Financial Inclusion in Karnataka: A Study of Operationalisation of No Frills Accounts

Financial inclusion may be defined as the process of ensuring timely and adequate access to financial services and credit delivery for low income groups at an affordable cost. The basic aim of Financial Inclusion is to ensure the ease of access, availability and usage of the formal financial System by these groups. The objective of this paper is to design a tool for measuring the level of Operationalisation of No-Frills (NF) Accounts (similar to Saving A/c of Banks with limitation of the balance at Rs.50,000) opened during the first phase of Financial Inclusion in the state of Karnataka. The paper identifies usage in 6 different facilities of NF Accounts from banking facilities as parameters. A Sampling Survey is designed and data is collected from 26 Districts and 48 Public, Private and Regional Rural Banks through the Lead Bank System. These parameters are clubbed to form an Operationalisation Index that measures activity in different facilities for the banks and collectively in a district as a percentage of total No Frills A/Cs. On the basis of contribution to Operationalisation, every parameter is assigned a score. The cumulative score for all the parameters for a bank or a district are added and corresponding ranks are assigned. The individual significance of the parameters is assessed using statistical tests on the Cross Sectional Data and recommendations are made to the concerned Bank or District under study. Further, the No-Frills A/C s are analysed as a product on the Ansoff-Matrix and strategic marketing recommendation are drawn.