;">, which was </span><span class="apple-style-span"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Arial;">founded to stimulate economic progress and world trade,</span></span><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;"> started a program in 2003 which was believed to mark the start of financial education. In India, RBI has been a key player in creating awareness of programs related to financial literacy.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;"><br />
</span></b></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgySZxpZ3dEW4HuFTe9RQX3xhyFHwE3jShMw2dGU5Kn4U4ts5nHOmqXtr2uWjRbQlkXr_2ffrlHsUSVAEHpQRL2q2qlaY7bsKAJtm4ECy6VnbBDG7NctNQD5AFVpfLCG9MzDlJ-q2zGAQdL/s1600/photo_19811_20100821.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgySZxpZ3dEW4HuFTe9RQX3xhyFHwE3jShMw2dGU5Kn4U4ts5nHOmqXtr2uWjRbQlkXr_2ffrlHsUSVAEHpQRL2q2qlaY7bsKAJtm4ECy6VnbBDG7NctNQD5AFVpfLCG9MzDlJ-q2zGAQdL/s320/photo_19811_20100821.jpg" width="320" /></a></div><div class="MsoNormal" style="text-align: center;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;"><br />
</span></b></div><div class="MsoNormal" style="text-align: justify;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;"><br />
</span></b></div><div class="MsoNormal" style="text-align: justify;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;">How to achieve financial literacy <o:p></o:p></span></b></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;"><br />
</span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; font-size: 12.0pt; line-height: 115%; mso-themecolor: text1;">As the definition says, financial literacy comes with simple understanding of how finances can affect the present and future. A simple guideline described below can be followed to achieve financial literacy:<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">1. Set financial goals for a time-period (days, months, years)<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">2. Creating a budget for the same <o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">3. Itemize the expenditures in a detailed manner.<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">4. Focusing and accordingly planning for high-budget expenditures<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">5. Basics of banking and investment<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">6. Plan for retirement<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">7. Know about Insurance and its premium<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">8. Be aware about taxes that might have to be paid<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">9. Understand inflation and interest in terms of financial assets and liabilities.<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6.0pt; margin-right: 0in; margin-top: 1.8pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="line-height: 16.75pt; margin-bottom: 1.8pt; margin-left: 6pt; margin-right: 0in; margin-top: 1.8pt; text-align: right;"><span style="color: black; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">-Chitra Nayak<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><br />
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</span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">As the world is increasingly getting conscious about the energy and environment sustainability, corporate houses are getting more focused on their efforts to mainstream CSE. Business entities are <strong><span style="color: #333333; font-weight: normal;">taking responsibility for the impact of their activities on environment as well as the customers, suppliers, employees, shareholders, communities and other stakeholders. These responsible acts have many methods and </span></strong><span style="color: black; mso-themecolor: text1;">approaches. Among them, three main approaches which are commonly adopted by companies are discussed here. These approaches are:<o:p></o:p></span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Community-based development approach: In this approach, corporations work with local communities to better themselves. For example, the</span></span></span><span class="apple-converted-space"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></span></span><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Shell Foundation's involvement in the</span></span></span><span class="apple-converted-space"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></span></span><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Flower Valley, South Africa by setting up an Early Learning Centre to help educate the community's children as well as develop new skills for the adults has achieved a stupendous result. <o:p></o:p></span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Second is philanthropy. This includes monetary donations and aid given to local organizations and impoverished communities in developing countries.</span></span></span><strong><span style="color: black; font-weight: normal; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></span></strong><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><o:p></o:p></span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">The third approach is to incorporate the CSE strategy directly into the business strategy of an organization. For instance, procurement of</span></span></span><span class="apple-converted-space"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></span></span><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Fair Trade</span></span></span><span class="apple-converted-space"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></span></span><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">tea and coffee has been adopted by various businesses including</span></span></span><span class="apple-converted-space"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></span></span><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">KPMG. <o:p></o:p></span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><b><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></b></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><b><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">A Strategy or a Need<o:p></o:p></span></span></b></span></div><div class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><b><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></b></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">In recent times, to achieve a more integrated approach to Corporate Social Engagement, business houses have started incorporating social missions. For example, social mission of Bharti Airtel is to get cell phones into the hands of the hundreds of millions of people in India who otherwise have no way to communicate with each other. Tata Motors has a similar goal with respect to providing low-cost transportation in the form of the Nano. The social mission of the pharmaceutical and healthcare company, Dr. Reddy’s, is to address the unmet medical needs of the poor in India as well as around the world. Hindustan Unilever’s “Project Shakti” uses microfinance principles to create a sales force in the poorest regions of the country.<o:p></o:p></span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">While corporates are realizing that CSE is more than a mere voluntary act, some countries have turned it to a legislative requirement. The formal origin of social responsibility goes back to the era of industrialization where businesses were ‘expected’ to be active not only in alleviating societal problems but also in providing solutions to them. Since then, the form of social engagement has come to include many more things in its scope. But there has always been a divided opinion on existence of CSE. While one school of thought supports that the rise of industrialization is the root of many societal problems, the other believes that solving societal and moral issues is not the responsibility of corporate. <o:p></o:p></span></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhz8vO5TKF86z4hqzp2BG_1suRjlW9SkmkWLZ5smDU3ZUfEP9H0dUNTi1iszze9Z7LVj7G_3MqQGgaGW015kHGuRp6dwTDm3NP3241DReZdulzjm-JYf3NqrTzqSbwV41z376mjxMBqF9N5/s1600/photo_22371_20101104.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhz8vO5TKF86z4hqzp2BG_1suRjlW9SkmkWLZ5smDU3ZUfEP9H0dUNTi1iszze9Z7LVj7G_3MqQGgaGW015kHGuRp6dwTDm3NP3241DReZdulzjm-JYf3NqrTzqSbwV41z376mjxMBqF9N5/s320/photo_22371_20101104.jpg" width="320" /></span></a></div><div align="center" class="MsoNormal" style="text-align: center;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">For some industries, it may look like a need to get involved in a corporate social act. It is said that the companies in these industries have a low threshold for CSR and that’s why have to abide by these kinds of social responsibilities. For others, its just a mere strategy to achieve the intended. But what makes companies strategize for CSE?? <o:p></o:p></span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">In the annual general meeting of CII in 2007, Prime Minister Manmohan Singh had addressed in his speech about the CSR as “<span class="apple-style-span">corporate social responsibility must not be defined by tax planning strategies alone. Rather, it should be defined within the framework of a corporate philosophy which factors the needs of the community and the regions in which a corporate entity functions.”</span><o:p></o:p></span></span></div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Amidst all these hustle-bustle, there are various underlying reasons for companies to engage in such action. The main reasons of corporate social engagement could be:<o:p></o:p></span></span></div><div class="MsoListParagraphCxSpFirst" style="margin-left: 37.