Parikalpana - KIIT Journal of Management 99

Financial Inclusion in India:

A case study on State Bank of India
Pruthiranjan Dwibedi
Research Scholar, Department of Commerce, School of Social, Financial &
Human Sciences
KIIT University, Bhubaneswar, Odisha, India
ORCID: 0000-0001-6049-2199
[email protected]
Jyotisankar Mishra
Assistant Professor, Dept. of Commerce, School of Social, Financial & Human
Sciences
KIIT University, Bhubaneswar, Odisha, India
[email protected]
DOI: 10.23862/kiit-parikalpana/2022/v18/i2/215259
[Article submitted on: 6.6.22; Revised on: 10.10.22; Accepted on: 25.10.22]

Abstract
“Financial inclusion is a multi-faceted term with differing perspectives around
the world. Because financial product requirements differ from person to person
and country to country, (Kempson and Whyley, 1999; Regan and Paxton, 2003;
Speak and Graham, 2000).” Financial inclusion is gaining traction as a new model
of economic development that can help the country escape poverty. It tends to
the development of new policy for banking services to the general public, both
privileged and disadvantaged, on reasonable terms and circumstances. In the
current context, it makes it possible to close the gap between the rich and the
poor. Banking sectors are proved as one of the strongest supports for country’s
progress, economic development and growth. The purpose of this research is to
look at the impact of financial inclusion on economic growth over a period of 10
years ranging from 2007 to 2016. Secondary data collected from RBI website
and SBI’s annual report has been evaluated using a multiple regression analysis
as the major statistical technique. The present study has found that independent
variables viz. number of SBI bank branches, SBI ATM growth rate and credit
deposit ratio of SBI, overall have a significant impact on the dependent variable
i.e. GDP growth of India. But individually, number of SBI bank branches have
statistically significant impact on GDP growth, where as other two independent
variables have no statistical significance on GDP growth.
Keywords: GDP, SBI, ATMs, Credit-Deposit Ratio, Bank Branches, Financial
Inclusion
 100 Parikalpana - KIIT Journal of Management

1.1 INTRODUCTION after 1991, resulting in an increase in

the number of commercial banks in
India is a developing country having a
India. As per Economic Survey 2012-
population about 136.64crore, which
13 the number of commercial banks has
rank India as the world’s second largest.
risen to 8,262, in June 1969 to 1,02,342
Majority of population of the India
in 2013 and the number of people per
are residing in rural areas and semi
branch has decreased from 65,000 to
urban areas where their main source of
13,756.
income is agriculture and other related
activities. People of rural area generally In India, one of the major instruments for
earn their wages on daily way basis. financial growth is financial inclusion. In
When they go to work, they will earn comparison to other emerging countries,
money, otherwise they don’t. People India has a low level of financial service
of rural area are mostly uneducated coverage. In India financial inclusion
or illiterate and they are hardly aware got started in the year 2005 by K.C
about the financial services provided in Chakraborty. He conducted a pilot study
India. People of rural area mostly suffer in Mangalam village in Pondicherry.
from poor infrastructural facilities and That village went on to become India’s
they often face risk and uncertainties first village to give banking services to
in their life. Majority of the financial all of its residents. Poor individuals were
institutions are focusing their business given General Credit Cards (GCC) to
operations in commercial areas where make it easier for them to get credit. As
there is infrastructural development and per the world Bank “Financial inclusion
there is maximum chance of earning is the process of ensuring access to
more profit. Financial institutions appropriate financial products and
mainly focus on key customers and services needed by vulnerable groups
business concern for growing their such as weaker section and low-income
business rather than focusing on under group at an affordable cost.”
privileged people. So, the Government
1.3 FINANCIAL INCLUSION
of India introduced a new concept
known as “financial inclusion” in the “The Committee on Financial Inclusion
year 2005. of Government of India has defined
financial inclusion as the process of
1.2 FINANCIAL INCLUSION:
ensuring timely access to financial
JOURNEY OF INDIA
services and adequate credit where
For the people of India, financial needed by vulnerable groups such as
inclusion is not a new notion. For the weaker sections or low-income groups
past 44 years, it has been in India. at an affordable cost.”
Commercial banks were nationalised in
“According to Reddy (2007) financial
1969 and 1980, Regional Rural Banks
inclusion consist of ensuring bank
were established in 1975, and reforms
accounts to each household and offering
in banking sector were implemented
their inclusion in their banking system.”
 Financial Inclusion in India 101

