Conclave Rep ort on

Financial Inclusion
in Orissa:
A way forward

March 2009

Centre for Youth and Social Development

E-1, Institutional Area, Gangadhar Meher Marg, Bhubaneswar – 751 013,
Tel. 0674-230774, 2301725, Fax: 0674-2301226

SMCS
Swamshree Micro-Credit Services
M-75, Samanta Vihar, Near NALCO Chhak, Bhubaneswar – 751 017
Tel: 0674-2302646
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Financial Inclusion in Orissa: A way forward
Executive Summary
On the eve of its annual day celebration, CYSD organized a one-day
conclave titled “Financial Inclusion in Orissa: A Way Forward” in
association with Swayamshree Micro Credit Services (SMCS),
Bhubaneswar on 23 March 2009. The day long conclave that witnessed the
participation of more than 100 participants was held in DRTC-CYSD,
Bhubaneswar. The participants included government officials, bank officials,
academicians, MFIs and civil society representatives, media representatives,
etc.
Prior to beginning of the conclave CYSD unveiled its new logo
representing its thematic areas of work and the people with whom it has
been working.
The conclave, which was divided into five sessions, began with spelling out
of the two broad objectives:

 To remove confusion, with respect to definition of financial inclusion,
and

 To define the role of various stakeholders in clear terms.
The first session on “Financial inclusion in Orissa: Current issues and
challenges” witnessed deliberations from Shri Sanatan Sethy, DGM, RBI,
Bhubaneswar and Shri Banabihari Panda, DGM, Indian Bank, Bhubaneswar
and a healthy discussion from participants. While Shri Sethi observed that
financial inclusion is a must for poverty alleviation, Shri Panda emphasized
the need for spread of mobile telephony as the primary mover for financial
inclusion. During discussion concerns were raised on lack of method to
identify the real beneficiaries and the cost involving reaching to the poor.
Session II on “Strategy and approach towards financial inclusion in
Orissa” witnessed Shri C. R. Patnaik, CGM, NABARD, Bhubaneswar and
Prof. L. K. Vaswani, Pro-Vice Chancellor, KIIT University, Bhubaneswar
shedding lights on the real objectives of financial inclusion following the
Rangarajan Committee Report, concerns regarding shouldering
responsibility of the huge cost involved in reaching to the poor and the
capacity of the poor to utilize the credit in desired manner.
___________________________________
Financial Inclusion in Orissa: A way forward
Smt. Usha Padhi, Director, Mission Shakti; Shri Kripal Singh, General
Manager, SIDBI, Bhubaneswar and Shri D. B. Sarangi, Chief Financial
Officer, ADHIKAR deliberated upon the role of federations, the
importance of financial literacy and the need for amending the current
practices respectively to make financial inclusion process more credible
and effective in the third session on “Financial inclusion and financial
literacy in Orissa”.
Expressing concern over the fact that the target of attaining 100% financial
inclusion in 14 identified districts of Orissa is still eluding the banks, Prof.
Prafulla Kumar Dash, Dean IBS, Bhubaneswar in the fourth session on
“Financial inclusion in Orissa: Role of various stakeholders” urged for
developing and promoting a perspective that finance for the rural poor is a
potential business opportunity and social obligation as well. In this regard,
he advocated the need for forging links between micro finance institutions
and local communities. On the other hand, Shri Kedar Choudhury of
Darbar Sahitya Sansad pleaded for giving due recognition to the community
driven financial institutions (CDFIs) for their contribution to financial
inclusion process.
In the final session, “Summing up: A way forward and future action
agenda” Shri Subrat Singhdeo, Madhyam Foundation, Bhubaneswar tried
to consolidate the finding from each session and spelt out the following five
outcomes of the day long conclave.

 As financial inclusion and financial sustainability go together, the
implication is that the state has to play a bigger role and there is a
need for commitment of resources for capacity building etc. to make
financial inclusion a reality.

 Use of creative adult learning techniques to promote financial literacy.

 As financial literacy is in the interest of the service providers, the
service providers must invest in such literacy programmes.

 MFIs need appropriate product design.