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">·<span style="font: 7.0pt "Times New Roman";"><span class="Apple-style-span" style="font-size: small;"> </span></span></span></span><!--[endif]--><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Commercial Benefit: Increased visibility among consumers and employees<o:p></o:p></span></span></div><div class="MsoListParagraphCxSpMiddle" style="margin-left: 37.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">·<span style="font: 7.0pt "Times New Roman";"><span class="Apple-style-span" style="font-size: small;"> </span></span></span></span><!--[endif]--><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Green Washing: Focusing the attention of consumers on certain actions only. To reposition the company’s image in the market.<o:p></o:p></span></span></div><div class="MsoListParagraphCxSpLast" style="margin-left: 37.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">·<span style="font: 7.0pt "Times New Roman";"><span class="Apple-style-span" style="font-size: small;"> </span></span></span></span></span><!--[endif]--><span class="apple-style-span"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Political-social relationships: To enjoy certain social and political benefits.<o:p></o:p></span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">The motives for CSR actions are often mixed, it is impossible to claim either one motive or another. There are no particular motives that can be authorized to have an advantage over another (Haugland & Nystad, 2006).<o:p></o:p></span></span></div><div class="MsoNormal" style="text-align: justify;"><b><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></b></div><div class="MsoNormal" style="text-align: justify;"><b><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">The long Term Achievement<o:p></o:p></span></span></b></div><div class="MsoNormal" style="text-align: justify;"><b><span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></b></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; line-height: 115%;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">To think of it, what differentiates these companies from others?? Well, </span><span class="apple-style-span"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">companies with motives to really help the society, gain more than just mere good marketing. They gain a long term reputation and trust of people at large which seeps into their employees too. CSR first starts at home with ones’ own employees. These companies often have level 5 leaders heading the organizations. These are the companies that have modeled themselves in ways different from the norm; quite often, particular practices that work well enough in business terms to be genuinely embraced; charitable endeavors that happen to be doing real good, and on a meaningful scale. For them CSR is much more than a cosmetic treatment. </span><span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-size: 12pt;"><o:p></o:p></span></span></span></span></div><div class="MsoNormal" style="text-align: justify;"><span style="color: black; line-height: 115%;"><span class="apple-style-span"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></span></span></div><div class="MsoNormal" style="text-align: right;"><span style="color: black; line-height: 115%;"><span class="apple-style-span"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">-Chitra Nayak</span></span></span></div><div class="blogger-post-footer"><script type="text/javascript">
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When Dr. APJ Abdul Kalam openly dreamed of bridging the digital divide among Indians, little had it occurred to anybody that mobile holds the potential to fulfill this dream. Mobile being the only device known to be with their owners for almost 24 hrs a day has changed the definition of information accessibility for human history. Information is now available on the fingertips. </div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJsq_P0b5rSlBAEzvC6pbJF54n8LiZuiOWx3LaQNoMiZ6BkAH1U5xH1rAckSUyrcXFKyVbs76-lZOj1N8dH_-B8X30S80ZI96H3C7z4asM1Uzpr6QZF0m5UijKKUcmNgX1bo0vUJ_5B3_k/s1600/photo_17291_20100603.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJsq_P0b5rSlBAEzvC6pbJF54n8LiZuiOWx3LaQNoMiZ6BkAH1U5xH1rAckSUyrcXFKyVbs76-lZOj1N8dH_-B8X30S80ZI96H3C7z4asM1Uzpr6QZF0m5UijKKUcmNgX1bo0vUJ_5B3_k/s200/photo_17291_20100603.jpg" width="200" /></a></div><div class="MsoNormal" style="text-align: justify;">According to India Telecommunications Q3 Report published by Business Monitor International, mobile customer base reached 584.3 millions in March 2010 and which is close to 50% growth over last year. Mobiles are now the most commonly used means to connect to the digital community. For a common user, a mobile is affordable, has a strong battery system, needs no huge and continuous supply of power and is easy to carry around when compared to a PC.</div><div class="separator" style="clear: both; text-align: center;"></div><div align="center" class="MsoNormal" style="text-align: center;"><br />
</div><div class="MsoNormal" style="text-align: justify;"> Browsing internet is a rapidly growing trend in many developing countries. For many, their first internet browsing has come through a mobile. <i style="mso-bidi-font-style: normal;">Juniper Research</i> quotes that ‘in 2008, 90% of the internet users in India used a mobile to access internet.’ Mobile network operators offering a range of data plans enable users even from far off lands to connect to the world without any hurdles. While email was most common form of communication some times ago, social network and other forms of networking are drastically changing the messaging habits of people. People are now more connected to each other around the world through a small mobile than anything else.</div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjz_fOB5-ga54FIxdJFXcVVgStBXr5gGfa6rLXNSa2V4-3rOYeGlqvSuV9Wnt2mZgHZM4PnWj5BP9tZHWvlCNSUCx8tPcOdXT2MxYdSQOqi0cmjXnCVn1hv1NJBQ76uk4vtejJ9IVZS7XQ6/s1600/photo_5998_20090427.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjz_fOB5-ga54FIxdJFXcVVgStBXr5gGfa6rLXNSa2V4-3rOYeGlqvSuV9Wnt2mZgHZM4PnWj5BP9tZHWvlCNSUCx8tPcOdXT2MxYdSQOqi0cmjXnCVn1hv1NJBQ76uk4vtejJ9IVZS7XQ6/s200/photo_5998_20090427.jpg" width="200" /></a></div><div align="center" class="MsoNormal" style="text-align: center;"><br />
</div><div class="MsoNormal" style="text-align: justify;">Today, it is era of business gadgets. Gadgets like Androids, Blackberry mobiles, Nokia E-series and many more brands are doing quite well in market. They have totally changed the way companies operate, especially in case of small and medium businesses. It is now easier to put advertisements, check for orders and tenders, stay connected to certain communities of interest and much more. Business owners across the globe are now thankful to this explosion of mobile growth which allows them to do more things in less time and less cost. Also, advanced network services like 3G lined up to roll out soon, the chances of using networking services though PC still might go down.<br />
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FINO has been quite active in exploiting this explosion in number of mobile phone users to benefit the society. One of the services- FINO Seva is a mobile application which simplifies all kinds of ticketing, recharging and bill payment requirements without going to the service provider's offices/outlets, is a revolutionary product in the arena of mobile applications. This reduces the requirement of consumers to stand in long lines or travelling to the needed stations for availing any above mentioned services. Moreover, people in remote areas can now avail these services by just visiting the nearest BC without having to travel far off places for any recharging, ticketing or billing requirements etc. <br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhUviiTzVik0pSoczN5hOgOtEHnz97r_rVcNpKcW7qyaOsWLFM4N8QNmO-VGrOc_l0q88c3OPXM6yuY4BzRhijbTMAGFLrPpz9oZ17oPHLzyhh5dirYzuJ78MI-QeJFJK8O6-BzP4UyGPb/s1600/fs.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhUviiTzVik0pSoczN5hOgOtEHnz97r_rVcNpKcW7qyaOsWLFM4N8QNmO-VGrOc_l0q88c3OPXM6yuY4BzRhijbTMAGFLrPpz9oZ17oPHLzyhh5dirYzuJ78MI-QeJFJK8O6-BzP4UyGPb/s200/fs.JPG" width="200" /></a></div><div style="text-align: center;"><br />
</div>The dimension of accessing information has been truly and completely changed by mobiles.</div><div class="MsoNormal" style="text-align: justify;"><br />
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</div><div class="MsoNormal" style="text-align: justify;">-By Chitra Nayak</div><div class="blogger-post-footer"><script type="text/javascript">
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<div class="separator" style="clear: both; text-align: center;"><a href="http://thedailymind.com/wp-content/uploads/2008/10/stocks.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="211" src="http://thedailymind.com/wp-content/uploads/2008/10/stocks.jpg" width="320" /></a></div><br />
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More recently the events in Andhra Pradesh with respect to the suicides amongst people who have borrowed from microfinance institutions has been devastating to the micro finance sector. While profit is essential (for no organization can function for long under recurring losses) the profit also needs to be responsible. The result of these recent events has been to once again bring the focus on to the concept that is popularly known as "sustainable finance" </div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/_GvixOMXpdoU/TOEzFrKK6kI/AAAAAAAAC9U/XIAHyBxmfVM/s1600/1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="http://1.bp.blogspot.com/_GvixOMXpdoU/TOEzFrKK6kI/AAAAAAAAC9U/XIAHyBxmfVM/s320/1.jpg" width="320" /></a></div><br />
