GOVERNMENT OF INDIA’S “SWABHIMAAN” The Financial

Inclusion

1

Objective:

1.To study about the banking initiative called “Swabhimaan”.

2.The main objective is to enables small and marginal farmersto obtain credit at lower rates from banks and otherfinancial institutions. This would insulate them fromexploitation of the money lenders. Government’s emphasis onbankers is to take up this task with a sense ofresponsibility and understanding and exercise courtesy andrespect, especially to small borrowers.

3.The initiative is also important to protect the customers,especially the most vulnerable ones, from harsh financialpractices and prevent them from being overburdened by debt.All in all, the end objective should be to empower people toachieve their own goals through enhancing their financialcapabilities.

2

3

Sr.no

.Name of the Topic

Page

No.

1. What is Swabhimaan..? 4

2. When did it start? 7

3 Reasons for the Campaign 8

4. What will this Campaign do..?

5. How will it work..?

6. Services to the Rural India

7.What will be the result of the

Campaign..?

8.How banks are Implementing the

scheme..?

9.An initiative by Bank of

Maharashtra

10. Conclusion

11. References

WHAT IS SWABHIMAAN?

Swabhimaan is a campaign of the Government of India which aims

to bring banking services to large rural areas without banking

services in the country. It was launched by Smt. Sonia Gandhi,

the Chairperson of the United Progressive Alliance party in the

presence of Shri Pranab Mukherjee, the Union Finance Minister

and Shri Namo Narain Meena, the Union Minister of State for

Finance on February 10, 2011.

This campaign is to be operated by the Ministry of Finance,

Government of India and the Indian Banks' Association (IBA) to

bring banking within the reach of the masses of the Indian

population.

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An initiative which seeks better financial inclusion within

India will strive for rolling out banking services in 20,000

villages without banking services with a population of 2000 by

March 2012 as to improve participation of rural folks in

different plans launched by government for them.

The government has targeted to cover at least 73,000 new

habitations with a population of 2,000 and above and open at

least 50 million new accounts by March 2012.This financial

inclusion campaign named, “Swabhimaan” aims at providing

branchless banking services through the use of technology.

The vision for this programme is social application of modern

technology. Banks will provide basic services like deposits,

withdrawals and remittances using the services of Business

Correspondents also known as Bank Saathi. This initiative also

enables Government subsidies and social security benefits to now

be directly credited to the accounts of the beneficiaries so

that they could draw the money from the Business Correspondents

in their village itself.

The Government hopes to reach the benefits of micro insurance

and micro pension products to the masses through this banking

linkage. It would now be possible for the large number of

migrant workers in urban areas to remit money to their relatives

in distant villages quickly and safely.5

The facilities provided through banking outlets will enhance

social security by facilitating the availability of allied

services in course of time like micro insurance, access to

mutual funds, pensions, etc.

Banking facilities like Savings Bank, recurring Deposits, Fixed

deposits, Remittances, Overdraft facility, Kisan Credit Card

(KCCs), General Credit Cards (GCC) and collection of cheques

will be provided. The Banks are also working together with the

Unique Identification Authority of India (UIDAI) for enrolment,

opening bank accounts and also to facilitate transfer of

government subsidies and other payments.

Swabhiman (pronounced as swaa-bhi-maan) meaning self-respect

comes from Swa-(meaning Self) and -abhiman (meaning Respect or

Pride) in Sanskrit language.

Swabhimaan” is a path-breaking initiative by the Union

Government and the Indian Banks’ Association to bridge economic

gap between rural and urban India. This campaign is a big step

towards socio-economic equality by bringing the underprivileged

segments of Indian population into the formal banking fold for

the first time. The vision for this programme is social

application of modern technology. 

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‘Swabhimaan’ – a financial security programme was launched by

the Central Government to ensure banking facilities in

habitation with a population in excess of 2000 by March 2012.

This nationwide programme on financial inclusion, was launched

in February, 2011 with its focus on bringing the deprived

sections of the society in the banking network to ensure that

the benefits of economic growth reach everyone at all levels.

In a big nation like India, providing banking facilities across

the length and breadth of the country, especially in rural

areas, has always been a great challenge for the successive

governments since Independence. Even though nationalisation gave

a big boost to expansion of banks in rural areas with Public

Sector Banks becoming important instruments for advancement of

rural banking and changing lives of rural populace.