“Lcyshon & Thrift (1995) defined services in an appropriate manner.”

financial inclusion as the process that
“According to World Bank, Financial
serve certain social group individual
inclusion is the process by which
from gaining access to the formal
individuals and businesses can have
financial system.”
timely access to financial products
“According to Sinclair (2001) financial and services. Banking, equity, credit,
inclusion means the ability to access insurance are the examples of financial
necessary financial products and products and services.”

It is helpful in maintaining a balance disadvantageous unit under the growth

between surplus and deficit units and category. Crucial objectives of financial
also helps in bringing the poor and inclusion are:

Economic Objectives Socio-Political Objectives

Equitable & Overall Growth Poverty eradication
Savings’ mobilisation Achieve SDGs Goals
Large Markets for Financial System Greater Social Inclusion
Effective directions of Government Effective directions of Government
Programs Programs
 102 Parikalpana - KIIT Journal of Management

1.4 FIVE AREAS OF FINANCIAL the lender’s risk assessment. Generally

INCLUSION financial inclusion considers the income,
home ownership, credit history, age and
(1) Banking:
other factors before providing loan to
Financial inclusion appertains to the any people.
provision of financial services to low-
(3) Insurance:
income members of society. Banking
services are mainly for the general public Insurance is a financial instrument that
but it is mandatory that these services helps individuals to overcome shocks or
will be made available to the general loss that have occurred over the course
public without any discrimination. of their lives. Insurance enables them to
The basic goal of financial inclusion protect their life, health and other loss
is to provide financial services to the compensation products. Insurance helps
economically disadvantaged members lower income segment to transfer their
of society at a reasonable cost. Financial risk they face and compensate their loss
inclusion was emerged keeping in mind arising from any damages
to provide banking services to each and
(4) Savings:
every people in India. To make financial
inclusion successful mostly in the rural Savings are necessary for economic
areas both main-stream (SBI & Others individual wellbeing and also provide
PSU) and non-main-stream (Rural & strength to national economy. Without
Cooperative banks) must work with adequate savings individuals face a lot
cooperation for the betterment of the when they are unemployed or when
people. there is a need of money.
(2) Providing credit: (5) Advice:
Financial inclusion also provides cheap Advice can be extremely informal or
loans to the low-income groups for general discussion on the basic financial
which they can easily access to these questions.
funds for live-hood. Providing credit is 1.5 BANK BRANCHES AND ATM
the main element of financial inclusion. NETWORKS IN INDIA TILL 31ST
The cost of credit is usually decided by MARCH 2017
Table No.1.1 Scheduled Commercial Bank Branches (Group Wise) as on 31st
March, 2017

Bank Group Rural Semi-urban Urban Metropolitan Total

Public Sector Banks 29047 25862 19751 21556 96216
Private Sector Banks 5778 8744 5726 7461 27709
Foreign Banks 9 9 40 243 301
Regional Rural
14982 4768 1639 442 21831
Banks
 Financial Inclusion in India 103

Small Finance
88 116 99 107 410
Banks
Payments Banks ----- ----- 1 2 3
Total 49914 39529 27276 29821 146546
(Source: Reserve Bank of India)
The number of branches added by each These banks comprise of public sector
bank group until 31 March 2017 has banks, private sector banks, foreign
been revealed in the above table 1.1. banks, regional rural banks, small
finance banks, and payments banks.
Table No. 1.2 Scheduled Commercial Bank Branches from 2007-08 to 2016-
17
Year Rural Semi-urban Urban Metropolitan Total
2007-08 28740 18622 14756 16947 79065
2008-09 29255 19972 15871 18188 83286
2009-10 30145 21719 17453 19667 88984
2010-11 31450 24083 18495 20986 95014
2011-12 33813 26990 19970 22479 103252
2012-13 36782 29808 21171 23621 111382
2013-14 41953 32991 22829 25228 123001
2014-15 45209 35374 24376 26827 131786
2015-16 48336 38078 25971 28425 140810
2016-17 49904 39499 27256 29811 146470
(Source: Reserve Bank of India)
Table No. 1.2 shows the number of operating commercial bank branches
from 2007-08 to 2016-17.
Table No. 1.3 No. of ATMs in India as on 31st March, 2017