</div><div style="text-align: justify;">Sustainable finance implies a commitment to sustainability in the operation of financial institutions whereby Financial institutions (FIs) expand their missions from ones that prioritise profit maximisation to a vision that also incorporates social sustainability. It requires FIs to fully integrate the consideration of social limits, equity and economic justice into corporate strategies and core business areas (including credit, investing, underwriting, advising), so that sustainability objectives are placed on an equal footing with shareholder maximisation and client satisfaction. It implies financial institutions creating policies, procedures and standards based on the principle of precaution to minimise social harm, improve social conditions where transactions that undermine sustainability; in this regard a delicate mix corporate and social sustainability; are avoided.Such a reality is possible only if the twin elements of responsibility and accountablity are ingrained into all aspects of the FI's operation right from the top to the groundlevel.<br />
<br />
<div class="separator" style="clear: both; text-align: center;"><a href="http://dowser.org/wp-content/uploads/2010/04/Blog-Bornstein-Commercial-Microfinance-Image-1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="187" src="http://dowser.org/wp-content/uploads/2010/04/Blog-Bornstein-Commercial-Microfinance-Image-1.jpg" width="320" /></a></div><br />
</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">This is possible even without the everseeing eye of government watching over the operations of FI's. It will require FI's to have better understand the social "limits" of the environments in which they operate; be able to differentiate between needs, wants and capabilities of their customers and pay their full and fair share of the risks they accept and create. These include financial risks, as well as social and environmental costs that are borne by the communities who are forced to pay a price for unsustainable financial decisions and investments. Responsible finance also requires FI's to ensure that the lives of people; in terms of life itself and the quality of life; are protected. This can be ensured through making sure that stakeholders’ rights are protected through practices and procedures voluntarily adopted by the FI.<br />
<br />
</div><div style="text-align: justify;">Most importantly Financial Institutions are capable of and should ensure that the markets that they create or operate in are capable of fostering sustainability. This can be done by the FI's supporting public policy, regulatory and/or market mechanisms which facilitate sustainability and foster the full cost accounting of social and environmental externalities.</div><div class="blogger-post-footer"><script type="text/javascript">
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</div><div class="MsoNormal" style="text-align: justify;">Mobile banking opens up a plethora of opportunities which is limited to the imaginative use of such services. <span style="mso-spacerun: yes;"> </span>Spread of mobile phones across all socio-economic classes and geographical areas ensures that penetration of mobile banking wouldn’t be limited to only some classes of the society like the conventional banking models. From the user’s point of view, the success of such a service would always depend on factors like ease of use, high levels of security of transaction, the affordability and the availability of the service at all time. All of these characteristics are dependent on the key stakeholders who are involved in making available such a service end users - Network operators, financial institutions, solution providers, mobile handset manufacturers and regulatory bodies. </div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;">Mobile banking when successful can be transformational in completely bridging the digital divide. But what really matters now is that the policy divide which been created protecting the existing banks and telecom service providers should be put to use of benefit of same institutions but with BOP customers included in the scope.</div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;">- Chitra Nayak</div><div class="blogger-post-footer"><script type="text/javascript">
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</div></div><div class="MsoNormal" style="text-align: left;"><div style="text-align: justify;">Government realized the importance of not only physical, financial and human resources but most importantly the technological support. Technology which would not only help reducing cost and increasing efficiency but also bring in more transparency and controls in the process.</div></div><div class="MsoNormal" style="text-align: left;"><div style="text-align: justify;"><br />
</div></div><div class="MsoNormal" style="text-align: left;"><div style="text-align: justify;">Technology can play a vital role in delivery of essential services to its citizens. This has proved to be a boon both for the beneficiaries as well as a lot of companies, who can leverage their competency in technology to benefit society at large. The primary drivers for this technological wave in the public sector are:</div></div><div class="MsoListParagraphCxSpFirst" style="text-align: left; text-indent: -0.25in;"></div><ol><li>Increased efficiency of the programs.</li>
<li>Reduced fake/fraud recipients.</li>
<li>Avoid forced sharing of the benefits with the end service provider.</li>
<li>Provide employment opportunities to many individuals even in remote parts of the country.</li>
<li>And most importantly, through technology, increase of outreach of various products through financial institutions to the un(der) banked</li>
</ol><br />
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: left;"><div style="text-align: justify;">However like any system, it is not perfect and suffers from certain lacunas. This makes it extremely important for the government who is driver for the change and companies at large to understand these shortcomings and risks involved and develop a more effective roadmap to reduce any risk to the beneficiaries. </div></div><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: left;"><div style="text-align: justify;"><br />
</div></div><div class="MsoNormal" style="text-align: left;"><div style="text-align: justify;">There is a saying that the only thing constant is “CHANGE”. Change is a process that will evolve everything towards a perfect world. And that what shall be after this change and all the changes that come along!!<span style="color: #c00000; font-size: 9pt; line-height: 115%;"><o:p></o:p></span></div></div><div class="blogger-post-footer"><script type="text/javascript">
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The Government machinery flung into action with an extraordinary swiftness and resulted into issuing a Special ordinance to rein so called <i style="mso-bidi-font-style: normal;">rouge MFIs</i> which is in addition to the<a href="http://economictimes.indiatimes.com/news/news-by-company/corporate-announcement/RBI-appoints-Malegam-to-head-MFI-sub-committee/articleshow/6778299.cms"> Reserve Bank of India’s sub committee</a> to look into MFI functioning . Thankfully, the Ministry of finance’s response has been cautious but with discernable strong signals about introduction of legislation on MFI sector in the parliament. <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"> The first glance and most of us would appreciate the public policy response of state actors to tighten noose around ‘Suicidal Microfinance’ amid of high passions for the breavered families; for which like all of you my heart also goes with the family members of those who committed suicides in Nizamabad and other places. But the question I pose here is slightly contrasting one: <i style="mso-bidi-font-style: normal;">Is the fire fighting action initiated by the state Government going to create more problems than solutions for poor?</i> Not only that, what could be the impact of ripples effects on MFI clients in days to come? Especially at a point in time when the sector is gradually making transition to integrate itself with the mainstream capital market and lower its dependency on lenders for high cost of capital which ultimately factors into higher interest rates for micro clients. The first market signal is <a href="http://businesstoday.intoday.in/bt/story/9660/1/sks-microfinance-dips-9percent-after-ap-govt-ordinance.html">9% bottom dip</a> in the share value of SKS microfinance - The only India listed Microfinance Company which had lent micro loans to 17 of those who committed suicide. All this is a reason for concern, but the policy response may also not be a welcome move for the Indian microfinance sector, particularly for those players which may plan to go public in coming days. <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;">If suicide is a parameter, I would like to share some pieces of data here, According to the National Crime Records Bureau, between 1997-2009 reportedly <a href="http://www.hardnewsmedia.com/2010/02/3445">2 lakh farmers in India have committed suicides </a>due to reasons like crop failure and inability to repay bank loan, but we not seen similar “supra regulatory” actions against lending banks, instead Government actions were mature and no one can deny role of policy in enabling the Indian mainstream financial system (which consists of Commercial and Scheduled Banks ,Regional Rural Banks, PACS and cooperative credit structure) to deal with the farmer suicide crisis . Not only was credit bailout option offered to farmers, rescheduling of loans was also carried out and debit refinanced by the Government – worth noting here no bank faced stifling noose of regulations. Basically, <i style="mso-bidi-font-style: normal;">Policy actions empowered the end customer to choose her lender and thus reinforced tenets of free market and rational choice theory.