 MFIs need to be well equipped with information on various insurance
products in order to pass them on to the beneficiaries.
At the end, Shri Binaya Kumar Rout, CYSD read out the vote of thanks.
2
Introducing the conclave address from Shri
On the eve of its annual day celebration, CYSD organized a one-day Parshuram Nayak,
conclave titled “Financial Inclusion in Orissa: A Way Forward” in Director, SMCS. Shri
association with Swayamshree Micro Credit Services (SMCS), Nayak put forth two
Bhubaneswar on 23 March 2009. The day long conclave that broad objectives and
witnessed the participation of more than 100 participants was held briefly described the
in DRTC-CYSD, Bhubaneswar. The participants included contents of each
government officials, bank officials, academicians, MFIs and civil session of the
society representatives, media representatives, etc. conclave before the
participants. The
CYSD unveiled the new logo objectives are:
“It is a historic day in the annals of CYSD as it completes 27 years
of arduous yet successful journey”said Shri Prafulla Kumar Sahoo, the 
 To remove confusion, with respect to definition of financial
Chairman of CYSD inclusion, and
while welcoming the 
 To define the role of various stakeholders in clear terms.
participants. As the
organization entered The conclave was divided into five sessions like:
into the 28th year of
playing an enabling role 1. Session-I: Financial inclusion in Orissa: Current issues and
while empowering the challenges
marginalized and 2. Session-II: Strategy and approach towards financial inclusion in
vulnerable section of Orissa
people to form an 3. Session-III: Financial inclusion and financial literacy in Orissa
inclusive society, it 4. Session-IV: Financial inclusion in Orissa: Role of various
reiterated its stakeholders
commitment towards the cause of such people. On this occasion it 5. Session-V: A way forward and future action agenda
unveiled a newly crafted logo for the organization depicting three
thematic areas on which CYSD has been working relentlessly, such Each session of approximately one hour witnessed deliberations
as primary education, sustainable livelihoods and participatory from the panelists followed by active participation from the
governance. Ms. Stephanie, a VSO volunteer working with CYSD participants during open house discussion.
explained that the logo illustrated the thematic areas of the
organization’s work and the people with whom it had been working. Session I – Financial inclusion in Orissa: Current issues
and challenges
The conclave begins The panelists for this session were Shri Sanatan Sethy, Deputy
At the outset, the Chairman, CYSD welcomed the participants and General Manager, RBI, Bhubaneswar and Shri Banabihari Panda,
introduced the delegates. This was followed by the welcome

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Financial Inclusion in Orissa: A way forward
DGM, Indian Bank, Bhubaneswar. Prof. Anup Dash from Utkal
University, Bhubaneswar facilitated the session.
Critical examination of the role of SHGs: The call of the day
In his initial remarks, Prof. Dash expressed concern that micro-
finance had become ossified over the years. He said that innovations
made nearly 30
years back had only
been mass copied
and in the process
the soul of micro-
finance had been
lost. Therefore, he
suggested that
there was a need to
examine the
number of real self
help groups (SHGs)
operating at the
ground level and to look into their performance.
Quoting Bijay Mahajan, he said “Micro-finance is barely an
instrument for poverty alleviation”. In his remarks he also referred
to the global initiative undertaken by Harper et al. to brainstorm on
micro finance. Referring to the fact that SHG is an Indian
contribution to the world, Prof. Dash said “SHG is one of the
variants of different group based micro finance programmes”.
“While promoting SHGs emphasis is being laid on institution and
community building”, he observed. He further observed that SHG
formation had two major objectives, such as 1) transformation in
local power structure and 2) improvement in governance system.
Nevertheless, “numerically SHGs are on a decline and anecdotal
stories are in use”, expressed Prof. Dash.
Furthering his argument that the concept of micro finance has been
ossified over the years, Prof. Dash put forth the theory that finance
and community run on completely different models. According to
him “while finance operates on exclusiveness, community runs on
the basis of inclusiveness”. Therefore, he expressed concern over
how to bring together both inclusivity and exclusivity or in other
words, the community and finance together.
Similarly, referring to the lack of accountability and credibility among
the micro finance institutions (MFIs) at macro level, Prof. Dash
raised concern over making MFIs sustainable at grassroots level.
Concluding from such state of affair in micro finance sector that the
net result has been impoverishment of poor and more victimization
of clients, Prof. Dash put forward the following suggestions to
revive the micro finance sector while fulfilling its objectives.

 Capacity building of the poor so that they can adapt to the
extremely complex financial system.