Rural Semi-urban Urban Metropolitan Total

Public Sector Banks 29033 25645 17890 18875 91443
Private Sector
4822 7803 5158 6878 24661
Banks
Foreign Banks 9 9 39 231 288
Total 33864 33457 23087 25984 116392
(Source: Reserve Bank of India)
 104 Parikalpana - KIIT Journal of Management

Table No. 1.3 displays the increase in the was implemented. PMJDY was created
number of Automated Tailor Machines to establish faster access to a variety
(ATMs) in the country till 31st March of financial products & services for
2017. Total number of ATM is 116392 excluded groups, such as basic savings
till March 2017. bank accounts, inexpensive, remittances,
The most significant change occurred need-based credit and insurance. Only
in August 2014, when the Pradhan by utilising technology effectively will
Mantri Jan Dhan Yojana (PMJDY) such deep penetration be possible at a
reasonable cost.

Table No. 1.4 Progress of PMJDY till March 2017

New savings
Deposit (in Debit Card issued
Bank Groups bank accounts
Rs. Million) (in million)
opened
Public sector banks 254.9 652183 192.00
Regional rural banks 51.7 137171.30 35.90
Private sector banks 09.8 22682.30 08.21
Total 315.9 812036 235.9
In order to help bolster India’s financial through business correspondents (BCs),
inclusion drive, all private & public bank branches in rural areas the number
sector banks have been recommended of General Credit Cards (GCC), the
by the government to design a three-year status of Kisan Credit Cards (KCC) and
financial inclusion plan (FIP), which other factors. Table 1.5 indicates how
will include data on branches opened far India’s financial inclusion plans have
progressed.
Table No. 1.5 Advancement of Financial Inclusion Plan

March March March March March March March

SN Particulars
2010 2011 2012 2013 2014 2016 2017
Rural locations-
1. 33378 34811 37471 40837 46126 51830 50860
Bank Branches
Rural locations-
Banking
2. Outlets 34316 81397 144282 227617 337678 534477 547233
(Branchless
mode)
Rural locations-
3. Banking outlets 67694 116208 181753 268454 383804 586307 598093
(Total)
 Financial Inclusion in India 105

Urban locations
(Through
4. 447 3771 5891 27143 60730 102552 102865
Business Corre-
spondence)
Total Kisan
Credit Cards
5. 24.3 27 30 34 40 47.3 46
(No. in
millions)
Kisan Credit
Cards -Total
6. 1,240 1,600 2,068 2,623 3684 5,131 5805
(Amount in
Billion)
Total General
7. Credit Cards 1.4 2 2 4 7 11.3 13
(No. in Million)
GCC-Total
8. (Amount in 35 35 42 76 1097 1,493 2117
billion)
Source: RBI’s Report on Trend and Progress of Banking in India of various years
Above table (1.5) shows journey of (547233). It is evident from the table that
financial inclusion plan from march the rural banking system is consisting
2010 to March 2017. In March 2010, the of both branch outlets and branchless
banking outlets in rural locations with outlets with almost equal proportions.
branches was 33378 and an increasing Total KCC distribution was 24.3 million
trend has been marked till March in March 2010, while it has increased
2017 (50860). In the same manner the to 46 million in March 2017. In case of
branchless mode of banking outlets in GCC it is also showing the same trend
the rural area is also increasing from as KCC from March 2010 (1.4 million)
March 2010 (34316) to March 2017 to March 2017 (13 million).
Table No. 1.6 Population Group Wise Credit of Scheduled Commercial
Banks
(Amount in Crores)
 