</i><o:p></o:p></div><div class="MsoNormal" style="text-align: justify;">Unfortunately, actions in the microfinance saga are diagrammatically opposite as these signals lead to ‘<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;">more regulations and less free market’</i></b>. Here it is worth mentioning about success story of the Indian Mobile telephony where supra regulations did not create fetters for MNOs at least in formative years and facilitated market competition due to which today mobile phone penetration in India is more than 670 million and is growing exponentially. Defining role of Public Policy in free market is facilitation of business and ensuring fair competition for firms and offering choices to customers without creating distortions. <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><b style="mso-bidi-font-weight: normal;">Finally, the question one might be tempted to ask; what is an alternative? . Answer is, a dedicated Business correspondent (B.C) which offers door step banking facility to micro customers. <o:p></o:p></b></div><div class="MsoNormal" style="text-align: justify;">The B.C is an ultra low cost technology driven banking channel which acts as extended arm of prudentially regulated financial institutions like banks and insurance companies and take their products and services to the nooks and corners of India – Product and service ranges from No frills savings accounts to remittance and insurance to low cost micro credit and payment solutions. B.C plays an important role in creating healthy competition in the micro-market and provides choice options for end customer to choose her financial service provider. On the top of this, BC is fully complaint to banking rules and regulations and works on razor thin margins. <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;">Dedicated BCs which offer doorstep services have potential to transform not only “<i style="mso-bidi-font-style: normal;">scenarios of suicide</i>” but face of unbanked and under banked in India. Therefore, strengthen free market competition that too, without low or no distortions if facilitated adequately by policy, can be a sustainable solution. If we compare cost of delivery of services, BC’s cost to serve a customer at her doorstep is around INR 4 -5 per Customer whereas typical MFI cost is much higher. A BC earns average revenue of INR 100 per customer per year and still survives but a typical MFI at present is not designed to operate on such thin margins, it earns on an average 5% of net profit per loan (which is around INR 500 for INR 10,000 loan size). <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;">Finally, what will address the issue adequately and sustainably is not more stringent regulations or predatory policies but policy actions enabling free market principles and offering more supply side choices to the end customer.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"> - Jatinder Handoo.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="blogger-post-footer"><script type="text/javascript">
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</span></span></span></span></div><div class="MsoNormal" style="line-height: 150%; text-align: justify;"><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%;">Socially Responsible Investments are those investments that consider both the financial returns from an investment and the potential social, environmental and ethical consequences these investments might have. Broadly socially responsible investment can involve either (1) screening of the investment such that its social/ environmental impacts can be deemed “responsible” as per international standards (2) shareholder advocacy for social or environmental causes or (3) investment in communities that bring about growth in those communities. While today a majority of SRI’s are in the form <span style="mso-spacerun: yes;"> </span>of assets held in socially screened investment funds or managed accounts ; internationally , community investments; particularly into microfinance; are enjoying strong growth rates, with such investments coming not merely from <span style="mso-spacerun: yes;"> </span>foundations and NGOs as it used to be previously but also from individual investors and, increasingly, professional institutional investors. The importance of this trend lies in the fact that world over with greater volume of investor money flowing into what were once the territory of NGO’s and charities rapid transformations are happening in microfinance sectors forcing them to become more leaner, efficient, <span style="mso-spacerun: yes;"> </span>transparent and by becoming more responsible, profitable<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 150%; text-align: justify;"><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%;"><br />
</span></div><div class="separator" style="clear: both; text-align: center;"><a href="http://reports.celent.com/PressReleases/200805232/MFI.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="183" src="http://reports.celent.com/PressReleases/200805232/MFI.gif" width="320" /></a></div><div class="MsoNormal" style="line-height: 150%; text-align: justify;"><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%;"><br />
</span></div><div class="MsoNormal" style="line-height: 150%; text-align: justify;"><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%;"><br />
</span></div><div class="MsoNormal" style="line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%;">Microfinance is based on the recognition that the working poor can act in an entrepreneurial manner and are, in principle, creditworthy. In this respect it poses an attractive opportunity for investors who are pulled towards it primarily by the fact that investing in microfinance allows investors to adopt a social investment strategy geared toward poverty alleviation and social development while at the same time offering an attractive risk-return profile that is marked by largely stable financial returns, low credit default rates and low correlation to the general domestic economy. This is actively aided by fact that in many countries Microfinance institutions are themselves exploring new opportunities to obtain funding and in the process making themselves attractive to investors through means like securitizing their loan portfolios and in some cases by even going public. Critics are of the opinion that such transformations will only erode the microfinance sector and force it to become more profit centric in the process forcing it to move away from the people who constitute its customer base today. Is this true?<o:p></o:p></span></div><div class="MsoNormal" style="line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%;"><br />
</span></div><div class="MsoNormal" style="line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><br />
</div><div class="MsoNormal" style="line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%;">The answer is that it is a false argument and the advantages of the transformation process have been manifold. Firstly, it is an acknowledged fact that the microfinance sector in many countries has reached a point where the subsidized loans they are dependent on for funding is no longer sufficient to cover a large many of their funding needs. By securitizing their loans and inviting market investments into their portfolios the MFI’s are not only broadening their funding structure but also are mobilizing additional monetary resources to facilitate in the expansion of their lending activities. Secondly, external funding from investors has in most cases eliminated the disincentive that had slowly crept in to MFI operations in many countries. This disincentive wrought by subsidized money; had been forcing MFI’s to curtail many of their lending activities to meet non core requirements. <o:p></o:p></span></div><div class="MsoNormal" style="line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><br />
</div><div class="MsoNormal" style="line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%;">The transformation wrought by investment inflows into the MFI sector has not only forced the MFI’s to become more transparent; by virtue of the fact that investors constantly want to know where their investments are going; it has also forced them to significantly reduce the degree of bureaucratic red tape that had come to characterize their functioning; simply because investors prefer their money be spent on lending and portfolio expansion rather than on administrative expenses. Alongside the transformation has also forced the MFI’s to become more efficient and profitable in their operation; which in most cases has implied becoming leaner, more efficient <span style="mso-spacerun: yes;"> </span>operations as they are now accountable to investors whose money is being lent. <o:p></o:p></span></div></span></span><div class="blogger-post-footer"><script type="text/javascript">
