Technology Based Financial Inclusion Project


Development Support Agency of Gujarat (D-SAG), Tribal Development Department (TDD) is implementing a Technology Based Financial Inclusion Project in 4 Tribal Talukas of Gujarat on a pilot basis. The project has been approved by Government of India (GOI) under Article 275(1) head for the financial inclusion of the Tribals in these Talukas. The project was initiated with an aim to:

  • Improve outreach and efficiency of existing cash transfer programmes of the State Government by ensuring direct cash transfer to beneficiary accounts without involving any intermediary;
  • Provide a reliable mechanism for parking the investible surplus of the population through an efficient savings bank mechanism operated through a large number of easily accessible ATMs;
  • Address the usual problems of seasonal shocks like medical emergency, seasonal income fluctuations, etc., by providing easy-to-access, very simple consumption loans which can be provided automatically to the account holders quickly; and
  • The system will create the credit history of every borrower so that those having good repayment records are able to graduate to larger production loans by dealing directly with the commercial banks.

The state of Gujarat has a Scheduled Tribe Population of 14.76% which counts to about 74.81 Lakh people. The Scheduled tribes of Gujarat reside mostly in the eastern region of the state. The tribal dominated Scheduled Areas consists of 43 talukas covered under the 12 Integrated Tribal Development Projects. These areas have some of the most backward talukas of the state.

During the initial phases of the project various consultative meetings were organized with various stake holders including the Regional Office of RBI, Ahmedabad, on 24th Feb 2010, 9th March 2010 etc, the last meeting being on 14th June 2010. In the meeting held on 14th June, 2010 in the Chamber of Chief Secretary, Block No - 1/3rd Floor, New Sachivalaya, Gandhinagar RBI, SJED, Dena Bank, Bank of Baroda, Allahabad Bank, Indian Overseas Bank, Central Bank of India, Punjab National Bank, HDFC Bank, Axis Bank etc. were invited to participate in the project. Due to the high investments and risks involved, TDD did not receive a good response from the Banks. However pertaining to the need for a comprehensive financial inclusion system to curb the issues of rural indebtedness with reference to the credit needs among tribal Farmers; to improve the savings among the Tribal Farmers; and to remove the intermediaries involved in all the money transfer schemes of the Government, TDD decided to implement the project on a pilot basis with the bank.

Accordingly, MOUs were signed with Dena Bank on 07/02/2011 for the implementation of the project. Under the project the Role of Banks :

  • Account opening of each family under the project area
  • Provision of two ATM cards to each family
  • Facility of inbuilt Rs. 250 to Rs. 2,000 as overdraft with each and every account without any other formality
  • Provision of Limited Banking Correspondents for disbursal of money and recovery of loans
  • Training and awareness campaign
  • Cost sharing for ATMs and arrangement of security
  • Bank will assign a separate team specifically for the effective implementation of the project.

The project is getting a good response of the beneficiaries in the target areas. At present about 1,39,000 beneficiaries have already been enrolled under the project; 21 ATMs have been installed in the most interior villages of Sabarkantha District; 2,05,000 A/Cs have been opened for the beneficiaries and about 20,000 ATM cards distributed. The linkage of Government cash transfer schemes like NREGA with the project is helping the beneficiaries to access their hard earned money easily.

Therefore with the present positive developments in the project D-SAG, TDD is planning to replicate the project in all the other Tribal Talukas of Gujarat.

However the cash that Government transfers to these areas for the economic and social development of these Tribal farmers, hardly reaches them, because of the intermediaries and various other reasons. As a result the Tribal farmers have nearly lost their faith in the Government and have not been able to come out of the vicious circle of poverty for years. The absence of any immediate cash facility has never allowed these farmers to have savings on one hand and on the other hand it has pushed these vulnerable farmers in the hands of money lenders.

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