Rural Semi-urban Urban Metropolitan

Amount
No. of No. of Amount No. of Amount No. of Amount
Out-
Year Ac- Ac- Out- Ac- Out- Ac- Out-
stand-
counts counts standing counts standing counts standing
ing
 106 Parikalpana - KIIT Journal of Management

2007 31029 2357.04 22099 2127.53 13254 3501.94 28060 11484.5

2008 33546 3231.32 24021 2559.98 14194 4305.92 35230 14072.8
2009 33823 3096.26 24793 3110.89 14750 4985.66 36690 17284.3
2010 37074 3851.5 27047 3678.59 16242 5936.15 38285 19985.5
2011 40018 3924.49 28772 4519.87 16896 7795.16 35038 24516.9
2012 41749 4422.12 31292 5282.89 17740 8548.68 40099 29779.0
2013 45703 5239.71 34621 6756.53 20924 9877.61 27038 33379.3
2014 48343 5667.05 39094 7177.64 25379 10614.7 25934 39361.4
2015 52777 6553.61 39526 7966.09 23777 11790.9 28160 42474.1
2016 57297 7357.83 44832 9363.28 28014 12965.8 32231 45539.6

(Source: RBI, Handbook on Indian statistics)

The above table indicates that, in 2007 highest number of accounts still the
the number of accounts in rural areas credit is only 1/5th of metropolitan areas.
was 31029, having an outstanding credit It indicates inefficient mobilization
of Rs.2357.04crores. While in case of of rural resources. The same trend
semi urban, urban and metropolitan continues till 2016. Hence the banking
areas, the number of accounts was sector should provide more credit access
22099, 13254 and 28060 respectively to the rural areas otherwise even after
and their outstanding credit was 2127.53, the implementation of different policies,
3501.94 and 11484.5crores respectively. those areas will lag behind in different
It means though the rural area has aspects.

Table No. 1.7 Population Group-wise Deposit of Scheduled Commercial

Banks

Semi-urban Urban Metropolitan

  Rural

No. of Amount No. of Amount No. of Amount No. of Amount

Year Ac- Out- Ac- Out- Ac- Out- Ac- Outstand-
counts standing counts standing counts standing counts ing

2007 149663 2530.14 132808 3573.95 113422 5325.92 123306 14540.43

2008 168034 3034.23 148361 4302.80 128021 6576.99 137241 18585.44
2009 199695 3639.1 169725 5297.58 142272 8229.14 150611 22053.99
2010 224155 4203.38 189457 6140.47 152323 9449.92 168934 25816.52
2011 250254 4932.66 212043 7168.31 168037 11105.13 179796 30689.41
 Financial Inclusion in India 107

2012 283072 5731.86 239951 8425.45 180626 12725.92 199551 33899.21

2013 335347 6698.89 283990 9791.94 203091 14970.13 222677 38665.25

2014 406624 7871.51 340522 11410.77 231521 17140.10 248043 43134.83

2015 493970 9156.76 404661 13172.51 266228 19649.01 275033 47242.83

2016 576171 10089.4 470711 14772.12 297715 21505.76 301519 49628.02

(Source: RBI, Handbook on Indian statistics)

As compare to the credit outstanding of agencies. Treasury (2004) stated that

scheduled commercial banks the deposit low-income persons, in particular,
side is showing a very surprising result. were unable to obtain financial goods,
As evident from the above table an imposing significant costs on vulnerable
inference can be drawn that though group of people. “Financial inclusion
rural areas having more accounts but may be described as the process of
the amount of deposit is negligible as ensuring access to financial services
compared to the urban and metropolitan and timely and enough credit where
areas. This condition is still prevailing. needed for vulnerable groups such as
By analyzing these facts even, a layman weaker sections and low-income groups
can say that such kind of situation is at an affordable cost,” according to the
there only because the people of rural Rangarajan Committee on Financial
India are not confident enough when it Inclusion (2008). Financial services
comes to banking habits. Therefore, in cover everything from savings to
order to eradicate this kind of problems, loans, insurance, credit, and payment.
more financial literacy programs, At a lecture on “financial inclusion
overall education facilities, technical for inclusive growth,” Vijay Kelker,
knowledge and investment awareness chairman of the thirteenth finance
program etc. can be proved as a panacea commission of the Government of
for these problems. India, stated that “financial inclusion
is a quasi-public good because finance
2. LITERATURE REVIEW
performs the important function of
Beck et al. (2000) attempted to mobilizing savings, allocating capital,
empirically assess the link between and transforming risk by pooling
financial intermediary development and repackaging it”. Faster and more
and economic growth. They discovered equal growth is facilitated by a well-
that the development of financial functioning financial system. According
intermediaries has a beneficial influence to S. Vighneswar’s (2011) “Financial
on productivity growth, which leads inclusion: An evaluation of trend and
to economic development institutional progress,” In India, there is a large gap
 108 Parikalpana - KIIT Journal of Management