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</div><div class="separator" style="clear: both; text-align: center;"><a href="http://cdn.trak.in/wp-content/uploads/2007/09/indian-rupees-new.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="210" src="http://cdn.trak.in/wp-content/uploads/2007/09/indian-rupees-new.jpg" width="320" /></a></div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;">Where it has been implemented in India the CCT schemes have come in for much criticism from critics who have challenged their effectiveness primarily on the grounds of inability to monitor whether or where utilization is happening and the threat of large scale leakages and delays in transfer. These concerns have consequently prevented the large scale uptake of CCT schemes in India; and in most cases the government continues to subsidize numerous sectors through other means. The result has been the inability to directly monitor the impact the subsidies are having and lack of transparency along the subsidy chain. Things are not the same today. Rapid developments over the past few years have seen significant transformations happening in India and made the environment more conducive to implement direct CCT schemes in the country. So what are these developments?</div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;">Not only has the MGNREGS significantly tested and fine tuned government’s ability to handle transfers of money to citizens across the country under challenging geographical and socio-economic as well as political conditions, it has, despite its many glitches, proven that suitable methods of oversight and control can be exercised to identified and eliminate delays and discrepancies in cash transfers.</div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;">The financial landscape in the country too has undergone significant change. Many bank branches have been opened in semi urban and rural areas improving the population to bank branch ratio. More post offices, micro finance institutions, self-help groups and other NBFI’s have also come up across India. This has significantly increased the number of institutional channels through which money can be transferred. Another significant development has been the opening of large numbers of No frill banks accounts under schemes like the Lead Bank Scheme etc that have brought previously unbanked and under banked segments of our population within the ambit of financial inclusion. </div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="http://www.livemint.com/images/5E8429C4-3B54-4BF5-81EC-D0856E03DCF7ArtVPF.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://www.livemint.com/images/5E8429C4-3B54-4BF5-81EC-D0856E03DCF7ArtVPF.gif" /></a></div><div class="separator" style="clear: both; text-align: center;"><br />
</div><div class="MsoNormal" style="text-align: justify;">But most important of all has been the evolution of the Business Correspondent model and the technological innovations the many BC’s have brought to the financial inclusion space; examples being biometrics, Point of Transaction machines that work in offline mode, use of mobile phones to carry out enrollments and disbursements etc that have extended formal financial coverage to the doorsteps of people where even bank branches do not exist. </div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;">Though much elaboration can be made and should be made on each of the aspects mentioned above and how they have vastly improved the situation prevailing in India, making the environment more conducive for implementation of Conditional Cash Transfer schemes, the fact remains that today we are better poised; in terms of hard infrastructure and technological capability as well as experience to successfully implement CCT’s and ensure transparency and accountability. </div><div class="blogger-post-footer"><script type="text/javascript">
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<br />
Financial literacy is a prerequisite for effective financial inclusion, which will ensure that financial services reach the un(der) banked sections of the society, leading to consumer protection through self-regulation. By making people aware of the exsiting products and services and the ways and means to utilise them to their advantage, financial literacy helps in stimulating the demand side of financial markets. <br />
<br />
In recent years, as the financial markets have become increasingly complex with the risk shifting from governments/corporations to individuals, managing risks require individuals to be able to access information that enabled comparison of the various available choices. Both developed and developing countries, therefore, are focusing on programmes for financial literacy/education. In India, the need for financial literacy is even greater considering the low levels of literacy and financial capabilities, and the large section of the financially excluded population.<br />
<br />
For this purpose, Govts and financial institutions across the world are involved in developing and implementing programs on these lines. Recently, the Reserve Bank of Fiji launched the Green Ribbon Campaign as a partnership between the public and private sectors and non- government agencies to promote financial literacy. <a href="http://www.oecd.org/department/0,3355,en_2649_15251491_1_1_1_1_1,00.html">OECD</a> has been quite active in this direction having implemented its Project on Financial Education, and established the International Network on Financial Education and the International Gateway for Financial Education (the first international clearinghouse on financial education).<br />
<br />
In India, Reserve Bank of India (RBI), with the assistance of Organization of Economic Development (OECD) has issued a concept paper, promoted a financial literacy website, and set up credit counseling centers to provide advice on personal finance. RBI’s ‘<a href="http://www.rbi.org.in/financialeducation/home.aspx">Project Financial Literacy</a>’ aims at disseminating information about the central bank and basic banking concepts through various media like films, games, cartoons and comic books, and essay writing competitions, specifically target school and college-going students. Various corporate banking organizations have also promoted financial literacy drive, mostly as part of their Corporate Social Responsibility.<br />
<br />
However, there is still a lot to be done. India is a diverse country with different regional profiles in terms of language and culture, accessibility and reach. There is a wide divergence in literacy levels across and within the States. Penetration levels of the formal financial sector, especially between rural and urban areas are quite wide. This diversity makes a standard pan-India program redundant. <br />
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The need of the hour is to design and implement programs specific to the target audience and involving use of suitable media; bring out publications in vernacular and simple language and ensure distribution of the material to the people in both urban and rural areas. Also appoint instuctors/counsellors from local areas who have the requiste qualifications as well as the trust of the people. One possible solution is the training of Business Correspondents to pass on the financial information to the customers. At the same time, monitoring and evaluation systems need to be build up so that the programs effectively reach the intended.<div class="blogger-post-footer"><script type="text/javascript">
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</div><div style="text-align: justify;">This brings us to the question. If corruption is still going on what has been achieved? If the purpose of these frameworks is only appeasement and to act as pressure valves why focus so much on these frameworks as role models? The answer to this question lies in the fact that though these frameworks; in the ways they were evolved have numerous loopholes that facilitate corruption to go on unhindered, they have acted, in numerous cases, as pedestals for further developments that have significantly gone ahead to ensure transparency and accountability in these programs. Take for example MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) and how it has been implemented in Andhra Pradesh. Despite having a significantly better system of ensuring audits and accountability than other states Andhra Pradesh, often hailed as one of the states where MGNREGA has been implemented best was still hit by a scam involving grassroots level workers for MGNREGA who stole crores of rupees. </div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">The solution the state implemented subsequently was an innovative mix of policy prioritizing accompanied by private involvement. They introduced a smart card based system for MGNREGA wage payments.It is understood that at the heart of any system of accountability lies the process of specifying a set of responsibilities, clearly recording activities of participants, cross verifying information and records and holding concerned individuals accountable if there are breaches in performance. What the smart card technology that has been implemented in Andhra Pradesh has ensured is the facilitation of these very tasks. First of all, the use of smart cards has ensured that every transaction is recorded accurately including the time, place and amount. To begin with, in the earlier system of MGNREGA cross verification and auditing it was extremely time consuming to process the long trail of paper data. It involved meeting a beneficiary and finding out how many days they worked in a particular project and how much money they