 The MFIs must be ready and well-equipped to absorb the
shocks.
Financial inclusion a must for poverty alleviation
The dimension of poverty in India has been very large and civil
society has been
working
relentlessly
toward poverty
alleviation. Having
said this, Shri
Sanatan Sethy,
Deputy General
Manager, RBI,
Bhubaneswar in
his deliberation
emphasized the
role of economic growth in poverty alleviation. He opined “if we
achieve 6-7% GDP growth we can probably overcome poverty”. In

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Financial Inclusion in Orissa: A way forward
other words, he emphasized the role of financial inclusion in
poverty alleviation and said “financial inclusion and poverty
alleviation cannot be separated”.
Referring to the policy and related guideline formulation by RBI on
financial inclusion and subsequent evaluation in the experimental
districts of performance of financial inclusion programme, he
expressed concern that the extent of financial inclusion had not
been universal as many families were found not to have bank
accounts in their names. Therefore, in order to achieve total
financial inclusion he suggested cooperation of government agencies,
NGOs and SHGs with banks to open accounts. In addition, he also
was of the view that account opening procedure must be very
simple.
Talking of business correspondent model, Shri Sethi informed that
this model allowed private agency to open an account for a person
through a smart card, and through this smart card money could be
transacted in favour of a customer. However, “remittance remains a
concern as facilitating money transaction through private
organizations becomes a risky proposition”, he expressed. As a full
proof measure, he assured the audience that efforts were on to
make the business correspondent model viable/practicable one.
Shri Banabihari Panda, DGM, Indian Bank, Bhubaneswar, observed, “in
simplistic terms financial inclusion means finance will be available to all
households”. He further said that financial inclusion encompasses
different components like savings, investment, credit, insurance and
remittance. Emphasizing the role of technology in achieving total financial
inclusion, Shri Panda suggested spreading mobile telephony among rural
masses.
With reference to the role of various stakeholders in achieving
financial inclusion which is essential for economic development, Shri
Panda urged the government officials at the ground level to facilitate
the process of opening up of bank accounts by helping in identifying
___________________________________
Financial Inclusion in Orissa: A way forward
the person. Similarly, he urged the MFIs to take up the role of
business correspondents to achieve the objectives of financial
inclusion.
Citing the unavailability of family-wise census data he urged RBI to
design a format so that the data would be available to all for use like
a telephone directory.
Referring to the current practice of SHGs opening account in the
name of the group, Shri Panda expressed concern about the
individual members. With a view to make the benefits of financial
inclusion process accrue to all individual members, he urged the
NGOs and MFIs to ensure that members must open individual
accounts.
As remittance has been a major concern, Shri Panda observed that
100% core banking would make remittance easier in the absence of
ATMs which would take time to reach all individuals.
On credit facility, Shri Panda was of the view that the beneficiary
should be charged 18% of interest on the sum provided by the MFIs
so that the MFIs would earn a profit of 5% as they got loan at a rate
of 13% from banks.
As an incentive he suggested that the credible SHGs at the
grassroots level that were capable of bringing beneficiaries to bank
must be paid for their service.
Last but not the least, Shri Panda said “financial inclusion can only be
successful if the beneficiaries are involved and this can only done by
the MFIs and NGOs.”
Open house discussion
The presentations by panelists from representatives from RBI and
Indian Bank were followed by open house discussion where the
participants raised concerns regarding credibility and viability of
5
MFIs and their operations, and also regarding the beneficiaries of
financial inclusion process.
Concerns:
1. Prof. Dash raised concern over lack of methods to identify the
beneficiaries more personally. Similarly, referring to spread of
technology, he expressed concern that technology could only
adopted by the haves and thus, in reality the excluded groups
had remained excluded.
