2. DEFINITIONS
FINANCIAL INCLUSION:
“The process of ensuring access to financial services and
timely and adequate credit where needed by vulnerable
groups such as weaker sections and low income groups at
an affordable cost”
- The Committee on Financial Inclusion
(Chairman: Dr. C. Rangarajan, 2008)
DEPRESSED CLASS OF India- Out of formal banking
system- no benefit of modern banking facilities and
schemes for the development and vulnerability of
poverty and exploitation by moneylenders-
So…. Bringing this population to formal banking system is
the financial inclusion
3. Who are the excluded people
& need to be included
Rural areas 147 million household, 89 million farmers, 51% no
access to formal or informal credit and 73% HH no formal
credit;
Loan access only 14% adult population
10% rural adult population
7%- 10% North eastern, eastern and
central Indian states
Small and marginal Farmers, landless agriculture workers,
unemployed persons, workers of unorganized sector like
construction, vendors, Scheduled Caste and Scheduled
tribes, women, and slum dwellers, migrants, people of
remote areas and geographically hard regions etc.
4. Why this exclusion….
Lack of poor oriented financial products
Irregular income or no income and uncertainty of
agriculture in India
Accessibility of bank services
Complexity of terms and conditions of the financial
institution
Illiteracy of the people in general: the biggest devil
Documentation problem
5. What is the solution..
Co-operative Movement,
Nationalization of banks
RRBs
Service Area Approach
Self Help Groups
Mandatory bank account in MNREGA etc.
But failed…..reason
No Financial illiteracy….
6. How financial literacy can help
Provides familiarity with and understanding of the financial market
products, rewards and risk
Rendering capacity to financial management of the family first of
all..regular saving and investment, appropriate expenditure, insurance
claims
Improve money management skill & managing debt
halt on unnecessary expenditure
borrow at only unavoidable conditions
Proper investment in productive usages
Handling bank and structured financial system
Handling financial market…how to use limited money
Avoid wrong choices/ haste/ repenting at leisure
Bank account, ATM, immediate credit, saving products, remittances and
payments, insurance, mortgage , entrepreneurial credit etc.
