Financial Inclusion Day

1. Financial Inclusion Day

2. Moderator Gaiv Tata, Financial Inclusion Practice and Africa FPD Director, The World Bank Group Speakers • Fabiano Coelho, FinancialInclusionExpert, Banco Central do Brasil • ModupeLadipo, CEO, EFINA • NirajVerma, Senior Financial Sector Specialist, The World Bank Group • Yoko Doi, Financial Specialist, The World Bank Group • David Porteous, Managing Director, Bankable Frontier Associates

3. FINANCIAL INCLUSION STRATEGIES • Douglas Pearce • Financial Inclusion Practice Manager • FPD Forum • November, 2012

4. Wave of Financial Inclusion Commitments – 35 through AFI and G20 * Financial inclusion commitments made for June 2012 G20 Summit (G20 Peer Learning Program for FI) Bold: Financial inclusion commitments under the Maya Declaration NB: Other countries have set financial inclusion targets/strategies (inc. prior to 2010-2012), including: India, UK, Morocco

5. International drivers for financial inclusion commitments • Under the “Maya Declaration” 34 financial regulators or ministries of finance have made the following financial inclusion commitments

6. International drivers for financial inclusion commitments 17 countries made commitments in June 2012 under the G20 Financial Inclusion Peer Learning Program for FI, to:

7. Examples of Financial Inclusion Commitments

8. Financial Inclusion Strategies

9. Financial Inclusion Strategies • A comprehensive approach addresses at least these aspects Financial Capability and Consumer Protection are relevant to the Usage and Quality dimensions

10. Financial Inclusion Strategies Can be broken down into six components

11. Data & Diagnostics The G20 endorsed a ‘Basic Set of FI Indicators in June 2012:

12. Data & Diagnostics: Secondary Indicators in development

13. Data & Diagnostics underpin Targets, Reforms, Product design, Delivery mechanisms

14. Coordination Structure for FI Strategies/Action Plans • Central Bank setting up a FI Secretariat to coordinate across its departments • The FI Secretariat would report to the Financial Services Regulation Coordinating Committee , which would provide updates to the National Economic Council • Ministry of Finance, Ag/Rural/Telecoms, and the Private Sector, not yet part of the plans

15. Financial Inclusion Strategies increasingly take into account Consumer Protection, Financial Capability

16. Financial Inclusion Strategy: Public Sector actions

17. Financial Inclusion Strategy: Public Sector actions

18. Examples of Public Sector Actions

19. Private Sector Actions: viable business models?

20. Monitoring Progress, Impacts • Tracking the impact of a policy, regulation, or program during its implementation (real-time impact evaluation) allows modifications to be made that can ensure that the intended impacts are achieved • Indicators can be tracked on a frequent and regular basis, while less-frequent impact evaluations provide a more rigorous assessment of effects and cost-effectiveness

21. Monitoring Progress, Impacts Impact Assessment Framework offers the following guidance:

22. WBG support to FI Strategies: mechanisms Technical Assistance Investment Loan or DPL + Policy Matrix

23. STRATEGY STAGES DATA, DIAGNOSTICS, MONITORING, IMPACT ASSMT PRIVATE SECTOR ACTIONS STRATEGY DESIGN, TARGET-SETTING PUBLIC SECTOR ACTIONS (INC. PUBLIC-PRIVATE) ACTIVITY AREAS Technical Assistance and Advice for Reforms DPLs – Policy Actions Institution and Capacity-Building Systems Develop-ment Analytical Reports, Data Know-ledge-sharing FINANCIAL SERVICES FOR HHs - Microfinance, Remittances, Government to Person Payments - • Household & Individual Surveys • Regulatory & Market Assessments • Technical Guides • Technical Assistance • Action Plans for Reforms • Global knowledge, lesson-sharing • Reforms • Guarantee Schemes • G2P/cash transfer programs • Investment Lending • Innovation Funding • Technical Assistance to Financial Institutions • Pilots of viable business models • Advisory Services • Risk-Sharing Mechanisms FINANCIAL SERVICES FOR SMEs - SME Finance, Trade Finance, Agrifinance - • Enterprise, Financial Institution Surveys • Regulatory & Market Assessments • SME Finance Policy Guide, Impact Assessment Framework • Factoring toolkit • Reforms • Guarantee Schemes • Factoring Platforms Financial Sector Assessment Programs (FSAPs) FINANCIAL MARKET INFRASTRUCTURE - Payment Systems, Retail Payments, Mobile Payments, Securities Settlement, Credit Reporting Systems - • Global Payments Systems Survey • Finl Market Infrastructure assessments • Guidance , good practices, standards (inc. with the BIS, CPSS) • Action Plans for reforms • Legal & Policy reforms • Systems and Institutional Development CONSUMER PROTECTION & FINANCIAL CAPABILITY - Responsible Finance, Market Conduct - • Consumer Protection (CP) / Finl Literacy (FL) diagnostics • FL Surveys • CPFL Action Plans • Good Practices for Financial CP • Smartkit for FL • FL Impact studies • Reforms • Strengthening enforcement capacity • Support to private sector codes of conduct, self regulation • Financial Awareness Programs • Price Transparency initiatives

