Financial Inclusion Fund (FIF) by RBI- Key Points Explained

Introduction

Financial Inclusion Fund (FIF) was formed by merging FIF and Financial Inclusion Technology Fund (FITF) and established by RBI 

Background

• FIF and FITF were established in the year 2007 – 2008 over a period of five years
• Initial corpus was 500 crore
• Contribution of GOI, RBI and NABARD was in the ration 40:40:20
• RBI framed guidelines for both these funds
• RBI merged both funds into a single entity named FIF and came into effect in 2016

Nodal Agencies

• RBI established FIF with a corpus of 2000 crore
• NABARD maintains the funds of FIF
• GOI administers the FIF

Need for FIF

• To create awareness among people about financial inclusion
• To set up financial literary centres at every block level
• To cater to the services of Jan Dhan Yojana account holders
• To set up standard kiosks to create financial literacy in gram panchayats
• The Kiosks will be highly interactive to educate the masses
• NABARD support to establish skill development centres (SETI)
• SETI aimed at imparting skills necessary for generating income 
• To provide linkages in a forward manner and establish marketing activities
• To improve network connectivity by sharing government projects pertaining infrastructure and telecommunication development

Objectives of FIF

• To enhance financial inclusion on a large scale 
• To support promotional and development activities 
• Increased technological absorption capacity 
• To provide ICT solutions
• To increase stakeholder capacity building
• FIF funding is done through ICT – BC model (Information and Communication Technology – Business Correspondent Model)
• To support banks investment in purview of business expansion in future
• To address the various issues pertaining to financial inclusion including training, skill development, creating awareness and lack of infrastructure and ICT etc

Eligible Institutions to get FIF

• Self Help Groups (SHG)
• NGO
• Cooperatives
• Farmer clubs
• Panchayats
• Village knowledge centres
• Agricultural societies
• IT enabled rural entities
• Rural multipurpose Kiosks etc

Other Guidelines

• Contribution to FIF in excess of 0.5 percent from STCRC and RIDF deposits
• NABARD to maintain all the fund sources and FIF
• FITF funds transferred to FIF
• RBI decides operation of FIF for a fixed period of years
• Union government in consultation with other stakeholders decides important amendments on FIF
• FIF will be included as a part of National E-Governance plan

Exceptions

• FIF not to be used for normal banking transactions
• FIF not to be used for normal business transactions

Conclusion

• FIF seems to a positive step forward to enhance financial inclusion 
• This is yet another measure of GOI to move towards a digital lifestyle and a cashless economy
• Financial inclusion and its benefits will be known to the common people through training programs conducted through FIF
• This will help majority of the Indians to come into the formal banking sector
• Subsidies will reach the beneficiaries directly in the bank accounts
• FIF is a positive step of RBI, GOI and NABARD to educate the rural masses and bring them under financial inclusion

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