2. Expressing his concern that MFIs and NGOs suffer from asset
loss, term loan etc. Shri Ramesh Das, a micro finance
consultant, asked what should be the strategy to overcome
these concerns.
3. Deepak Kindo, a micro finance practitioner from Regional Rural
Development Centre in his views said that one of the primary
objectives of financial inclusion was accessibility of all to bank
accounts. His concerns are as follows.
a. MFIs are overcrowded in certain places;
b. An important agenda like health insurance has been missing
from the ambit of financial inclusion;
c. Considering the fact that financial inclusion has always been
started from the supply side, the concern is that no effort
has been made yet to know what the beneficiaries actually
want or what they demand;
d. Lack of clear identification of appropriate interest rate on a
micro finance; and
e. Lack of specification or consensus as to who should bear
the cost of different processes involved in financial inclusion
like social mobilization and technology upgradation.
4. Shri Subrat Singhdeo of Madhyam Foundation in his remarks
echoed the concerns of the preceding speaker and asked whose
agenda was financial inclusion and who should finance the whole
___________________________________
Financial Inclusion in Orissa: A way forward
process. While asking RBI as to why the banking correspondent
model and smart card could not take up, he remarked that
outcome of the pending micro finance bill would have far
reaching implication on financial inclusion.
Amidst these concerns, Ms. Naina Mohanty from Swayamshree,
Cuttack suggested that bankers should own the responsibility of
orienting the beneficiaries on financial inclusion process, thus
reducing the financial burden on NGOs and MFIs.
Response from the panelists
Responding the Prof. Dash’s suggestion of opening up of 4000 -
5000 bank branches by each nationalized bank to achieve faster
financial inclusion, Shri Sethy from RBI said that there were 78,000
branches of all banks in Orissa till date and the number had been
increasing. Based on this achievement, he informed that it would
take much longer time to open 4000 – 5000 branches by each
nationalized bank.
Nevertheless, in lieu he sought greater role from NGOs and MFIs
to make financial inclusion achieve its objectives at a desired pace.
Also, in response to the query regarding opening of bank account in
the name of SHG rather than in the name of individual members,
Shri Sethi said the idea is to reduce the transaction cost in favour of
individual members.
Session II – Strategy and approach towards financial
inclusion in Orissa
The second session facilitated by Shri Parshuram Nayak,
Director,SMCS, witnessed deliberation from two distinguished
panelists – Shri C. R. Patnaik, Chief General Manger, NABARD,
Bhubaneswar and Prof. (Dr.) L. K. Vaswani, Pro-Vice Chancellor,
School of Rural Management, KIIT University, Bhubaneswar.
In his deliberation, Shri Patnaik, CGM, NABARD informed the
participants about the history and need of financial inclusion, and
6
emphasized the need to push the concept forward in order to see
how would it work and how much successful would it be in
addressing the issue of poverty. Shri Patnaik’s deliberations are as
follows:
Poverty is multi dimensional and strategies have been made to
address the issue of rural poverty. This, in turn, has led to the
evolution of concept of cooperatives. One of the major initiatives to
address poverty has been to ensure access to credit.
In the early 1990s when the concept of SHG-bank linkage was
mooted there were not many takers. But NABARD took the challenge
and during 1993 initiated the process with a target of only 500 SHGs
with an objective of providing hassle free credit to these SHGs.
Through the journey it was recognized that only facilitating credit
would not be helpful to address poverty unless infrastructure building,
forward-backward linkages and other support services were
emphasized. Therefore, the state took the onus of building of
infrastructure and in the following years NABARD took a lead role in
this through disbursement of Rural Infrastructure Development Fund
(RIDF) for creation of rural infrastructure.
Following 2004 NSSO data whereby it was learnt that most of the
rural population were still out of the reach of formal credit facility,
Rangarajan Committee came out with a strategy to include such
excluded group into the credit net. The Committee spelt out the need
for financial inclusion as a policy measure to address the issue of
poverty which would ensure avenues for people to:

 Save their savings

 Credit facilities

 Insurances

 Remittances

 Financial advices
The objectives of Rangarajan Committee Report may be achieved by
2015.
___________________________________
Financial Inclusion in Orissa: A way forward
It can also be noted here that following the Baidyanathan Committee
Report to facilitate total financial inclusion massive recapitalization is
being done in the country through credit cooperatives.
The concept of banking correspondent model has evolved to counter
the lack of required manpower to reach all people in the current
banking system. Similarly, the idea of creating a financial inclusion
fund is to build conducive environment so that technology adoption
will be easier and banks can reach to the targets easily by not
involving huge expenditure.
Micro finance is a mirage and concerns are galore
This was clearly reflected in the deliberation of Prof. Vaswani. As an
independent observer, minting no words on achievements of micro
finance, he straight away raised certain pertinent concerns/doubts
for the micro finance policy makers and practitioners to ponder
over. These concerns are as follows.:

 There has been no assessment as to how many people have
real access to credit. Also, even after nearly two decades,
there is no clear picture regarding the impact of micro
finance on the living standard of the poor.

 If technology has to be developed what should be the cost
of reaching to the poor and who should bear the cost,
particularly in the context where the cost of reaching to the
poor has become astronomical?

 Similarly, referring to the fact that micro finance is a very
manpower intensive sector, he asked do we have enough
competent manpower and money to compensate the labour
of such manpower.

 How are the poor going to utilize the credit made available
to them and do they have capacity to utilize the fund as
desired?

 Who would take responsibility for their capacity building?

 What about the market linkage and do all beneficiaries have
viable enterprise options and entrepreneurial ability?
7
Open house discussion
Responding to Shri Kindo’s queries regarding the burgeoning cost of
reaching to the poor and other strategies than recapitalization
adopted by NABARD, Shri Patnaik, CGM, NABARD clarified that
“financial inclusion means people should get financial products and
services at affordable cost, and it is not about only micro finances
and SHGs”. Nevertheless, he also expressed his anxiety regarding
the rising cost and said it would defeat the purpose of financial
inclusion.
Similarly, responding to the concern regarding lack of monitoring
mechanism to monitor the performance of financial inclusion
process, Shri Patnaik said it was practically difficult to monitor all 32
lakh SHGs linked to banks and therefore, he sought cooperation
from MFIs and SHGs to make the process more transparent and
effective through evolving self-monitoring mechanism. And, in this
regard he urged the participants to suggest ways to improve the
system and evolve self-monitoring mechanisms.
Prof. Vaswani suggested expansion of avenues and reach by
NABARD so as to reduce the transaction cost.
Session III – Financial inclusion and financial literacy in
Orissa
The third session witnessed deliberations from Smt. Usha Padhi,
Director, Mission Shakti, Government of Orissa, Shri Kripal Singh,
General Manager, SIDBI, Bhubaneswar and Shri D. B. Sarangi, Chief
Financial Officer, ADHIKAR. Prof. Bedabati Mohanty facilitated the
session.
Referring to the UN statement that “there is nothing to keep the
bankables unbankable” and the fact that the poor should have access
to banking services is a global concern, Prof. Mohanty tried to
define financial inclusion and financial literacy in Indian context in
the following terms.
___________________________________
Financial Inclusion in Orissa: A way forward
According to her financial inclusion is “delivery of financial services
to the disadvantaged and excluded section in an affordable cost”.
Having said this, she, however, opined that the term ‘affordable’ is
ambiguous or relative. Then she went on to add that “financial
inclusion is estimated by finding out the ratio of people having bank
accounts to the total adult population, which is 56% for India as per
the NSSO data”. Further, she expressed her views that “financial
inclusion helps people to participate in the development process,
thus augmenting economic growth”.
According to her poverty is not the only factor excluding people
from financial inclusion. The other factors are social inhibition,
illiteracy, volume of paper work in bank etc. In this context, she
observed that “financial inclusion is a part of the wider goal of social
inclusion and the first step is increasing financial literacy”.
In an attempt to define financial literacy, she said “it includes
awareness, knowledge and skill building of the target group to make
decision on savings, borrowings etc.” In other words, she observed
that “financial literacy enables a person to manage his/her own
money and plan well in advance so as not to fall prey to debt trap
and therefore, it is as much useful to a poor as it is to a rich
person”.
Finally, she concluded saying “financial inclusion is not the goal,
rather it is just a facilitating tool/instrument to increase the standard
of living of any person” before allowing the panelists to share their
views.
Smt. Usha Padhi, Director, Mission Shakti
As the Director of Mission Shakti, Government of Orissa, Smt.
Padhi has been the playing the anchor role in promoting SHGs
across Orissa and is committed to the cause of women
empowerment and poverty reduction by making economic activities
sustainable for the women while ensuring a sustainable credit inflow
through SHG-bank linkages.
8
 Talking of the 
 To increase the competency of women members of SHGs
importance of in the process of decision making at different level of
SHG-bank linkage society.
she said just 
 To sensitize the stakeholders of SHGs and Federations on
opening an account Credit availability, Credit planning, financial management,
would not micro insurance and so on.
empower an 
 To make them skillful in efficient accounting of their
individual woman. investments for different economic growth.
While assuring the 
 To broaden their knowledge and increase their efficiency in
audience that policy financial vis-à-vis resource and time management.
wise no differential
treatment is being (For the detailed presentation on Mission Shakti, its achievements in Orissa etc.
meted out to SHGs of different categories, she said Mission Shakti by Smt. Usha Padhi, Director, Mission Shakti, Government of Orissa, please refer
had given an impetus to the SHG movement in the state. She was to Annex-I)
categorical in saying that NGOs must take up the role of facilitators
to create demand among SHGs. Shri Kripal Singh, General Manager, SIDBI, Bhubaneswar
During deliberation, Shri Singh observed that “because there is lack
Emphasizing the role of federations at the block levels as umbrella of capacity of perception among people, there is lack of access to
bodies for all SHGs in that particular block, she said that it was a felt financial products and services by the people in the underserved or
need for an institutional set up. It was realized that practically it was unserved areas”. Therefore, he opined that “financial inclusion is not
not impossible to monitor all SHGs across the state. Therefore, this only opening of no-frill account, but to reach out to all people with
realization resulted in giving way to formation of federations at the all financial products and services”. In this regard, he advised the
block levels and corresponding capacity building of these federations MFIs to study the rural situation. Accordingly, they should educate
to take up monitoring and other related tasks like SHG-bank the people on why to take loan, and how to utilize it and repay the
linkage, loan recovery and record maintenance. loan.