The key idea is that there is need for village level presence –

a customer-facing channel that is close to the customer

preferably at a walking distance of not more than three to four

kilometers. For this, it is important to have entities which are

good at delivering outreach while operating in very difficult

remote conditions. Besides giving access to banking, it also

enables government subsidies and social security benefits to be

directly credited to the accounts of the beneficiaries, enabling

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them to draw the money from the bank saathi or business

correspondents in their village itself.

This initiative enables small and marginal farmers to obtain

credit at lower rates from banks and other financial

institutions. This would insulate them from exploitation of the

money lenders. Government’s emphasis on bankers is to take up

this task with a sense of responsibility and understanding and

exercise courtesy and respect, especially to small borrowers.

The initiative is also important to protect the customers,

especially the most vulnerable ones, from harsh financial

practices and prevent them from being overburdened by debt. All

in all, the end objective should be to empower people to achieve

their own goals through enhancing their financial capabilities.

8

When did it start?

The Reserve Bank of India set up four working groups to test the

effectiveness of technology, identify the changes that are

required to be made in the regulations and provide inter-

connectivity across banks for taking the process of financial

inclusion forward.

In India, focused attention on financial inclusion started in

2005.

In November 2005, banks were advised to make available a basic

banking - ‘no-frills’ account with low or nil minimum balance,

as well as charges, to vast sections of the population. Banks

were required to make available all printed material in the

concerned regional languages.

To encourage people to open accounts, simplified Know Your

Customer (KYC) norms were introduced for accounts with balances

not exceeding Rs 50,000. Banks were asked to consider

introduction of a General purpose Credit Card (GCC) facility up

to Rs 25,000 at their rural and semi-urban branches.

The Finance Minister decided to take advantage of the work done

so far on financial inclusion and directed that habitations

having population over two thousand, as per 2001 census, should

be provided with banking facilities through business9

correspondent model by March 2012. He made an announcement to

this effect in his budget speech in the year 2011.

Swabhiman – Our Account Our Pride was launched by Smt. Sonia

Gandhi, the Chairperson of the UPA in the presence of Shri

Pranab Mukherjee, the Union Finance Minister and Shri Namo

Narain Meena, the Union Minister of State for Finance on

February 10, 2011. It is the campaign started by the Ministry of

Finance, Government of India and the Indian Banks Association

(IBA)-( an association of most of the Indian banks) to bring

banking within the reach of the masses of the Indian population.

This campaign or the movement is started to promote banking

facilities and basic banking services to 73,000 villages in the

country which are not served by any bank so far.

REASONS FOR THE INITATIVE..

The size of the un-banked population in the country, only a

little more than a third of India’s population has access to

banking services at present.

The rural money lender who often charge an exorbitant

interest rates and exploit them

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. The interests of consumers are not protected and thus not

supportting financial stability and the country is not able

to achieve equitable growth.

Also opening of an bank account would need some education

due to which it would enhances the literacy rate in rural

sector.

Weak financial consumer protection and low levels of

financial literacy have resulted in disastrous consequences

for both the financial sector and society.

Also it has showen how even though microfinance credit was

easily available but the lack of consumer education left

many borrowers in despair.

Also there were many cases of Money Laundering happening

even in the rural villages

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WHAT WILL THIS DO?

Highlighting the objective of the campaign,

The initiative would enable small and marginal farmers

obtain credit at lower rates from banks and other financial

institutions. This would insulate them from exploitation of

the money lenders,

Once banking access increases, it is hoped that it enables

government subsidies and social security benefits to be

directly credited to the accounts of the beneficiaries,

enabling them to draw the money from the business

correspondents in their village itself.

The key idea is that there is need for village level

presence – a customer-facing channel that’s close to the

customer not more than three to four kilometers walking

distance.

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.

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It will not only ensure availing of a variety of financial

services at doorstep but also easy enrolment to all public

welfare schemes.

Ranging from connectivity of handheld devices, geographical

connectivity to literacy rate of the population can raise

issues in smooth implementation of the program.  

The main objective of the government is to promote and bring

about a financial literacy in rural parts of India.

The programme will increase the demand for credit among the

millions of small and marginal farmers and rural artisans

who will benefit by having access to banking facilities.