received. </div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">With the smart card system and the electronic records that are generated during its usage the process of cross verification of data has become much less cumbersome. Not only has the smart card based system of NREGA payments made accurate record keeping possible at multiple points (thereby facilitating cross verification) It has also helped address the problems associated with fake signatures and helped clarify on entitlements of people (as money cannot be transferred without accessing an individual’s card and confirming ownership by matching against biometrics data stored on that card)</div><div style="text-align: justify;">Another equally important feature that this system has facilitated is that it has helped remove the control of information from the hands of those who indulge in corruption. It was a trend with the earlier system of payments that to access paper records auditors would have to approach precisely those who fudged them, and naturally they would resist making it difficult to monitor their activities. Officials were more willing to part with their lives than part with their papers. By taking information out of their control, it has been made more difficult for them to resist providing information or doing damage control with records when they sense trouble as records of payments are also available in the hands of the Business Correspondents and banks.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Technology has thus reduced the costs of cross-verification dramatically and significantly altered the terrain of the politics of accountability. In partnership with RTI (Right to Information) which ensures that information is easily, quickly and cheaply accessible to those who wish to ensure accountability; effective inroads are being made to combat corruption and leakage. The ready availability of information; facilitated by technological innovation and partnered implementation; has thus given a ready fillip to civil society’s quest to ensure transparency and accountability in financial aspects of programs and policies in India. </div><div style="text-align: justify;"><br />
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<div class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial,Helvetica,sans-serif;"><span class="Apple-style-span" style="font-size: small;"> “what according to you has been the benefit of today’s modern technology”. “What do you use it for”. these are questions that we constantly encounter nowadays in surveys after surveys that seek to identify the perceptions of different age groups on technology and its uses. Think about it and the first thought the hits one is that technology has made faster communication and information exchange possible and hence brought people closer; reducing time and cost of communication and information exchange. When we say so our thoughts are motivated by that which we regularly use; mobile phones and the internet and email ; that have facilitated our communication to be faster and allowed us to exchange data across vast distance at a fraction of the time it used to take earlier. our answers are touched by a tinge of bias that lies rooted in an understanding of technology as a possession of the privileged and those able to afford it and capable (in terms of possessing education and the technical know how) of using it. even our understandings of the associations between technology and banking and finance is colored to a large extent by how it has allowed for international trade and commerce; cross country economic information exchange and planning, global stock trading and electronic money transfers of massive amounts between countries etc.</span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial,Helvetica,sans-serif;"><span class="Apple-style-span" style="font-size: small;">But today when we look around us what we see is something far more expansive; the ability of technology to be not only a plaything of the privileged but also its ability to transform; in combination with innovative ideas and genuine social concern; the lives of millions of people across the world who constitute the very bottom of the development pyramid and who in no way can be called privileged. It is not charity but business with a social conscience that seeks to earn even while transforming the lives of millions of people for the good. Be it the biometric smart card based branchless banking system that is employed by FINO in bringing financial inclusion to the rural poor across the geography of India (which has opened bank accounts for 17 million + bottom of the pyramid customers and linked them to formal financial system) or the mobile banking technology that today has revolutionized the way people do banking in countries like Kenya, Brazil and South Africa; technology has today made it possible to overcome geographical, social and economic barriers to take banking to people previously unbanked and under-banked and integrate them into formal financial systems. Added to this is the fact that as far as the customer is concerned these technologies are not complicated or difficult to use; despite the immense sophistication and complexity that characterizes the networks and back end processing systems into which the front end customer interfaces and data input devices in these systems are integrated. </span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial,Helvetica,sans-serif;"><span class="Apple-style-span" style="font-size: small;">Take for example the system being employed by FINO in India which is the Business correspondent model (BC). Important characteristics of this system currently in place include (1) access to the most remotest regions of the country through agents (bandhus) drawn from these communities and regions who go to customers villages with equipment to facilitate branchless banking processes (2) ability to Capture Customer details including biometric and non biometric details easily (using fingerprint reader, webcam, mobile software interface, computer interface) and facilitate Unique Identification using the equipment in the hands of the Agent that satisfies banking KYC norms(2) ability to provide non-repudiable and user-friendly authentication mechanism that ensure individuals identity during transactions (3) ability to ensure reliable connectivity up to the last mile supported by the ability of the system to operate in online and offline mode (4) ability to offer Financial products tailored for the specific target group and system ability to be adapted to add on other financial and non financial products (5) ability to support the use of innovative User Interfaces and work in harsh rural environmental conditions and (6) Low Capital and Maintenance costs as compared to costs that would be incurred was a bank to set up branches in rural areas. By virtue of its inherent features this model being employed in India possesses distinct advantages not merely over the brick and mortar model but also over other models being practiced in other countries </span></span></div><div class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial,Helvetica,sans-serif;"><span class="Apple-style-span" style="font-size: small;">Technology provides numerous solutions to bring financial inclusion to the millions of teaming masses who are outside the formal financial system. But the fact also remains that technology is never and can never be a standalone solution. It needs to be supported by favorable regulatory frameworks that allow flexibility, growth and innovation while also spearheaded by comprehensive understandings of the geographical, social and economic characteristics of the environment in which it is going to be implemented. If these enabling conditions are ensured then financial inclusion for all is not far away.</span></span></div><div class="blogger-post-footer"><script type="text/javascript">
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Recently, a lot of furore was generated in media when Bill Gates and Warren Buffet managed to convince 38 other billionaires to sign The Giving Pledge to give away at least half of their wealth during their lifetime or after their death for humanitarian causes. The <a href="http://gizmodo.com/5604368/bill-gates-convinces-40-billionaires-to-give-away-half-their-fortunes">article</a> also stated that if the 400 richest Americans were to give away ½ of their assets, the charity would amount to nearly $ 600 billion. And it is this figure and the accompanying people’s voices which makes it an interesting piece of news. <br />
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The debate about Philanthrocapitalism as any debate runs along the similar lines of whether it is needed or not, whether it is good or bad.<br />
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Michael Edwards, who wrote <a href="http://www.futurepositive.org/smallchange.php">‘Small Change: Why Business won’t save the world’</a> entirely rejects the notion that applying business principles to solve global problems is more effective than the traditional approaches, stating that philanthrocapitalism will make the organisations ‘ignore the costs and tradeoffs involved’ in applying business approach to civil society actions and will ultimately undermine social transformation process, which doesn’t adher to deadlines and returns.<br />
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On the other hand, Mathew Bishop and Michael Green in their book,<a href="http://www.philanthrocapitalism.net/about/synopsis/"> ‘How the Rich Can Save the World’</a> examine this notion from a more positive viewpoint. They cite the examples of various ‘social investors’ who are involved in how their money is utilized, who want accountability and efficiency as outcomes in the process of social change.<br />