In her remarks, Smt. Padhi also emphasized the role of financial
literacy in achieving the objectives of Mission Shakti. The followings,
according to her, are the primary objectives of financial literacy
programmes.

 To aware poor women members of SHGs on importance of
financial planning and income enhancement.

 To increase the efficiency of SHGs to plan for future
secured financial growth.
According to Shri Singh “financial literacy is knowledge, awareness
and information regarding saving, borrowing etc.” Observing that
the poor should have clarity about financial loans and term of loans
etc., he opined that the poor should also know why to and where
to borrow from along with what were the associated pre- and post-
borrowing factors. He reiterated the role of MFIs and NGOs to
create financial literacy n this regard as well.

___________________________________ 9
Financial Inclusion in Orissa: A way forward
Shri D. B. Sarangi, Chief Financial Officer, ADHIKAR inclusion. With a view to bring convergence he felt that the role of
Like the other panelists, Shri Sarangi also expressed that financial various stakeholders had been very important and therefore, he
inclusion was nothing but inclusion of those people who could not requested the panelists to deal elaborately on the role of various
be included in the financial system so far. He observed that in stakeholders in realizing the objectives of financial inclusion.
independent India’s history, MFI is the recent edition of
experimentation towards achieving total financial inclusion followed Prof. Prafulla Kumar Dash, Dean, IBS, Bhubaneswar
by experimentation with banks and other financial institutions. In his presentation Prof. Dash highlighted the concept and scope of
Nevertheless, he was convinced that financial inclusion was a financial inclusion.
process for achieving development/growth. He also deliberated
upon the
Shedding light on bank correspondent model, Shri Sarangi felt that consequences of
the concept was problematic because of its inherent faulty nature. financial inclusion in
For example, he said withdrawal through such model was time general while
consuming and taking back cash from the customer to the bank narrating the global
involved high risk. experiences in
promoting financial
Emphasizing the need for promoting financial literacy, Shri Sarangi inclusion. In the
advocated for reforms in the nitty-gritty of financial inclusion context of
process involving further amendments in order to make the process extending banking
more credible and effective. services to the rural poor, he observed that the following steps had
been taken up till the 1980s.
Session IV: Financial inclusion in Orissa: Role of
various stakeholders 
 A hugely expanded bank branch and cooperative network and
Prof. Prafulla Kumar Dash, Dean, IBS, Bhubaneswar; Shri Kedar new organizational forms like RRBs;
Choudhury, Darbar Sahitya Sansad, Balipatna; Shri Jayanta Narayan 
 A greater focus on credit rather than other financial services
Sarangi, APD, TRIPTI; and Shri Biswaraj Pattanaik in their like savings and insurance;
deliberations tried to clarify the roles of various stakeholders in 
 Lending targets directed at a range of ‘priority sectors’ such as
making financial inclusion a reality. The session was facilitated by agriculture, weaker sections of the population, etc.
Shri Nasir Ali from CYSD.
However, in the present context he suggested the following
In his initial remarks Shri Ali opined that financial inclusion was a measures to achieve financial inclusion:
product of convergence of different types of determinants like  Putting ceilings on interest rates;
social, cultural and political. And, “this convergence has not yet  Facilitating government subsidies; and
been articulated probably”, he expressed. Further, emphasizing the  Developing and promoting a perspective that finance for the
need for a vision on products, market and entrepreneur ability he rural poor is a potential business opportunity and a social
suggested for organizing a methodological workshop on financial obligation as well.

