(GIST OF YOJANA) Growth Opportunities
for Weaker Sections
Growth Opportunities for Weaker Sections
The framers of the Indian Constitution have thought well in advance and ensured
to provide adequate and mandatory provisions in the Constitution of India to
provide justice in all aspects of life, equality in status, social security and
economic/financial safeguards to the weaker sections of the society. The
successive governments have recognised the social and economic imperatives for
broader financial inclusion and have made significant policy changes from time
to time by finding innovative ways to bring the poor at par with the rest of the
society. The successive Governments in India have also made essential amendments
to the constitution and brought legislative framework to ensure social and
economic safeguards to the deprived sections of the society.
As an initial step banks have been nationalized, provisions have been made for
priority sector lending requirements for banks; lead bank scheme was introduced
to ensure government policy initiatives to get shape in action. Regional Rural
Banks (RRBs) have been established to provide last mile connection to the people
in rural areas and have banking facilities at their door steps, the concept of
service area approach have been brought in. Self-Help Groups(SHGs) bank linkage
programmes were introduced to give a platform for needy people to come up with
business and innovative ideas to self sustain and engage in gainful economic
activities, etc. Multiple steps have been taken by the Reserve
Bank of India (RBI) over the years to increase access to the poorer segments of
In the global context, most of the countries now look at financial inclusion as
the means to more comprehensive growth, wherein each citizen of the country is
able to use earnings as a financial resource that can be put to work to improve
future financial status and adding to the growth of the economy of the nation.
Financial inclusion has become a top policy priority of the Central Government
to ensure egalitarian society, as the substantial population of India lives with
economic insecurity. Setting steps towards universal financial inclusion is both
a national commitment as well as a public policy priority for India. To achieve
the final outcome of reaching banking services to all the 6,49,481 villages,
financial inclusion has to become a viable business proposition for the
substantial population and also for sustainability of the financial
Barriers for Financial Inclusion: Some of the research studies have
revealed that despite the presence of enough number of legislations, sincere
efforts by the policy makers, guidelines from RBI, Scheme of Lead Banks and
appointment of ombudsman, there are still certain barriers to achieve full
financial inclusion in the country: Bharati DB (2016) observes that from the
demand side, the reasons identified in the study for financial exclusion are low
income, poverty and illiteracy and lack of awareness. From the supply side
branch proximity, timings, cumbersome documentation and procedures, attitude of
the bank staff and language are the reasons cited.
Ranjini and Bapat (2015) observed that impediments in approaching the bank due
to difficulties in documentation requirements, loan sanction procedure,
inflexible repayment terms, inability to communicate the requirements,
reluctance to approach the bank for small loans were the major blockade in the
road to achieve financial inclusion.
Charan Singh (2014) observes that in-spite of various measures initiated by the
Reserve Bank of India and Government of India, satisfactory results are yet to
be witnessed. He has classified the challenges as customer related and technical
issues. Mobile number registration and pin number generation is a big deterrent
for customers along with financial illiteracy. Access channels, coordination
with mobile service operators are other challenges for banks. Low penetration of
financial services, less efficiency of business correspondents also limits the
success of financial inclusion.