in the number of bank accounts between (2017), in India, there is a strong link
rural and urban areas, as well as in between economic development and
terms of population coverage per bank the financial inclusion indicator. GDP
location, there is an uneven distribution is a crucial metric for determining a
of banking services. In order to increase country’s progress. In their study “Role
financial inclusion, the government of Banks in Financial Inclusion in
needs to adopt more policies and India,” they discovered that number of
program. According to Bharadwaj bank branches and the credit deposit
(2013), “Financial inclusion for ratio have statistically significant impact
inclusive growth,” people are becoming on a country group’s GDP. Dahiya, S.,
more integrated with banks as a result and Kumar, M. (2020) in their study
of the launch of various initiatives, and attempted to link financial inclusion
no-frill accounts are on the rise. Several parameters such as credit deposit ratio,
institutions should hold financial ATM growth rate, and bank branch
literacy programs in order to improve count with the Indian economy in terms
people’s basic knowledge of the country. of GDP. The data support the existence
In their work “Financial Inclusion for of a positive and significant link between
Inclusive Growth in India,” Dixit and financial services usage and GDP per
Ghosh (2013) discovered that states capita growth. Raichoudhury, A. (2020)
with low GDP per capita have poor in his paper “Major determinants of
financial inclusion, with the exception financial inclusion” revealed that the
of Gujarat. He also came to the net state domestic product (NSDP),
conclusion that there is no link between road length and presence of factories
financial inclusion and unemployment. have a considerable impact on financial
Sahu (2013) attempts to determine inclusion in India.
the link between socio-economic
3. RESEARCH METHODOLOGY
determinants and financial inclusion in
India in her study “commercial banks, 3.1 Relevance of the Study
financial inclusion, and economic In the 1950s, the All-India Rural
growth in India.” She compared India’s Credit Survey was completed, then
financial inclusion to the index of the concept of analyzing financial
financial inclusion (IFI) by looking at access became prominent. The survey’s
three dimensions: banking penetration, findings revealed that rural residents
banking services availability, and rely substantially on money lenders, a
banking system utilisation. According tendency that has persisted to this day.
to the report, no state in India falls into
the high IFI category. Sharma, D. (2015) As a result, robust financial institutions
“Nexus between financial inclusion and an effective regulatory body are
and economic growth” indicates that required for the nation’s balanced
economic growth and many aspects regional growth. So that not only the
of financial inclusion have a beneficial residents of the city but also the people
relationship. According to Iqbal & Sami of the countryside can benefit.
 Financial Inclusion in India 109

