Odisha becomes first state to bring banking to remote rural areas through SHG

In what can be considered as a path breaking development on financial inclusion front, Odisha became the first Indian state to extend banking facilities to masses in unbanked areas through Self- Help Groups (SHGs).

• To implement this initiative, Odisha State Government has signed an agreement with State Bank of India (SBI) – the largest public sector bank of India. Odisha Govt.’s Odisha Livelihoods Mission (OLM) is the main party (corporate agent) in this agreement with SBI. Around three lakh SHGs, currently operating under OLM will take up the role of Banking Correspondents (BCs).
• Jyoti Nath, Director of OLM Pranab and Srikant Hota signed the agreement, Assistant General Manager, SBI have signed the agreement on March 27, 2017

Phase Wise Implementation Plan:

1. First Phase: SHGs in the role of Banking Correspondents will reach out to 1000 Gram Panchayats in Odisha which do not have any banking facilities as of now.
2. Second Phase: Another 4000 Non-Banked gram Panchayats will be covered.
3. Final Phase: Full state will be covered, and this system will function as a supplementary banking service.

Expected Benefits from this Arrangement:

• 70 per cent of Gram Panchayats in Odisha which do not have the modern day brick and mortar bank branches will be directly benefited from this initiative.
• People in unbanked areas would get access to basic banking services viz. having a bank account, making cash withdrawals and deposits, using Aadhaar-enabled payment system, getting familiar with usage of RuPay cards etc.
• Experts believe that this system would be of great help to people covered under social security schemes like Jeevan Jyoti Yojana (PMJJY), Pradhan Mantri Bima Surakshya Yojana (PMBSY), Atal Pension Yojana (APY) etc.
• Besides fostering digital banking, this collaboration will also increase the AADHAR – Bank Account linkage numbers.

About Odisha Livelihoods Mission (OLM):

‘Odisha Livelihoods Mission (OLM)’ is the new name of the reconstituted ‘Orissa Poverty Reduction Mission (OPRM)’. Government of Odisha had formed OPRM in the year 2006 for implementing various poverty reduction programmes in the state.

• OLM commenced its operations in year 2012 and is functioning as an autonomous society under the aegis of Odisha Government’s Department of Panchayati Raj.
• It currently implements both National Rural Livelihoods Mission and National Rural Livelihoods Project.
• OLM’s objective is to help the rural poor households rise above the poverty line. It fulfils this objective by providing financial assistance, conducting skill development programmes and establishing self-reliant institutions.

Basic information about Self-Help Group (SHG):

It is a small sized voluntary group of poor people, generally belonging to the same socio-economic background, formed with a motive of solving common problems throughcollective efforts of group members.

• Raising fund through small savings contributed by individual members and using this fund for productive purpose is one of the primary activities of SHGs.
• SHGs are mostly found in rural areas of India.

Other Related Terms:

• Financial Inclusion: Involving the low-income/disadvantaged section of population in mainstream financial system by extending cost-effective financial services to them.
• Banking Correspondents: Any individual/entity appointed by a bank in India for purpose of providing banking services in areas where the bank does not have physical presence.

Quick Facts about Odisha:

• Capital: Bhubaneswar
• Chief Minister: Mr. Naveen Patnaik
• Ruling Party: Biju Janata Dal
• Governor: Dr. S C Jamir