Rajiv Gupta (2014), Sachindra G. R (2013) observed that marginal farmers,
landless labourers, oral lessees, self-employed and unorganized sector
enterprises, urban slum dwellers, migrants or ethnic minorities and socially
excluded groups, senior citizens and women are out of the purview of financial
inclusion. Challenges identified include (i) Agent and vendor risk. (ii)
Consumption oriented expenditure patterns. (iii) Dormant accounts. (iv)
Inadequate awareness levels (v) Lack of infrastructure. (vi). Low literacy
rates. (vii). Poor saving habits. (viii). Recovery related issues. (ix). Small
ticket transactions and high transaction costs. (x). Sustainability factor Ashu
(2014) observed that penetration of bank branches in rural areas was unviable on
account of high transaction costs. Business Correspondent (BC) model is observed
to be restrictive in rural areas. Lack of financial literacy and poor marketing
of financial products leads to low awareness among urban poor depending on the
informal credit sources which cater according to their convenience. There is
also a large degree of self exclusion due to the existence of informal credit
sources meeting their convenience. The complex financial services market offers
a wide range of products; however lack of awareness restricts the use of these
Rao SK (2010) study suggests that achievement of inclusive growth was a result
of the act of nationalisation of banks way back in 1969. For the purpose of the
study, he analysed data published by RBI to substantially prove the fact that
banking development after nationalisation has paved the way for penetration of
banking into unbanked and rural areas. He is of the opinion that, in spite of
the massive branch expansion activity carried out by the banks, the challenges
of the banking sector has not been met and there is need for recognising new
channels to achieve full inclusive growth in the country.
Badajena, S, N and Prof. Gundimeda, H (2010) studied the impact of self-help
group linkage programme in achieving financial inclusion across sixteen states
during the period 2008. The study found out that despite vast coverage of formal
banking network, the basic financial services are still not accessible to larger
sections of the society.
Present Scenario: The Government of India is successfully exploring
multiple facets for financial inclusion. During the last five years, we have
witnessed incredible shift in the line of social and economic empowerment. The
attention has moved towards participatory and citizen engagement model of
development. The commitment reiterated among the masses by the Prime Minister on
many occasions rapidly brought changes in the economic system.
Financial Inclusion and the Government:
The National Scheduled Castes Finance & Development Corporation (NSCFDC):
NSFDC was setup by the Government of India in February, 1989 as a Government
Company under Section 25 (A company not for profit) of the Companies Act., 1956.
The broad objective of NSFDC is financing, facilitating and mobilising funds for
the economic empowerment of Scheduled Caste communities living below the Double
the Poverty Line (DPL) limit.
The NSFDC extends loans (Term Loans, Micro Finance and Education/ Vocational
Education and Training) at concessional rates to Scheduled Castes (SCs) living
the below DPL as rehnancing through State Channelising Agencies and Regional
Rural Banks (RRBs). Under promotional activities, the NSFDC also provides
assistance directly to the target groups for skill development and marketing.
Since inception till 31.03.2015, the NSFDC has disbursed total loans worth of Rs.
3019.87 crore to its state Channelising agencies benefiting 9,41 ,034 persons
belonging to Scheduled Castes living DPL.
The National Scheduled Tribes Finance & Development Corporation (NSTFDC): NSTFDC
was established during 2001 and it is incorporated as a government company
having licence under Section 25 of the Companies Act, 1956 i.e. a company not
for profit to provide concessional financial assistance to scheduled tribes for
their economic and educational development.
NSTFDC assists Self Help Groups and extends financial assistance for projects
having unit cost upto Rs.25 lakh per S.H.G. and provides upto 90 per cent of the
cost of the project subject to per member loan not exceeding Rs.50,000/-. It
provides concessional finance to tribal artisans empanelled with TRIFED for
purchase of project related assets and working capital.
NSTFDC provides term loan for viable projects costing upto Rs.25 lakh per unit.
Under the scheme, financial assistance is extended upto 90 per cent of the cost
of the project and the balance is met by way of subsidy/promoters contribution/
margin money. The rate of interest is 6 percent p.a. upto Rs.5 lakh and 8 per
cent p.a. up to Rs.lO lakh and 10 per cent above Rs. 10 lakh. The Adivasi Mahila
Sashaktikaran Yojana (AMSY) is an exclusive scheme for economic development of
scheduled tribes women under which NSTFDC provides loan upto 90 per cent for the
project costing upto Rs.l lakh at an interest rate of 4 per cent p.a.
NSTFDC has disbursed Rs.l654.92 crore in its twelve years of operation up to
31.03.17. In the recent past, NSTFDC has introduced new schemes for educational
skill development of scheduled tribes such as Adivasi Shiksha Rinn Yojana (ASRY),
Awareness Generation, etc.