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People on the other hand voiced entirely different kind of viewpoints; many even labelled it as a gimmick to garner publicity, to evade taxes, to increase social station. Nevertheless there were some interesting ideas which came out of these reactions. <br />
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Philanthrocapitalists like Bill Gates are concentrating their energies on the issues in third-world countries; however there are no. of problems in their respective countries as well. For example, the general concern in USA, which recently recovered from recession, seems to be the current lack of employment opportunities, a situation which many felt could be rectified if the corporates invested in business expansion rather than on donations. <br />
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Another idea was that though it is highly noble that capitalists are involved and promoting the notion of ‘effective charities’, they should work towards sustainable solutions arising out of their businesses. Increasing the productivity of poor through skill development and capacity building would help in reducing their dependencies on donations. The classic case of helping how to fish…<br />
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At the end of it, Philanthrocapitalism is still an evolving concept and judging its effectiveness is too early. However it can be said that this need not be a case of either/or, but can be seen as an opportunity to generate innovative solutions to reach out to the poor – integrate the efficiency of business with the social commitment of non-profits.<div class="blogger-post-footer"><script type="text/javascript">
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<b><i>Published in Microfinance Focus on August 6, 2010</i></b><br />
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The Reserve Bank of India (RBI) has recently put up a discussion paper in public space for engagement of “for profit” companies as business correspondents (BC) in India. This was on cards after a series of developments like August 2009 Working Group’s review of the BC guidelines which paved path for relaxing entry barriers for new entities and individuals as BCs. It also entailed provision of allowing banks to charge a “reasonable” user fee followed by Government’s acceptance of Inter Ministerial Group’s recommendations for use of mobile phones to further financial inclusion and now the latest one – Prime minister’s high power committee on financial inclusion which includes Industry captains from sectors like telcom, retail,BFSI,IT etc.<br />
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Finally, we have a 22 page document on the bank’s website cobbled up with familiar arguments for a business case to facilitate entry of “for profit corporate BCs” citing reasons like “risk mitigation and organizational capabilities” and “too big to fail” as pros and a few cons as well. But the conventional public policy reasoning reminds: “Behind every policy decision there are winners and losers”. I leave it to the wisdom of esteemed readers to find out the set of winners and losers in this case.<br />
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The paper shores up case for quashing entry barriers in favour of corporate BCs who would be either telcos or organized retail players (organized retailing in India is less than 2-3 percent in India) or “bankers to poor” NBFC –MFI . The pivotal argument put forth in the draft arrows that there is a paucity of organizational innovation and technology adoption by the existing players for furthering the “business of financial inclusion” in India, hence the entry of corporate BCs for speeding financial inclusion.<br />
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By mentioning this, does proponents find a technology and innovation vacuum in the current network of BCs? And thus expects “for profit corporate delivery channels” to employ these engines of commercial viability?. If this is the case, then it becomes interesting to foresee how would a for profit corporate channel solve commercial viability jigsaw on its own which is primarily the outcome of “low take up rates” of financial services and products at bottom of the pyramid; particularly when end customers have erratic cash flows and there are not enough better designed and properly priced micro banking products and services available which is the domain specialization of financial institutions and not telcos and retailers .<br />
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Commercial viability of the model as a factor is cited in the draft to buttress the case, but there are no pointers as to how “for profit” BCs will make the model commercially viable. Finally a global overview of Business Correspondents and need for adhering to principles of client protection is also touched upon despite of the fact that globally celebrated telco led model of M-Pesa is also largely a remittance service oriented and Safaricom makes no or extremely razor thin profits from this business stream. In Brazil BCs are in picture since 1970s, they are commercial entities but still more than 95 percent revenues are generated from checking accounts, utility bill payments and remittances and they have to cross subsidize their operations.<br />
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Finally, it is an open secret that the RBI despite of its herculean endeavors to go with bank led model at present seems to be under tremendous pressure from various quarters to accommodate corporate interests. Retailer-Telco-Technology interest groups and corporate lobbying at high echelons has taken the debate of financial inclusion beyond obvious.<br />
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It needs to be understood clearly that business of banking is of bankers and not of telcos or retailers. In the Indian context is visible on ground that the regulator has been proactive and Banks have demonstrated serious intentions and vision for enabling universal financial inclusion. However the missing link is investment gap. To fund the gap, policy can play a defining role here by incentivizing banks monetarily and this could be done by propounding a clear cut financial support policy for banks.<br />
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Non banking Players like retailers and telcos have along way to go in demonstrating some scalable and profitable models of micro banking for bottom billion junta. BC model is just on the verge of stabilization after four years. Let the existing system be incentivized without further experimentation and keep the debate on technology for future.<div class="blogger-post-footer"><script type="text/javascript">
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<div class="MsoNormal" style="font-family: Calibri, sans-serif; line-height: 17px; margin-bottom: 10pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; text-align: justify;"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">In economic and financial literature much attention has been paid to two important points namely (1) how remittances help meet shortfalls in finances in countries and (2) how financial inclusion is a means to an end – helping channel these remittances from abroad to intended recipients; most of whom are often poor and beyond the reach of normal banking channels.</span></span></div></div></div><div class="MsoNormal" style="font-family: Calibri, sans-serif; line-height: 17px; margin-bottom: 10pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; text-align: justify;"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Though true the emphasis on these two points tend to miss another very important point. How remittances are a means to achieving financial inclusion for all.</span></span></div></div></div><div class="MsoNormal" style="font-family: Calibri, sans-serif; line-height: 17px; margin-bottom: 10pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; text-align: justify;"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Not only do these remittances flowing in from abroad provide an incentive to bring greater segments of the population under the ambit of formal financial institutions and channels as there is sufficient revenue to be gained for banking and financial institutions from channeling remittances to these recipients but they also make it possible for the recipients to gain access to formal banking channels and networks that were until recently structurally at least out of their reach. the result of this is an improvement in the lending capacity of banks and credit institutions in these countries who with greater numbers of people using their service; primarily for savings; suddenly have greater volumes of credit in their possession ; significantly enhancing their lending capability. An added impetus is provided by national and international security considerations that look down upon informal channeling of money from abroad into domestic economies. Thus remittances by their very existence exert and demand pull to improve formal institutional coverage to unbanked and under-banked sections of society. </span></span></div></div></div><div class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 17px; margin-bottom: 10pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; text-align: justify;"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Under such scenarios remittances provide ample scope for “development” ; provided adequate policy is designed by governments and central banks to channelize the extra lending capability of formal financial institutions; through infrastructural and policy initiatives; to help bridge the gap currently existing between demand for credit and supply of credit for particular segments of society and regions that are lagging behind. Structural change in economies to put them on to an accelerated path of development is hence a very possible consequence if remittances and their externalities are successfully harnessed. </span></span></div></div></div><div class="blogger-post-footer"><script type="text/javascript">