___________________________________ 10
Financial Inclusion in Orissa: A way forward
Further, he also observed that financial inclusion would lead to In his deliberation, Shri Choudhury tried to portray a critical
socio-economic empowerment and subsequently to betterment of appraisal of government promoted financial inclusion processes till
life of the excluded people. While expressing optimism for the date and how had
business potential in Orissan context despite high risk perception, they failed in
he, however, expressed concern that the attainment of 100% achieving their
financial inclusion of 14 identified districts in Orissa had missed the objectives. On the
dateline. other hand, he
expressed
In conclusion, he suggested that considerable faith in
the abilities of

 Addressing financial exclusion would require a holistic approach community driven
on the part of the banks in creating awareness about financial financial institutions
products, education, and advice on money management, debt (CDFIs) like NGOs
counseling, savings and affordable credit. and MFIs and self

 The banks would need to evolve specific strategies to expand help cooperatives to effectively promote financial inclusion among
the outreach of their services in order to promote financial the poor.
inclusion.

 One of the ways in which this could be achieved in a cost- While expressing his concern that “a small CDFI struggles hard in
effective manner is through forging links between microfinance balancing between effective inclusion of poor, and sustainable and
institutions and local communities. efficient finance management”, he strongly felt that “more number

 Banks should give wide publicity to the facility of no frills of strong intermediaries can effectively and efficiently do larger
account. financial inclusion of the poor”. He also advocated for the following

 Technology could be a very valuable tool in providing access to roles by different stakeholders in order to make the objectives of
banking products in remote areas. ATMs cash dispensing financial inclusion a reality.
machines could be modified suitably to make them user friendly
for people who were illiterate, less educated or did not know 
 Financial Intermediation to be widened.
English (may be, Hindi also). 
 More number of CDFIs to be promoted, nurtured and
handheld.
(For the detailed presentation by Prof. Prafulla Kumar Dash please refer 
 Banks need to partner with local CDFIs.
to Annex-II) 
 Soft loan/ capital to be available to CDFIs at lower rate.

 Self Help Cooperatives need soft loan fund and support.
Shri Kedar Choudury, Darbar Sahitya Sansad 
 Waiver business needs to be either opposed or universalized.
Giving a brief account of the activities and outreach of Darbar
Sahitya Sansad Shri Choudhury opined that the services of the (For the detailed presentation by Shri Kedar Choudhury please refer to Annex-III)
formal financial institutions to poor had remained little despite long
efforts.

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Financial Inclusion in Orissa: A way forward
Shri Jayanta Narayan Sarangi, APD, TRIPTI, Bhubaneswar
In his remarks, Shri Sarangi observed that the main aim of financial
inclusion is livelihood sustenance and not micro finance.
Nevertheless, he was of the view that SHGs were considered as
vectors for livelihood sustenance through micro finance. He also
informed that the SHGs promoted by TRIPTI in the project districts
were addition to those already or being formed under Mission
Shakti.
Responding to Prof. Anup Dash’s suggestion that ICDS workers at
the grassroots level must be treated with some kind of incentives
and their capacity building should be the top priority for effective
financial inclusion, Shri Sarangi assured the participants and the
organizers to take up the suggestion to the policy level.
Shri Biswaraj Pattanaik
While emphasizing the need for promotion of financial literacy
programme, Shri Pattanaik observed that the NGO and MFI
workers working at the grassroots level should raise questions
before government officials regarding any flaw in implementation of
financial inclusion programmes. He, nonetheless, also advocated for
adoption of smart business plan by the NGOs and MFIs for an
effective and efficient implementation of financial inclusion
programmes. Thus, in his deliberation, Mr. Pattanaik among other
stakeholders gave more emphasis on the role of the intermediaries
like the NGOs and the MFIs.
Session V: Summing up: A way forward and future
action agenda
Shri Subrat Singhdeo of Madhyam Foundation, Bhubaneswar tried to
summarize the day’s proceedings in the previous sessions while also
trying to put across his views for setting up a future action agenda
to make financial inclusion a reality with involvement of NGOs and
MFIs.
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Financial Inclusion in Orissa: A way forward
While the first session dealt with the meaning and objectives of
financial inclusion, Shri Singh observed that poverty emerged as the
single most important concern during every deliberation and
discussion. “The discussion primarily revolved around opening up of
no-frill account”, he added.
Outcome