The National Safai Karamcharis Finance & Development Corporation (NSKFDC):
NSKFDC, was established under Section 25 of the Companies Act, 1956, on 24th
January 1997 as a ‘company not for profit’. It is fully owned by the Government
of India and has an authorized share capital of Rs. 600.00 crores.
NSKFDC disburses the funds to the state channelising agencies (SCAs) nominated
by the concerned State Govts./UT Administrations and to Regional Rural Banks (RRBs)
and Nationalised Banks for onward disbursement of the funds to the
beneficiaries'. The SCAs disburse the funds to the ultimate beneficiaries in
association with the District Social Welfare Department. The financial
assistance is provided upto maximum of Rs. 15.00 Lacs for General Scheme and
Rs.25.00 Lacs under Swachhta Udyami Yojana.
The National Backward Classes Finance & Development Corporation (NBCFDC):
NBCFDC is a Govt. of India Undertaking under the aegis of Ministry of Social
Justice and Empowerment. NBCFDC was incorporated under Section 25 of the
Companies Act 1956 on 13th January 1992 with authorised share capital of Rs.
1500 crores. The Corporation has been paid Rs. 1124 crores as paid up capital by
the Government of India till the end of 2017. The company is a not for profit
with an objective to promote economic and developmental activities for the
benefit of Backward Classes and to assist the poorer section of these classes in
skill development and self employment ventures. The Corporation carries its
activities through 46 State Channelising Agencies (SCAs) in different States. As
on 31.3.2017 NBCFDC has disbursed Rs. 3575.52 crore benefiting 23,00363 persons
belonging to Other Backward Classes.
The National Minorities Finance & Development Corporation (NMDFC): NMDFC
was incorporated on 30th September 1994, as a company not for profit, under
Section 25 of the Companies Act 1956. The prime mandate of NMDFC is to provide
concessional finance to the Minorities for self employment/ income generation
activities. As per the National Commission for Minorities Act, 1992, the
notified Minorities are Muslims, Christians, Sikhs, Buddhists and Parsis.
Subsequently, Jain community was also added into the list of notified Minority
Communities in January 2014. Under
NMDFC programme, preference is given to artisans and women.
Since its inception in 1994 till 30.06.2018, NMDFC has disbursed loans amounting
to Rs.4680.16 crores to 14,26,308 beneficiaries. During 2017-18, an amount of
Rs.570.83 crores was disbursed to 1,29,489 beneficiaries. During the current
financial year 2018-19 (upto 30.06.2018), NMDFC has extended loans amounting to
Rs.112.00 crores to 10,800 beneficiaries
The National Handicapped Finance & Development Corporation (NHFDC): The
NHFDC had been set up by Government of India to play a catalytic role in
economic empowerment of Persons with Disabilities (PwDs), as a Company u/s 25 of
the Companies Act, 1956 on 24th January, 1997 with an authorised share capital
of Rs. 400 crores. It has been working as an Apex Corporation for the benefit of
Persons with Disabilities (PwDs) (Divyangjan) in the country.
The corporation has been extending financial assistance for the benefit of PwDs
for their economic empowerment and help them rise up the economic/social ladder.
The corporation provides financial assistance at concessional rate of interest
for setting up/extend income generating activities of PwDs. Financial assistance
is also extended for higher education of PwDs at a concessional rate of
interest. NHFDC has released Rs.801.66 crore for the benefit of 1,42,349 PwDs in
the country till 31.3.2017.