24. Financial Inclusion Support Framework TA, Financing, Capacity Building - for Implementation of FI Commitments • Data & Diagnostics • Diagnostics: FSAPs, Financial Infrastructure, Consumer Protection, SME Finance, Payments • Surveys: Enterprise, Financial Capability, Access to Finance for individuals/HHs 2. Strategy Development • Up to 15 countries • $60-70m TA, AAA, capacity-building • TA & AAA can complement DPLs/FILs 1. Data & Diagnostics, Monitoring 5. Evaluation Technical Assistance, Advisory Services • Funding enables CSCs/TTLs to scale-up FI support, address gaps, leverage loans • Relevant areas: Micro & SME Finance, Payments, Financial Consumer Protection/ Literacy, Insurance, Housing Fin, Capital Mkts • In-country capacity: WB specialists, IFC Advisory Services, development partners 3. Strategy Implementation 4. Financial Sector Response • Capacity-Building • Support for regulators, statistical agencies, industry associations etc in developing capacity • Funding/risk-sharing for critical systems development

25. Reference Framework as a resource • Accessible reference point: • Review and synthesis of country experience and models • Links to and draws from range of technical guides • Country matrix of models for FI Strategy components • Countries can share models, insights (online version) • Focus themes include: • Institutional framework: for country-led coordination, • monitoring, public and private sector roles • Public sector models: for stimulating private sector action, • compensating for market failures, providing scale • Financial infrastructure: legal & institutional framework • Data: sources of data & diagnostics, strengths/ weaknesses, applications

26. Financial Inclusion - Brazil • Evolution • Correspondent Banking • Savings accounts • Co-operative system • Microcredit

27. Research CNI/ IBOPE –

28. Inclui: Sedes, Agências, PAC e PAE Cooperativas – PAC/Sedespor 10.000 adultos (2000) 1 2

29. Inclui: Sedes, Agências, PAC e PAE Cooperativass – PAC/Sedespor 10.000 adultos (2010) 1 2

30. Thank you! fabiano.coelho@bcb.gov.br Bacen/Denor

31. India’s Financial Inclusion ApproachNirajVerma, SASFPFPD Forum and Learning Week – Financial Inclusion DayNovember 8, 2012

32. Financial inclusion in India : a snapshot over time “Govt must do” ………………………………………Market can play some role…………… “Govt enabler /facilitator, market doer” 1900 1980-90s ?? 2010-12 1950s 1960-70s 1990s 2000s Banks as ‘Public Utilities’ Banks + More market based approaches

33. Characteristics - India’s Financial Inclusion approach Multi-agency/ channels Specialized institutions/apexes Sharp focus: devpt + political economy lens Market infrastructure FI = S + C + R + I Banking  Public utility function; mandates… …yet market players welcome… Mixed approach Innovations: product and delivery Priority sector: 40%