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Why it is that poverty characterizes vast tracts of rural India and people there aren’t able to use the ladder of access to alternative sources of finance to escape the clutches of poverty and the social and economic shackles that a poorly performing agricultural sector has imposed up on them. Why is it that large numbers of landless agricultural laborers AND farmers continue to be dependent on agriculture despite falling wages and incomes? <br />
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The answer to this is that though the architects of India’s poverty alleviation programs had their intentions right and realized that providing financial inclusion in the form of access to formal financial institutions and their services to the most impoverished segment of the population would help them to break away from their dependency on incomes from agriculture and also liberate them from the clutches of the moneylender (principally responsible for a large part of rural indebtedness); in implementation the “financial inclusion” did not go further than increasing the number of bank branches in rural India and emphasizing on credit requirements of the rural population; most of which again went to the land owning segments of the agricultural class who were able to muster sufficient collateral. <br />
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There was hardly any focus on providing the landless laborer with credit let alone other financial products and services including savings, insurance, etc. Thus the rural financial infrastructure that came about was quantitatively impressive but qualitatively poor. <br />
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What they forgot was that the approach towards making financial inclusion a reality needs to focus on perceiving the common man at the base of the pyramid not merely as a recipient of the financial services that institutions hand down but also as an important stake holder in the entire process; one for whom these products and services are a gateway to greater freedom from poverty and underdevelopment. The focus therefore needs to be not only on the quantitative but also on the qualitative. This poses interesting questions to us today. It forces us to ask ourselves are we providing the base of the pyramid with what they need or are we providing them with what we think they need? what difference is what we are doing making in terms of providing the base of the pyramid with a greater avenue of choices to escape the poverty and impoverishment that binds them?<br />
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It brings us to the realization that when we talk about financial inclusion we should not merely talk about the quantitative but also about the qualitative. There needs to be a focus on sustainability; on providing the base of the pyramid with access to financial services and products that are designed to help bring about transformational changes within the structure of rural society and economy that will help it escape from the clutches of poverty and grow while at the same time providing adequate protection to those making use of these products and services. The task of financial inclusion will be incomplete if the common man at the base of the pyramid, who is in a vulnerable position due to poverty and marginalization is not protected and is left even more vulnerable at the end of it. <br />
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it requires us to adapt and adopt newer systems and processes to cater to the demands of different geographical, economical and social environments with the purpose of breaking restraining forces that are inhibiting their economic development and hence fulfill the objective of achieving sustainable growth that is all inclusive.<div class="blogger-post-footer"><script type="text/javascript">
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Remittance in common parlance refers to the transfer of money by a person abroad to his family/friends in his/her home country. Various reports by World Bank, United Nations University show that remittances form the second largest source of international finance to many developing countries of the world, often surpassing the official development flows. International Fund for Agricultural Development (<a href="http://www.ifad.org/">IFAD</a>) 2006 estimates put the total flow of remittances to developing countries at $301 billion (including informal channels) while the World Bank estimates are $250 billion (excluding informal channels), which mirrors the huge market potential.<br />
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And we are not just talking about the rich or middle-class but the poor too. We have known through personal experience or news stories about the sheer no. of unskilled labour who have migrated to areas for e.g. Gulf (from Kerala) in search of livelihoods. And it is this section of migrants that the development sector needs to concentrate on by ‘introducing’ formal channels to them which can be better leveraged to promote economic development. <br />
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Remittances make a real difference to people, a difference that’s measured not in money but in its ultimate utilization for better food, medicines, education and healthcare. But what’s the connection between remittance flows and financial inclusion?<br />
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In countries like Ghana, remittances can account for up to half the household income. In Bangladesh, they can represent most of the household income. It is estimated that about 10% of the world’s households receive remittances (<a href="http://www.dfid.gov.uk/">DFID</a>). And while this money is used to support basic necessities like roti, kapada, makaan, it can have a multiplier effect. It is known that most often the excess money is further invested for genetrating profits for the family. The cumulative effect on the economy could be increased employments, increased money flow for investments, thereby stimulating growth. And it is this aspect that if encouraged, can help communities to come out of poverty. <br />
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Money is sent through formal channels like banking institutions or money transfer agencies or more frequently, as in case of poor migrants, through informal channels like friends, acquaintances or illegal Hawala channels. There a number of impediments faced in the informal fund transfer – higher charges, delivery issues, possibility of theft etc., which may not just mean reduced money to the beneficiary but may even further tax the family. On the other hand, the formal channels ensure easy transference of the entire amount in return for set charges. And as money transfers through formal channels often require the use of a bank account, remittances promote access to formal financial services for the sender as well as recipient. <br />
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However the problem lies in the fact that the penetration of the formal channels is much limited, due to the same demand and supply problems which are plaguing the banking sector - problems of availability and accessibility, identification, information gap, illiteracy, higher operational costs.<br />
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This situation if utilized efficiently can prove to be a win-win situation for all stakeholders. As <a href="http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1110315015165/LeveragingRemittancesForDevelopment.pdf">Dilip Ratha</a>(World Bank) points out, encouraging remittances through the banking channels (formal channel) can increase the development impact of remittances by encouraging more savings and furthering investment opportunities. Banks and other financial institutions can introduce their other products to its remittance customers thereby reducing their costs per customer. MFIs can make use of the history of the remittance receipts to map out the credit history of the potential customers. <br />
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Access to remittance services in rural and remote areas can be improved by encouraging the participation of the microfinance institutions, credit unions, and saving banks (including postal saving schemes) in the remittance market thereby effectively increasing the probability of usage of formal channels by the poor.<br />
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The opportunities are limitless; and if combined with initiatives by the financial institutions and policy and regulatory support by Governments have the potential to make a difference!<div class="blogger-post-footer"><script type="text/javascript">
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