Rashtriya Mahila Kosh (RMK): Rashtriya Mahila Kosh (RMK) is an autonomous
organisation under the Ministry of Women & Child Development (MWCD). It is a
society registered under the Societies Registration Act 1860 and an apex
microfinance organisation. The main objective is to provide micro-credit to poor
women for various livelihood support and income generating activities at
concessional terms in a client-friendly procedure to bring about their
socio-economic development. RMK extends microfinance to the poorest and asset
less women entrepreneurs through intermediary Organisations ( IMOs) for income
generating activities @ 6 percent simple interest who in turn extend the loan to
SHGs beneficiaries’ upto 14 per cent simple rate of interest.
MUDRA Yojana: The Finance Minister announced the formation of MUDRA Bank.
Accordingly MUDRA was launched by the Hon’ble Prime Minister on 08 April 2015
for providing loans upto 10 lakh to the non-corporate, non-farm small/ micro
enterprises. Loans are given by Commercial Banks, RRBs, Small Finance Banks,
Cooperative Banks, MFIs and NBFCs.
The borrower can approach any of the lending institutions or can apply online
through MUDRA portal. Under the aegis of PMMY, MUDRA has created three products
namely ‘Shishu’, ‘Kishore’ and ‘Tarun’ to signify the stage of growth /
development and funding needs of the beneficiary micro unit/entrepreneur and
also provide a reference point for the next phase of graduation/growth. Stand-Up
India Scheme: Facilitates bank loans between 10 lakh and 1 crore to at least one
Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman
borrower per bank branch for setting up a Greenfield Enterprise. This enterprise
may be in manufacturing, services or the trading sector. The rate of interest
would be lowest applicable rate of the bank for that category (rating category)
not to exceed (base rate (MCLR) + 3+ tenor premium). The scheme envisages 25 per
cent margin money which can be provided in convergence with eligible
The number of loans given by Public Sector, Private and Regional Banks under the
Stand-up India Scheme are 51,888, 2,445, and 1,009 respectively upto 07.03.2018
since inception of the scheme. Regional Rural Banks have sanctioned 180 loans to
borrowers of Scheduled Castes (SC) category as on 07.03.2018 since inception of
Venture Capital Fund Scheme: A first of its kind Venture Capital Fund was
launched by Ministry of Social Justice and Empowerment, Government of India to
promote entrepreneurship in India among the Scheduled Castes by providing
concessional finance to them.
Credit Enhancement Guarantee Scheme: The Finance Minister during the
Union Budget speech (2014-15) on July, 2014, had announced that a sum of Rs.200
crore shall be allocated towards credit enhancement facility for young and
start-up entrepreneurships, belonging to Scheduled Castes, with an objective to
encourage entrepreneurship in the lower strata of the society resulting in job
creation besides creating confidence in Scheduled Castes. Department of Social
Justice & Empowerment under the Ministry of Social Justice & Empowerment,
Government of India sponsored the “Credit Enhancement Guarantee Scheme for
Scheduled Castes” under its social sector initiatives.
The Eligible Borrowers and Risk Cover: Upto 31.12.2017, loans aggregating
to Rs.21.27 crore have been sanctioned by some of the Member Lending
Institutions against which the total guarantee cover of Rs. 14.40 crore has been
provided by IFCI. Efforts are on to promote the scheme through wide publicity by
conducting seminars, conferences and awareness programmes in coordination with
Chapters of Dalit Chambers of Commerce (DICCI) and attending State Level Bankers
Committee (SLBC) meetings. PSU Banks, across the country are being sensitised.
Prime Minister Jan Dhan Yojana (PMJDY): Hon’ble Prime Minister announced
a new scheme Pradhan Mantri Jan Dhan Yojana (PMJDY) on August 15, 2014, to
ensure financial inclusion for weaker sections of the society for providing
banking, pension and insurance to reduce the negative effects of earlier
schemes, thus giving them financial freedom and stability. 1.5 crore bank
accounts were opened under this scheme across the country. These schemes clearly
highlight that the government is committed to the cause of inclusive empowerment
of weaker sections of the society. As stated, various landmark initiatives have
been taken under the present regime to eliminate poverty and empower the
disadvantaged sections of the society.
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