3.2 Research Gap X2 = ATMs Growth rate of SBI

Many researches are being conducted X3 = Credit Deposit Ratio of SBI
on financial inclusion initiatives from
On the basis of research objectives,
a theoretical standpoint, while other
following hypothesis has been
works on state-by-state magnification
developed:
of financial inclusion have been
discovered. The overall influence on H0 The number of SBI branches, ATM
Indian economic growth by financial growth, and credit-deposit ratio of SBI
inclusion, has been studied in a few have no significant impact on GDP.
research, with conflicting results. HA The number of SBI branches, ATM
With these considerations in mind, the growth, and credit-deposit ratio of SBI
purpose of this research is to determine have significant impact on GDP.
the current state of financial inclusion
in India, as well as to assess the impact In order to prove the above hypothesis,
of financial inclusion on the country’s following sub-hypothesis has been
economic growth, with an emphasis on formulated:
the India’s largest public sector bank, i.e. H02 The number of SBI branches has no
State Bank of India. substantial bearing on the Indian GDP.
3.3 Objective of the Study HA 2 The number of SBI branches has a
To look at the current state of financial substantial bearing on the Indian GDP.
inclusion in India with a focus on the H0 3 SBI ATM growth has no substantial
banking industry. impact on India’s GDP.
To investigate the impact of financial HA 3 SBI ATM growth has substantial
inclusion indicators on GDP growth in impact on India’s GDP
relation to SBI.
H0 4 SBI’s credit deposit ratio has no
3.4 Research Methodology substantial impact on GDP.
This section will outline the HA 4 SBI’s credit deposit ratio has
methodological techniques used to substantial impact on GDP.
achieve the current research objectives.
3.5 Data Collection
The current study used Gross Domestic
Product (GDP) as a dependent variable This research is developed on secondary
and the number of SBI branches, SBI’s data gathered from SBI’s annual reports
Automated Teller Machines (ATM) and the India’s Handbook of Statistics
growth rate, and SBI’s credit deposit released by RBI, as well as newspapers,
ratio as independent variables. research journals and magazines.
Number of websites, such as the RBI
Y= b0 + b1X1 + b2X2 + b3X3 + e
and the IMF, were also used. The study’s
Y = Gross Domestic Product time frame is ten years, from 2007-08 to
X1 = Number of SBI Bank Branches 2016-17.
 110 Parikalpana - KIIT Journal of Management

3.6 Tools of Data Analysis ratio along with its impact on GDP
growth.
To achieve the study aims, the data
is analysed using a variety of tools The previous literatures taken ten years
and methods. Correlation, multiple data are the minimum benchmark to
regression analysis, percentages, and analyze a time series data. With these
ratios are examples of these. The supporting arguments the present study
application of these methodologies in considers the time period from 2007-08
various locations has been based on the to 2016-17.
nature and suitability of data provided,
4. Data Analysis and Interpretation
as well as the analysis requirements.
SPSS was used to carry out these According to empirical research,
statistical analyses (version 16). specific metrics must be defined in
order to formulate effective policies on
3.7 Scope of the Study
financial inclusion. “Experts from the
As SBI is the largest commercial bank World Bank, the International Monetary
in India, the dissertation is about the Fund, and a variety of other international
journey of India’s financial inclusion, organisations have identified some
with a focal point on the banking key markers of financial inclusion in
industry and giving emphasis on SBI a country’s economy. The number of
and making comparison of SBI with bank branches, ATMs installed, bank
reference to, ATM growth rate, number deposits, and bank credit are some of
of bank branches and Credit Deposit these broad indicators.”

Table No. 4.1: Number of SBI Branches during 2007-08 to 2016-17

2007- 2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016-
Year
08 09 10 11 12 13 14 15 16 17
Number
of SBI
12475 12986 13333 14504 15146 15871 16918 17375 17836 18232
Branch-
es
(Source: Annual Reports of SBI from 2007-08 to 2016-17)
Table No. 4.1 depicts the trend in the India. The graph clearly shows that SBI
number of functioning SBI banks in branches have been rising in number
over the last ten years.
Table No. 4.2: ATMs Growth of SBI during 2007-08 to 2016-17
2007- 2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016-
Year
08 09 10 11 12 13 14 15 16 17
ATMs
4.55 2.34 4.82 4.77 10.25 22.74 50 4.14 0.67 -1.21
Growth
(Source: Annual Reports of SBI from 2007-08 to 2016-17)
 Financial Inclusion in India 111

The growth rate of ATMs across the SBI Automated Teller Machines in India
country is depicted in Table 4.2. The are revealed as a measure of financial
inclusion.
Table No. 4.3: Credit Deposit (CD) Ratio of SBI during 2007-08 to 2016-17

2007- 2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016-17
Year
08 09 10 11 12 13 14 15 16
CD
70.25 73.11 78.58 81 83.13 86.94 86.76 82.45 84.57 76.83
Ratio
(Source: Annual Reports of SBI from 2007-08 to 2016-17 and RBI’s Handbook of
Statistics)
Table No. 4.3 depicts the credit deposit stunning increase of 86.94 percent,
ratio throughout a ten-year period, followed by a fall in 2016-17. (76.83
beginning in 2007-08 and ending in percent). In 2013-14 and 2014-15, the
2016-17. The year 2012-13 saw a credit deposit ratio fell marginally.