New computer based technology connecting all the banks with

one another in the country, is going to play a very

important role in this campaign.

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.

How will it work??

process

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Inclusive growth is one of the main planks of the government and

bringing in until then excluded people to the mainstream of the

financial institution network is an important priority in the

medium term. The focus to financial inclusion was provided by

the Rangarajan Committee through its aspiration that financial

inclusion should denote delivery of credit and other financial

services at an affordable cost to the vast sections of the

disadvantaged and low-income groups.

Based on this, over the last four to five years, a series of

initiatives and programmes have been launched by the Reserve

Bank of India to bring more and more people into the fold of

formal financial institutions.

Banks were asked to consider introduction of a General purpose

Credit Card (GCC) facility up to Rs 25,000 at their rural and

semi-urban branches. Since it was clear that it would be

difficult to set up branch networks across all villages in the14

BANKSBUSINESS

CORRESONDENTS

RURAL PEOPLE

country banks were encouraged to appoint Business

Correspondents.

Further the norms for appointment of Business Correspondents

were also liberalised. Various categories of individuals, kirana

shops etc. were allowed to become Business Correspondents for

banks. Subsequently, mobile banking guidelines were also issued

by RBI as mobile connectivity was thought of as a cheap but

reliable model to reach out to the people.

Recently, there has been relaxation in some provisions of the

Prevention of Money Laundering Act, only to enable and

facilitate the opening of small accounts for poor people. In

addition, the guidelines for Business Correspondents have been

liberalised to allow corporate and for- profit companies to

become Business Correspondents’ of banks.

Thus with the help of these BC’s the GoI will make the rural

people open up their bank account with various banks and hence

they, this will lead that every person in a family in

the village having the bank account with the bank .

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“This campaign ensures to provide the following services tothe Rural India:

Promises to bring basic banking services to unbanked villageswith a population of 2000 and above.

The movement facilitates opening of banks accounts, provideneed-based credit and remittance facilities besides helping inpromoting financial literacy in rural India. 

The programme is aimed at increasing the demand for creditamong the millions of small and marginal farmers and ruralartisans who will benefit by having access to bankingfacilities.

This financial inclusion campaign aims at providing branchlessbanking services through the use of technology.

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Banks provide basic services like deposits, withdrawals andremittances using the services of Business Correspondents(BCs) also known as Bank Saathi.

The initiative also enables Government subsidies and socialsecurity benefits to now be directly credited to the accountsof the beneficiaries so that they could draw the money fromthe Business Correspondents (BCs) in their village itself.

The Government hopes that the benefits of micro insurance andmicro pension products reach the masses through this bankinglinkage.

This programme now makes it possible for the large number ofmigrant workers in urban areas to remit money to theirrelatives in distant villages quickly and safely.

The facilities provided through banking outlets will enhancesocial security by facilitating the availability of alliedservices in course of time like micro insurance, access tomutual funds, pensions, etc.

Banking facilities like Savings Bank, recurring Deposits,Fixed deposits, Remittances, Overdraft facility, Kisan CreditCard (KCCs), General Credit Cards (GCC) and collection ofcheques will be provided.

The Banks are also working together with the UniqueIdentification Authority of India (UIDAI) for enrolment,opening bank accounts and also to facilitate transfer ofgovernment subsidies and other payments.

What will be the result of the campaign…

17

This financial inclusion campaign named, “Swabhimaan” aims

at providing branchless banking services through the use of

technology. The vision for this programme is social

application of modern technology.

Government subsidies and social security benefits now will

be directly credited to the accounts of the in their village

itself.

The Government hopes to reach the benefits of micro

insurance and micro pension products to the masses through

this banking linkage. It

would now be possible for the large number of migrant

workers in urban areas to remit money to their relatives in

distant villages quickly and safely.

The facilities provided through banking outlets will enhance

social security by facilitating the availability of allied

services in course of time like micro insurance, access to

mutual funds, pensions, etc.

Banking facilities like Savings Bank, recurring Deposits,

Fixed deposits, Remittances, Overdraft facility, Kisan

Credit Card (KCCs), General Credit Cards (GCC) and

collection of cheques will be provided.

The Banks are also working together with the Unique

Identification Authority of India (UIDAI) for enrolment,

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opening bank accounts and also to facilitate transfer of

government subsidies and other payments.