34. What has this achieved

35. What lessons and what next Much done and much to do: Access has expanded significantly…yet, a large % of households lack adequate A2F • State: has a justifiable role, but has to evolve with market & use ‘smarter subsidies’ • Priority sector: Redistributive policy - What if not there? Cost and/or opportunity? • Expanding market infrastructure (incl. responsible finance) and outreach • Credit information • Better regulation/supervision & ‘Smart’ oversight (Lenders leverage for responsible finance) • ESR mantra: support channels that can be Efficient, Scalable and Responsible • Use multiple channels, using comparative advantage as key principle • MFIs: for credit and BCs for deposits • POs, banks, mobile cos., remittance cos.: payments • Leveraging existing retail networks optimally: • Distribution to ‘last mile’ is expensive, leveraging is critical • New product development and process innovation • Combined weather and area yield indexed crop insurance, warehouse receipts • Technology application (mobile phones for insurance, payments, etc)

36. FPD Forum 2012 & Learning WeekFinancial Inclusion Day: National Strategies for Financial Inclusion 8 November 2012 Yoko Doi Senior Financial Specialist Financial and Private Sector Development Department The World Bank Indonesia

37. 2012 Indonesia’s commitments towards Financial Inclusion 1st ASEAN Financial Inclusion Week hosted by Indonesia Bank Indonesia co-hosted AFI annual meeting in Indonesia G20 meeting in Los Cabos, the President signed the joint commitment together with Mexico and Chile to a reciprocal learning program on financial inclusion Indonesia hosted ASEAN meetings: Financial Inclusion became one of priority area for discussion NSFI development Pilot of CCT through Bank account Gov Mid-term Development Plan 2010-2014: (Improving A2F for MSMEs and MWs) KUR (GoI Credit Guarantee Program) Fin Literacy for MWs MW Microinsurance Reform BapepamLK Master Plan 2010-2014 (Facilitation of Microinsurance Development) Microinsurance Regulatory Framework Branchless Banking TabunganKu (Basic bank account) Ayo Ke Bank Initiatives (Public Financial Education) Reform on PNPM Mandiri RLFs Scheme Financial Identity Number for MSMEs Initiatives E-money, NPGW, Int’l Remittance Services etc

38. 2012 The World Bank Engagement in Indonesia DPLs NSFI development Reform on GoI funded PNPM Mandiri RLFs Scheme Two Diagnostics Studies TA for Fin Literacy for Migrant Workers Research on Fin. Literacy Assessment on MWs Microinsurance Regulatory Framework Microinsurance Marketplace Review on MW Microinsurance Islamic Finance for MSMEs Strengthening Savings & Loans Cooperatives Assessment on KUR (GoI Credit Guarantee Program) & M&E Advice Branchless Banking regulatory review Evaluation of TabunganKu (Basic bank account) TA for Central Bank Payment System Dept (E-money, NPGW, Int’l Remittance Services etc). Series of dissemination and public awareness efforts on Financial Inclusion

39. Indonesia: Financial Inclusion: Measures & Challenges • Effective Measures • High-Level of Commitments (President, Governor of Central Bank and Minister levels) • Development of National Strategy and a series of policy discussions among various ministries and regulators • Challenges • Degree of understanding of Financial Inclusion among policy makers is diverse. • i.e. beyond credit, beyond banking sector, beyond financial sector, linking it into poverty reduction & local economic development , and linking it to public policy and public finance; • Coordination among regulators / government agencies and private sectors and establishing effective partnership; • Creating Financial Inclusion as an integrated agenda for other government priorities (i.e. Poverty Reduction, Local Economic Development etc.); • Data collection, Monitoring and Evaluation (M&E) for effective policy reform / policy development; • Setting long term goals with sustainable form of financial inclusion for policy makers

40. The role of the World Bank in supporting financial inclusion priorities • Providing awareness of Financial Inclusion and broader concept sof Access to finance among senior policy makers / regulators and private sectors • Bringing Global Practices and Lesson learnt from other countries including on-going discussions • Research (i.e. Diagnostic studies), Policy Advice and Technical Assistance • Facilitating coordination among regulators and ministries, and private sectors • Analyzing on-going Gov priorities (challenges) and advising to include Financial Inclusion components/elements to these priorities (Holistic approach) • Monitoring and Evaluation (M&E) and on-going policy advice Resources: • Trust Funds (country focused / Area focused (i.e. FIRST Initiatives) ) • Cross Support from Practice Groups • Cross Support to other department (DEC. SD. HD etc) • Joint-Work with IFC

41. The video and presentations from today’s workshops will be available online on the OneFPD website. Type “financialinclusion” into your intranet browser, and click on learning.