First State to Carry Financial Inclusion Through Self Help Groups

2019 ias preliminary exam test series

Odisha became the first state in the country to carry financial inclusion and extend banking services to unbanked areas through Self Help Groups (SHGs).

The state government signed an agreement with State Bank of India in this regard. Around 70 per cent Gram Panchayats in Odisha do not have brick and mortar bank branches.

In the first phase SHGs would be engaged as BCs (Business correspondents) in around 1,000 remote Gram Panchayats having no banking facilities and gradually it would be extended to 4,000 non-banked panchayats.

Through this arrangement, people would get services like opening of bank accounts, cash deposits and withdrawals, Aadhaar-enabled payment, use of Rupay Cards and other banking facilities.

The system would be of great help to people in rural areas under social security schemes like Pradhan Mantri Bima Surakshya Yojana, Pradhan Mantri Jeevan Jyoti Yojana, Atal Pension Yojana etc and would also be helpful in promotion of digital banking.

Self-Help Group (SHG) is a small voluntary association of poor people, preferably from the same socio-economic background. They come together for the purpose of solving their common problems through self-help and mutual help.

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