Table No. 4.4: GDP of India during 2007-08 to 2016-17

Year GDP (In million)
2007-08 65928231
2008-09 68493429
2009-10 74301571
2010-11 81924894
2011-12 87363300
2012-13 92130200
2013-14 98013700
2014-15 105276700
2015-16 113861500
2016-17 121960100
Source: IMF, World Economic Outlook Database, October 2018

The Gross Domestic Product (GDP) 2014). Table 4.4 shows India’s GDP
is a widely used economic metric during a ten-year period, from 2007-
to determine a country’s growth 2008 to 2016-17. During these financial
(Chithraand Selvam, 2013; Kamboj, years, the GDP has been steadily
increasing.
Table No. 4.5: GDP of India and Different Indicators of Financial Inclusion during
2007-08 to 2016-17
GDP (in mil- SBI Bank Growth of Credit Deposit
Year
lion) Branches ATMs Ratio
 112 Parikalpana - KIIT Journal of Management

2007-08 65928231 12475 4.55 70.25

2008-09 68493429 12986 2.34 73.11
2009-10 74301571 13333 4.82 78.58
2010-11 81924894 14504 4.77 81
2011-12 87363300 15146 10.25 83.13
2012-13 92130200 15871 22.74 86.94
2013-14 98013700 16918 50 86.76
2014-15 105276700 17375 4.14 82.45
2015-16 113861500 17836 0.67 84.57
2016-17 121960100 18232 -1.21 76.83
(Source: Compiled by authors)

Table No. 4.6: Correlations among GDP, SBI Branches, SBI ATMs and SBI CD
Ratio
Total
Gross Credit
Number ATM
Domestic Deposit
of SBI growth rate
Product Ratio of
Branches of SBI
of India SBI
in India
Pearson
Gross Domestic
Correla- 1.000 .985 .070 .569
Product of India
tion
Total Number of SBI
.985 1.000 .205 .654
Branches in India
ATM growth rate of
.070 .205 1.000 .569
SBI
Credit Deposit Ratio
.569 .654 .569 1.000
of SBI
Source: Compiled by authors

Table No.4.6 indicates that correlation and GDP is 0.070, which indicates that
between GDP and number of SBI both the variables are no way correlated.
branches is .985, which indicates very Correlation between credit deposit ratio
strong relationships between two. and GDP is .569, it indicates a moderate
Correlation between ATM growth of SBI relationship between two.
 Financial Inclusion in India 113

Table No. 4.7 Model Summary

Adjusted Std. Error of Durbin-
Model R R Square
R Square the Estimate Watson
1 .994a .988 .982 .01223 2.136
a. Predictors: (Constant),
Credit Deposit Ratio of
SBI, ATM growth rate of
SBI, Total Number of SBI
Branches in India
b. Dependent Variable:
Gross Domestic Product of
India
Source: Self-Compiled
The model summary of multiple It means that the model explains 98
regression analysis performed using percent of the variability in response
SPSS 16 is shown in Table No. 4.7. The data that is close to the mean. The R
result shows the value of R to be 0.994, square indicates how well the model
which means the dependent variable fits the data. Here, Adjusted R square
Gross Domestic Product (GDP) is is 0.982 or 98.2%. It indicates that,
having positive relationship with the the independent variable improves the
three independent variables, viz. number model fit more than expected by chance
of SBI bank branches, credit deposit alone.
ratio of SBI, ATM growth rate of SBI. The value of Durbin-Watson test comes
The value of R square is 0.988 or 98%. 2.136. As per the rule of thumb, the
value of more than 1 and less than 3 independent variables (number of SBI
is free from autocorrelation problem. branches, ATM growth rate of SBI and
So, in the present study dependent credit deposit ratio of SBI) is free from
variable (GDP) and its relationship with autocorrelation problem.

