Finding (and funding!) the Frontiers of Financial Inclusion

With alliterative flair, I wanted to build off of Satyarupa's great blog about the post Union Budget 2010-11 meeting of the minds in Delhi. One of the themes seemed to be the government's role as an enabler. Satyarupa wrote that during the conference she pondered the question, "If the government is enabling, then who is it really enabling?”

I've been thinking about this enabling function of public funds in the context of financial inclusion. A few weeks ago I came across testimony given at the US Congress on how best to leverage public funds to accelerate financial inclusion. Testimony from experts played along the idea that Elisabeth Rhyne of ACCION succintly put - namely that public funds should, “Find the frontier and help push it out.”

In India, the government created (in 2007? I think?) two massive public funds for financial inclusion, the Financial Inclusion Fund and the Financial Inclusion Technology Fund. FIF and FITF have huge corpus' - 500 crore apiece, that were even recently augmented by 100 crore each in the 2010-11 Budget. Funds will be distributed in a 40:40:20 ratio from the GoI, RBI and NABARD over 5 years, with disbursement contingent on usage of funds. Five years, twelve hundred crore to spend on the frontiers of financial inclusion.

Yet, I was surprised to see that to date, only a few projects had been funded by FIF and FITF. According to NABARD's Annual Report as of March 31st 2009, 30 crore had been spent (in total) by the two funds. Is this enough to enable financial inclusion? Here are the projects funded thus-far (looks like 9 total):

Projects Under FIF (copied and pasted from page 39 of NABARD's Annual Report)
• Trainers’ training programme on financial literacy in Kolkata.
• Pilot project to establish farmers’ service, village knowledge, mobile credit counselling centres, promote financial literacy and farmer education through mass media in South Malabar district of Kerala through South Malabar Gramin Bank.
• Pilot project for capacity building of 25 FC of West Tripura, South Tripura and North Tripura districts to function as business facilitators, generating new accounts and business for Tripura Gramin Bank.
• R&D project for ICT solution in 15 select RRB with support from World Bank and Technology provider.

Projects under FITF
• Smart card based pilot project in Tirunelveli district of Tamil Nadu, covering 500 SHG (6,000 customers) to help Pandyan Grama Bank and NGO in registering,
lending and micro-financing SHG.
• Project on smart cards in Medak, Mahbubnagar and Warangal districts of Andhra Pradesh to facilitate payments to the beneficiaries of NREGS and Social Security Pensioners, opening of ‘No Frill Accounts’ of other rural households by Andhra Pradesh Grameen Vikas Bank (APGVB). Services are being extended through Business Correspondent Model with the help of abiometric card and mobile device. This will cover 13 lakh beneficiaries in 1,115 villages.
• Pilot project to establish Financial Inclusion Hubs aiming a ‘e-branch’ facility offering multiple financial products & services in 10 PACS in Andhra Pradesh.
• Pilot for installing four ATMs, one in each district of Tripura by the Tripura Gramin Bank for technology upgradation to reach out to the excluded population.
• Impact study of 100% achievement under Financial Inclusion in Kanyakumari district

All of these sound pretty interesting though I'd never heard of any of them - which leads me to another dimension of government as enabler. In my opinion if the government wishes to enable financial inclusion through these funds, they should build awareness about what works and what doesn't work (and what they're actually funding). Take these 9 pilot projects for example - wouldn't it be great to have a platform to gauge progress on the initiatives and communicate best practices to other players in the market? Would it take that much money to build in some transparency to these initiatives, a fabulous website along with some monitoring and evaluation? (though the last pilot impact study seems to do just that)

What do you all think?