Banks will create a closer relationship between the formal

financial system and the people living in the rural remote

country region far away from brick and mortar bank branches.

The BCs will help in making available banking facilities to

the interior areas through various handheld mobile devices

and other technologies that reduce cost and have the ability

to record banking transactions and to communicate the record

of such transactions to the Bank using the internet

facilities / GPRS.

The progress of “Swbhimaan” programe will be monitored

through the State Level Bankers Committee mechanism.

Also benefits and social security payments through the

banking system will reach the beneficiaries timely and

efficiently and leakages are reduced substantially.

“Swabhimaan” campaign is expected to benefit millions of

small and marginal farmers and rural artisans by providing

them easy access to credit at lower rates and save them from

clutches and exploitation by moneylenders.

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How banks are implementing the scheme?

State Bank of Travancore SBT implementing Swabhimaan schemeTHIRUVANANTHAPURAM, September 27, 2011

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The State Bank of Travancore (SBT) has been allotted 29 of the

120 villages with a population of over 2,000 each in the State

for implementing the Union government's Swabhiman programme for

financial inclusion, a press release said here on Monday. The

deadline set for achieving financial inclusion is March 31,

2012.

Under SBT “Sahaya Hastham” (helping hand), the name given by the

bank for the project, a branch has been opened at Perumanna in

Kozhikode district. The remaining 28 villages are covered

through business correspondents based on an ICT (information and

communication technology) platform.

For this, the bank has entered into a memorandum of

understanding with the State-run Kudumbasree project. Women

members of the Kudumbasree self-help groups had been engaged to

work as customer service providers in the villages. No-frills

savings bank accounts have been opened and more than 3,500 smart

cards issued in the 28 villages.

The bank does not charge any fees for the services being offered

to the cardholders. The bank will provide banking products such

as recurring deposits and overdrafts for a maximum of Rs.10,000.

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Swabhimaan initiative in Maharashtra

SWABHIMAN – State Financial Inclusion Plan – Maharashtra

INTRODUCTIONSwabhiman is path-breaking initiative by Govt of India and banks

in state to cover the economic distance between rural and urban

India. It promises to bring basic banking services to all

unbanked villages in the country with population above 2000.

The swabhiman movement facilitate opening of bank accounts,

provide need based credit, remittance facilities and help to

promote financial literacy in rural India using various models

and technologies including branchless banking models through

Business correspondents.

RBI on the basis of recommendations of High Level Committee on

Lead Bank Scheme directed lead banks to draw a road map by March

2010 to provide banking services through a banking outlet in

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every village having a population of over 2000, by March 2012

and further stated that such banking services may not

necessarily be through a brick and mortar branch but can be

provided through any of the various forms of ICT-based models

with the help of hand held machines, smart card & Business

Correspondents.

In view of the above, SLBC has taken various steps/initiatives

for preparation of Financial Inclusion Plan (FIP) for providing

banking services in every village having a population of over

2000 as below:

All Lead District Managers were advised to constitute a Sub-

Committee of the District Consultative Committee to draw a

roadmap for Financial Inclusion for each district. All LDMs have

been provided list of villages having population over 2000 in

the state as per census 2001 and finalise the allocation of

villages to bank branches in each district by sub-committee of

DLCC. The allocation of unbanked villages is to be done on lines

erstwhile service area guidelines, proximity to bank branches&

contiguity of villages,etc and submit the final list of unbanked

villages & their allocation to bank branches to SLBC for

approval. As per census 2001, there are 7312 villages in the

state having population above 2000, of which 4292 villages have

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been identified as unbanked in the state. The same was allocated

to various banks in state & approved by SLBC.

The Bank-wise summary of number of identified villages having

population above 2000 for providing banking services are as

under:

A.] Public Sector Banks

Sr. No. Name of theBank

No. of unbanked villages

Sr. No. Name of theBank

No. of unbanked villages

1. Allahabad Bank

33 11. Indian Overseas BK

21

2. Andhra Bank 01 12. OrientalBkof Commer

06

3. Bank of Baroda

176 13. Punjab National Bank

26

4. Bank of India

506 14. State Bank of Hyderabad

215

5. Bank of Maharashtra

853 15. State Bank of India

855

6. Canara Bank 40 16. Syndicate Bank

50

7. Central Bank of India

436 17. Union Bank of India

189

8. CorporationBank

03 18. UCO Bank 23

9. Dena Bank 158 19. Vijaya Bank 0310. Indian Bank 11 20 IDBI 82Total (1 to 11) 2217 Total (12 to 20) 1470Total villages for Public Sector Banks 3687

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B.] Regional Rural Banks

C.]