Table No. 4.8 Result Summery

Stand-
Unstandard- ardize Col- H0 Ac-
Model ized Coeffi- and t sig line- cepted/
cients Coeffi- anity Rejected
cient
Std.
B Er- Beta VIF
ror
 114 Parikalpana - KIIT Journal of Management

1 (Constant) -1.551 .332 -4.671 .003 Rejected

Total
Number
of SBI 1.567 .093 1.035 16.936 .000 1.880 Rejected
Branches
in India
ATM
growth
.001 .000 -.120 -2.139 .076 1.591 Accepted
rate of
SBI
Credit
Deposit
.002 .001 -.039 -.532 .614 2.662 Accepted
Ratio of
SBI

a. Dependent Variable: Gross Domestic Product of India

Source: Compiled by authors

The above Table No. 4.8 indicates the the p value of total number of SBI
p value of independent factors taken branches in India to be 0.001, (which is
together to be 0.003 which is less than less than 0.05), ATM growth rate of SBI
level of significance 0.05. This shows to be 0.076 (which is greater than 0.05)
the independent factors all together have and credit deposit ratio of SBI to be
significant impact on GDP growth of the 0.614 (which is quite greater than 0.05)
country. By analysing the independent at 5% level of significance respectively.
variables individually, it is found that This indicates that number of SBI bank
branches have a significant impact on and the p value is less than 0.05. The
Indian GDP growth and ATM growth other two hypothesis are rejected means
rate and credit deposit ratio, individually H0 accepted and HA rejected.
have no statistically significant on GDP
As a general rule, VIF values more
growth.
than 5 are not optimal and indicate
4.2 Testing of Hypothesis multi-collinearity. As the VIF value
of all impartial variables are less than
By analysing table No. 1.15, it is found
5, this regression model is free from
that out of four hypothesis two hypothesis
multicollinearity.
are accepted. The first hypothesis
mainly (Alternative hypothesis HA) is We came up with the following
accepted and the p value is less than regression equation:
0.05. The second hypothesis mainly
Y = -1.551 + 1.567X1 + .001X2 +
(Alternative hypothesis HA) is accepted
.002X3 + e
 Financial Inclusion in India 115

The regression model reveals that the the country. The Financial Inclusion
number of SBI bank branches have Program (FIP) has been utilised by the
significant impact on GDP growth. RBI to assess the performance of banks
Since my null hypothesis is accepted, participating in financial inclusion
basing on my hypothesis I try to find out efforts. The new Financial Inclusion
the rural coverage of SBI to prove the Plan is now more focused on transaction
financial inclusion carried out by SBI. volume, which is critical for India’s
growth and development. The strongest
4.3 Conclusions
link is seen between financial inclusion
Financial education is especially and the country’s economic growth.
important for persons in vulnerable The number of SBI branches has a
groups in a country like India, which has positive considerable impact on the
a broad social and economic character. country’s GDP, according to the current
As a result, banks should realise financial study, while two financial inclusion
inclusion as a commercial opportunity metrics, SBI’s ATM growth and credit
than a need. It must touch every part deposit ratio, have had a statistically
of society. Banks serve as a means insignificant influence.
of mobilising savings and allocating
4.4 Scope for Further Study
credit for production and investment in
emerging economies like India. Banks, as The data analyzed only for ten years
a financial mediator, which contribute to from 2007-08 to 2016-17. The present
the country’s economic development by study excludes the 2017-18 fiscal year
identifying and lending to entrepreneurs data considering it as an abnormal year.
who have the best chance of launching During this period Indian banks are
new commercial operations. For this saddled with bad loans and government
reason, the RBI and the government has made it a priority to lift banks out
play a critical role in promoting financial of non-performing assets crisis. These
inclusion in order to boost economic conditions may affect the performance
growth through increasing banking of SBI. Further study can be made by
penetration, installing new ATMs, and considering 2017-18 financial year.
implementing various initiatives around

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