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The Key Role of Financial Institutions for the Sustainable Development in India. Keynote Address. Dr . Vijayamohanan Pillai N CDS. Sustainable Development and Financial inclusion. Dr. Vijayamohanan Pillai N CDS. Sustainable development: first used by Brundtland Commission ,
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The Key Role of Financial Institutions for the Sustainable Development in India. Keynote Address Dr. VijayamohananPillai N CDS Vijayamohan CDS
Sustainable Development and Financial inclusion Dr. VijayamohananPillai N CDS Vijayamohan CDS
Sustainable development: first used by Brundtland Commission, (the World Commission on Environment and Development, WCED, 1983) Convened to address the growing concern “about the accelerating deterioration of the human environment and natural resources and the consequences of that deterioration for economic and social development.” Gro Harlem Brundtland Vijayamohan CDS
April 1987 Sustainable development = “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Vijayamohan CDS
Development becomes sustainable only when there is a sustained natural resource base. the inherent tensions between economic development and environmental protection. environmental degradation through the consumption of nonrenewable resources, the overuse of renewable resources, and the production of waste and pollution. Vijayamohan CDS
Diverse interpretations: the technocentric: environmental problems viewed as a threat to human quality of life; technology and science viewed as the solution the ecocentric: emphasis on the need for radical change in political structures and human organization. Vijayamohan CDS
Development not spontaneous phenomenon A dynamic process of effects Finance: one facilitative factor major factor governing the rate of development process : capital accumulation. Vijayamohan CDS
WW Rostow : a rise in the rate of productive investment to over 10 % of national income as a necessary requirement for a country’s take off. The mobilization of domestic and external resources to facilitate the process of capital accumulation. Vijayamohan CDS
Agenda 21 of the United Nations Conference on Environment and Development (Earth Summit, 1992) in Rio de Janeiro : a blueprint for the world’s transition to sustainable development. Vijayamohan CDS
Chapter 33 of Agenda 21: a framework for financing sustainable development. assesses the costs of its implementation at US$ 625 billion a year of which $125 billion as additional financial transfers from North to South. Vijayamohan CDS
The United Nations World Summit on Sustainable Development (Earth Summit 2002) in Johannesburg preceded by the United Nations Summit on financing for development, 2002. Vijayamohan CDS
The two important sources of external resources : Official development assistance (ODA) and Foreign Direct Investment (FDI). ODA fallen steadily since 1990 to less than 0.3% of the GNP of developed countries, under half of the UN global target of 0.7% of the GNP. Development banks as financiers of sustainable development Since 1989, tied with structural adjustment programmes Vijayamohan CDS
Since the Rio Summit, commercial credits and foreign direct investment (FDI) in developing economies substantially. In 1990, for every dollar of long-term ODA, less than one dollar in long-term capital did flow from the private sector. Now, for every dollar ODA there are four dollars FDI. Vijayamohan CDS
Domestic resource mobilization absolutely critical. Agenda 21 : the domestic resource mobilization needs of developing countries for implementing sustainable development : $500 billion a year. Increased national savings and capital formation to offset resource depletion and population growth, to expand infrastructure and human capital and to improve the environment. Vijayamohan CDS
Debate on the effectiveness of aid: Vicious circle Shrinking funds Ineffective use Lack of legitimacy This dynamic into a virtuous cycle: By supplementing the current preoccupation with ‘supply’ side issues with ‘demand’ side issues Vijayamohan CDS
‘Supply’ side issues: the enhancement of the inflow of financial resources into development activities ‘Demand’ side issues : enhancing the capacity of individuals, communities, governments and development institutions to access and effectively utilize financial resources. Vijayamohan CDS
Enhancing the capacity to access financial resources: Significance of Financial inclusion Financial exclusion: the unavailability of banking services to people living in poverty. one factor preventing poor people from exiting poverty, by forcing them to manage their finances on a cash-only basis and restricting their access to equitable sources of credit. Vijayamohan CDS
“The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. Together, we can and must build inclusive financial sectors that help people improve their lives.” Kofi Annan Former UN Secretary-General 29 December 2003 Vijayamohan CDS
The poor and the excluded…. Vijayamohan CDS
Beatrice's Goat is a 2001 children's story based on the true account of Beatrice Biira, an impoverished Ugandan girl whose life is transformed by the gift of a goat from the nonprofit world hunger organization Heifer International. Vijayamohan CDS
Based on a true story, the children’s book, “One Hen: How One Small Loan Made a Big Difference” tells the inspirational tale of Kojo, a boy from Ghana burdened with the responsibility of helping his mother collect and sell firewood to survive. Kojo’s life gets lucky when he gets a small loan to buy a hen. Kojo eventually builds a flock of 25 hens and earns enough money to feed and educate himself. Vijayamohan CDS
The real Kojo—and inspiration for the story—is KwabenaDarko. Vijayamohan CDS
“Forty years after nationalization of banks, only 5 per cent of the 6 lakh habitations in the country have a commercial bank branch; the proportion of the population having a bank account is less than 35 per cent and nearly 90% do not get loans.” KC Chakraborty, deputy governor, RBI more than 650 million people have mobile phones fewer than 350 million have bank accounts. Vijayamohan CDS
Financial Inclusion first featured in 2005: under a pilot project of Indian Bank in Union Territory of Pondicherry (புதுச்சேரி) Mangalam Village : the first village in India where all households were provided banking facilities. Vijayamohan CDS
Mangalam Village : the first village in India where all households were provided banking facilities. in response to the recommendations of Khan Commission set up in 2004 by the RBI to look into financial inclusion. 2008: the Committee on Financial Inclusion headed by C Rangarajan. Vijayamohan CDS
RBI • commercial banks in different regions • to start 100% financial inclusion campaign • on a pilot basis. • Puducherry, Himachal Pradesh and Kerala : • 100% financial inclusion in all their districts. • RBI’s vision for 2020 : • to open nearly 600 million • new customers' accounts Vijayamohan CDS
For promoting greater financial inclusion: Initiatives like banking correspondents, banking facilitators, no frills accounts, introduction of microfinancial sector bills ……. Special funds like Microfinance Development and Equity Fund (MFDEF), Financial Inclusion Fund and Financial Inclusion Technology Fund, each with a seed capital of Rs. 500 Crores Vijayamohan CDS
January 2006, the Reserve Bank permitted commercial banks to make use of the services of NGOs/SHGs, micro-finance institutions and other civil society organizations as intermediaries for providing financial and banking services. As business facilitators (BF) or business correspondents (BC) the role of microcredit in enhancing financial inclusion. Vijayamohan CDS
Microcredit : extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship. Vijayamohan CDS
a part of microfinance: provision of a wider range of financial services to the very poor: Vijayamohan CDS
Originated with The Grameen Bank in Bangladesh in the 1970s for which its founder Muhammad Yunus was awarded the Nobel Peace Prize in 2006. Vijayamohan CDS
42 families of Jobra village in Chittagong Vijayamohan CDS
42 families of Jobra village in Chittagong Vijayamohan CDS
In Jobra village Vijayamohan CDS
In Jobra village Vijayamohan CDS