 As financial inclusion and financial sustainability go together, the
implication is that the state has to play a bigger role and there is a
need for commitment of resources for capacity building etc. to make
financial inclusion a reality.
Reiterating the observations made by the panelists that financial
services must be backed by financial literacy, Shri Singh remarked
that the major challenge before financial literacy programme was
that they were not cost effective. Referring to the Phillipines model
where financial literacy is built in with credit facility and results are
beneficial, Shri Singh advocated for integration of financial literacy at
primary education level as done in Phillipines.
Outcome

 Use of creative adult learning techniques to promote financial literacy.

 As financial literacy is in the interest of the service providers, the
service providers must invest in such literacy programmes.
Observing that starting from people, the target beneficiaries, to
bankers, MFIs and NGOs to the regulators and policy makers are
the major stakeholders in the financial inclusion process, Shri Singh
seconded the views of Shri Kedar Choudhury that CDFIs, having a
huge potential to make financial inclusion a reality, must get a due
place in the policies regarding financial inclusion.
Raising concern over the fact that the current practice enhances
financial grants to government promoted SHG federations while
12
ignoring those promoted by NGOs and MFIs, he urged the Conclave on Financial Inclusion in Orissa: A Way Forward
participants to ask this questions to the policy makers. Reiterating Monday, March 23, 2009 at CYSD, Bhubaneswar
the concerns made earlier, Shri Singh observed that the outcome of
the pending Micro Finance Bill, 2007 had a large implication for AGENDA
remittance. Session/Time Agenda for discussion/Resource person
10.00-10.10 AM Welcome address by Shri P. K. Sahoo, Chairman, CYSD
Concluding from the panel and open house discussion that lot of Session I Financial inclusion in Orissa: Current issues and
handholding supports are being meted out for capacity building of (10.10-11.10 AM) challenges
Panelists:
the beneficiaries and intermediate functionaries, he expressed  Mr. Santana Sethy, DGM, RBI, Bhubaneswar
concern that no efforts were made towards convergence of such  Mr. Banabihari panda, DGM, Indian Bank, Bhubaneswar
activities. Facilitator: Prof. Anup Dash, Utkal University
Session II Strategy and approach towards financial inclusion in
Outcome (11.10-12.00 PM) Orissa
Panelists:

 MFIs need appropriate product design.  Shri C. R. Patnaik, CGM, NABARD, Bhubaneswar
 Prof. (Dr.) L. K. Vaswani, Pro-VC, SRM, KIIT University,

 MFIs need to be well equipped with information on various insurance Bhubaneswar
products in order to pass them on to the beneficiaries. Facilitator: Shri Parshuram Nayak, Director, SMCS
Session III Financial inclusion and financial literacy in Orissa
(12.00-01.00 PM)
Vote of thanks Panelists:
At the end of the day-long conclave Shri Binaya Kumar Rout,  Smt. Usha Padhi (IAS), Director, Mission Shakti,
Bhubaneswar
Monitoring and Evaluation Specialist from CYSD gave the vote of
 Shri Kirpal Singh, GM, SIDBI, Bhubaneswar
thanks. In his address, Shri Rout on behalf of CYSD and SMCS  Shri D. B. Sarangi, Chief Financial Officer, ADHIKAR
expressed sincere gratitude to all the panelists and participants for Facilitator: Prof. Bedabati Mohanty, Utkal University
their valuable contribution to the conclave and finally called it a day. Lunch Break (01.00-02.00 PM)
Session IV Financial inclusion in Orissa: Role of various stakeholders
(02.00-03.20 PM)
Panelists
 Prof. Prafulla Kumar Dash, Dean, IBS, Bhubaneswar
 Mr. Kedar Chaudhury, DSS, Balipatna
 Mr. J.N.Sarangi (OAS), APD, TRIPTI, Bhubaneswar
 Facilitator: Shri Nasir Ali, Director, L&A, CYSD
Session V A way forward & future action agenda
(03.20-04.50 PM)
Mr. Subrat Singhdeo, Madhyam Foundation, Bhubaneswar
Vote of thanks Mr. Binaya Kumar Rout, Monitoring & Evaluation Specialist,
CYSD

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Financial Inclusion in Orissa: A way forward