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FM Asks Financial Institutions and PSBs to Launch a Mass Awareness Campaign and Bring Domestic Savings of Unorganized and Vulnerable Sections of the Society into National Banking System

Finance Minister, Shri Pranab Mukherjee has said that domestic savings have always played a major role in Indian economy and therefore there is a need to bring the savings of the people of the unorganized sectors into banking mainstream. Shri Mukherjee was addressing a gathering at UTI headquarters in Mumbai today after the launch of smart card of short distance vehicle operators.  This card was launched jointly by UTI, BPCL and Corporation Bank. 

The Finance Minister said there is a need to create awareness among the people to bring their savings in the national banking system in order to get better returns and for social security in their old days.  The rate of domestic savings in the country on an average is around 34%, out of which domestic household savings contribute about 23%, which is a major contribution by domestic households, said the Finance Minister.  He appreciated the corroborative efforts made by various financial institutions and public sector banks to bring more and more people in the banking network and to help the Government in achieving the objective of financial inclusion which is on its high priority.  He said there are not enough branches in the country to provide banking facilities in a physical form and therefore new technologies are being used to provide banking facilities to the vulnerable and poor sections of the society.  In this regard, he mentioned that banking facilities are being provided through mobile vans, business correspondents and mobile telephone services.   

The text of the speech of Finance Minister is given below:

“I am very happy to address this august gathering of investors and the fraternity of the Unit Trust of India. I would like to compliment the Unit Trust for this timely initiative. The Unit Trust of India should be legitimately proud of its accomplishments in promoting and mobilizing the savings of the different sections of our society and investing them in a diverse spectrum. I am very happy that institutions like Bharat Petroleum Corporation Limited and Corporation Bank have joined hands with the UTI in providing retirement saving plans to the underprivileged sections of the society, in pursuit of their corporate social responsibility goals. What particularly impresses me is the fact that the present initiative for decentralized programme for creation of investor awareness and fostering financial inclusion, in conjunction with the on-going Micro-Pension Initiative of the UTI, touches the key social welfare objectives of our Government in many ways.


The importance of the agency function of mobilizing saving from the different sections of the economy and placing them with investors gets magnified in the current juncture wherein we have emphatically left behind the impact of the economic slow-down and have moved forward to achieving accelerated economic growth. Quite similar to BPCL and Corporation Bank joining together with UTI for a noble cause, the Government worked in close unison with the Reserve Bank of India and different stakeholders of the economy in an effort to mitigate the ill-effects of the externally-driven economic slowdown. The salutary impact made by this harmonious effort is reflected in the widely acknowledged recovery achieved by the Indian economy. The immediate task before us, as I mentioned in the budget speech, is to quickly revert to the GDP growth path of 9 per cent and then find the means to cross the 'double digit growth barrier'. Calibrating macroeconomic policies to emerging contexts is a continuous process, and some of the proposed fiscal initiatives like the goods and services tax and the changes to direct taxes as envisaged in the Direct Tax Code are some of the important measures towards promoting enterprise. While it is felt that our industrial sector has regained its momentum, analysts are keenly observing and examining ways of supporting and sustaining the growth momentum with increased investment and capital formation. Effective mobilization of savings and their seamless channelization into investment holds the key in sustaining and accelerating growth. Considering the size, diversities and the population of our country, savings at different levels, irrespective of whether they are big-sized or small, are equally important. The present initiative of the UTI is a welcome step in this direction.


The current efforts of the UTI, showcased in this meeting, are in line with the Government’s central economic agenda of achieving greater inclusion in the process of growth. You may appreciate that the Government’s social sector initiatives attest to its firm commitment to the poor. The National Rural Employment Guarantee Act, providing legal guarantee of 100 days of wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work is being implemented in 619 districts now. During the year 2009-10, 4.34 crore households were provided employment under NREGA, spending around Rs 25000 crore. Our Government redeemed the pledge of giving all our children the right to elementary education with the enactment of the Right of Children to Free and Compulsory Education Act, which has come into force. As announced by the President of India, in her address to the joint session of Parliament on 04.06.2009, the Government proposes to enact a National Food Security Act which envisages, among other things, that every citizen Below Poverty Line family shall have fixed entitlement to highly subsidized food grains. The law is also proposed to be used to bring about systemic reforms in the Public Distribution System.

Ladies and Gentlemen;

 The on-going Micro-Pension Initiative of the UTI is an initiative which is in line with the inclusive growth agenda of the Government. I am given to understand that this has been designed as a unique, sustainable and scalable model through which the working poor would be able to save for their old age by channelling their modest savings to regulated products. I am heartened to understand that the benefits of this programme are being delivered to the working poor in the States of Gujarat, Orissa, Bihar, Tamilnadu, Delhi, Karnataka, Andhra Pradesh, Maharashtra, Goa and West Bengal and that the beneficiaries of this initiative include various under privileged sections like vegetable vendors, rag-pickers, Bidi rollers, daily workers and small scale milk farmers. While I wish that the Micro-Pension Initiative achieve greater levels of spread and success, I also expect that the present initiative of the UTI for creating awareness among people, especially the underprivileged, about the virtues of saving and the possibilities of investment, achieve the same degree of success and effectiveness.

 As per the National Accounts, household savings constituted around 23 per cent of the Gross Domestic Product during 2004-05 to 2008-09. The importance of household saving to the national economy is clear from the fact that this constituted the bulk of the gross domestic saving which varied in the band of 32 to 36 per cent in the last five years. During the last decade, the household savings grew at a brisk pace, thanks to the rapid growth in income and financial market innovations that opened new avenues for channelizing savings and investment. I firmly believe that the growth in savings too has been inclusive to a great extent, considering that the higher growth, both farm and non-farm, has bestowed much greater incomes to the lower strata of the economy.

 The Indian capital market has achieved a dramatic growth in the last two decades. It has mobilized huge volumes of capital that supported the investment-led growth of the Indian economy effectively. The number of participants also has increased manifold. Still, I feel that the large chunk of the Indian economy is yet to be attracted to this dynamic world. This exclusion, though not purposive, needs to be corrected. This also represents a great untapped potential. Exposure to capital markets may provide the small and marginal savers with an opportunity to meaningfully participate in the growth process. At the same time, this will augment the quantum of investible funds in the capital market. Financial products need to be designed to suit this purpose, and once designed, they need to be adequately advertised, promoted, fine-tuned and sustained. Our financial intermediaries are aware of the need for this correction, and they are putting in their efforts to introduce tailor-made products. It is hoped that the present initiatives of the UTI, while serving to market the products of the mutual fund industry, would make a significant step forward in this direction.

  I understand that what the UTI has envisaged is a decentralized programme for awareness creation, covering a large number of locations in the country in 100 days. I see that a mix of instruments, including street plays and exhibitions, sale of literature, amplification with media tie-ups and partnership with self help groups, has been envisaged for creating awareness. With the activities planned under the initiative, mostly intended at financial education of the under-privileged, I am hopeful that the programme would achieve a meaningful purpose in catalyzing small savings and channelizing them into fruitful investment opportunities. Interacting with people and educating them at their own locations is the best way to reach out to them. This is a welcome move.

 I know that today am in the midst of a gathering that has partnered with the UTI in an important initiative. With wider participation and patronage, especially of institutions like BPCL and Corporation Bank as in the present initiative, I hope your endeavours achieve their objectives. I would like thank the organizers for inviting me to speak on this occasion.”




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