Private Sector Banks

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Sr. No.

Name of the Bank No. of unbanked villages

1. Maharashtra Gramin Bank

355

2. Vidarbh Kshetriya Gramin Bank

63

3. Wainganga Krishna Gramin Bank

92

Total villages for RRBs 510Total villages for Private Sector Banks

95Sr. No. Name of

the BankNo. of unbankedvillages

Sr. No. Name of the Bank

No. of unbankedvillages

1. HDFC 01 4. RatnakarBank

21

2. ICICI Bank

72 5. Karnataka Bank Ltd.

01

Total (1 to 2) 73 Total (4 to 5) 22Total villages for Private Sector Banks

95

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Swabhimaan - The Financial Inclusion Plan

''Swabhiman" is Financial Inclusion Plan of

Bank to take banking to the doorsteps of

remote villages where banking facilities are

not available

Maha Gram Seva Kendra - An initiative by Bank

of Maharashtra

Located in a remote village, the Kendra will

provide all basic banking services to the

customers. It will be manned by one bank

official from the parent branch to which the

Kendra is linked.

This initiative is an alternative to BC model

service delivery channel provided by the Bank

in selected remote villages to give more

personalized services.

List of Unbanked Villages Alloted to

Various Banks (Bankwise) in Maharashtra.

List of Unbanked Villages Alloted to

Various Banks (Districtwise) in

Maharashtra.

List of Total Villages Covered By Bank of

Conclusion

Providing banking facilities across length and breadth of the

country, particularly in rural areas, has always been a great

challenge for the successive governments since Independence.

Nationalization gave a big boost to expansion of banks in rural

areas with Public Sector Banks becoming important instruments

for advancement of rural banking and changing lives of rural

populace. However, financial inclusion remains one of the

biggest challenges before our nation even today as only about

38% of bank branches are in rural areas and only 40% (approx.)

of the country’s population have bank accounts.

Though strides have been made in expansion of bank branches from

around 8700 at the time of bank nationalization in 1969 to

around 87,000 presently, only 32,000 (approx.) are in rural

areas. The average population per bank branch is around 13,900.

To address this need the Union Finance Minister in his Budget

Speech 2010-11 directed all banks, to provide appropriate

banking facilities to habitations having population in excess of

2,000 by March, 2012 using various models and technologies

including branchless banking through Business Correspondents.

Accordingly, the banks through the forum of State Level Banker

Committees (SLBCs), have formulated their roadmaps for Financial

Inclusion and have identified approximately 73,000 habitations 27

having a population of over 2,000 for providing banking

facilities. These habitations have been allocated to Commercial

Banks, Regional Rural Banks and Cooperative Banks for providing

banking facilities in a time bound manner. This would provide

new bank accounts to around 5 crore rural households.

Accordingly, a nationwide programme on financial inclusion,

“Swabhimaan” was launched in February, 2011 by the Government,

which is focused on bringing the deprived sections of the

society in banking network to ensure that the benefits of

economic growth reach everyone at all levels. This campaign is a

big step towards socio-economic equality by bringing the

underprivileged segments of Indian population into the formal

banking fold for the first time.

Reference:

http://www.inclusion.in/index.php?option=com_content&view=article&id=638

http://fino-cofi.blogspot.com/2011/01/swabhiman-grand-financial-inclusion.html

http://www.commodityonline.com/news/swabhimaan-indias-unique-financial-inclusion-initiative-37812-3-1.html

http://www.hindu.com/2011/01/07/stories/2011010761940300.html

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http://www.livemint.com/2010/10/26202145/Swabhiman-scheme-for-5-cr-fami.html

http://www.thehindu.com/news/cities/Thiruvananthapuram/article2490057.ece

http://www.bankofmaharashtra.in/downdocs/SLBC/State%20FIP-%20Swabhiman-2010-12.pdf

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