Understanding different ways to achieve financial Inclusion in India

1. Financial inclusion and its
relevance to
Socio-Economic development

2. DEFINITION:
• Financial Inclusion is the process of facilitating the access
to the formal financial system and thereby various financial
products and services at affordable prices and with ease of
access.
FINANCIAL
INCLUSION
Savings
Financial
Advice
Payment &
Remittance
Services
Insurance
Affordable
Credit
Bank
Accounts

3. • According to Dr. Raghuram Rajan, Former
Governor, Reserve Bank of India, in his speech on
Financial Inclusion: Technology, Institutions and
Policies, Financial inclusion is about:
• the broadening of financial services to those people
who do not have access to financial services sector ;
• the deepening of financial services for people who
have minimal financial services; and
• greater financial literacy and consumer protection
so that those who are offered the products can make
appropriate choices.

4. IMPORTANCE OF FINANCIAL
INCLUSION:
• It is a necessary requirement for acquiring
growth with equity.
• It protects the poor from the clutches of
selfish or greedy moneylenders.
• It mobilizes the savings of the poor into the
formal financial intermediation and channels
them into investment

5. Benefits of financial inclusion:
• Provides access to Rural Masses to banking
facilities
• Reduction in cash economy
• Inculcates the habit to save, thus increasing
capital formation in the country
• Direct cash transfers to beneficiary bank
accounts, instead of physical cash payments
against subsidies.
• Foster the entrepreneurial spirit

6. Barriers to Financial
Inclusion
Supply Side
Barriers
Inappropriat
e Products
Complicated
Processes
Insufficient
Reach &
Access
Demand Side Barriers
Financial
Illiteracy
Socio-
Economic
Factors
Unfriendly
Interface

7. MEASURES TAKEN BY RESERVE
BANK OF INDIA (RBI) & GOI
• No Frills Accounts
• Easier Credit Facility
• Simpler KYC Norms
• Use of Information Technology
• EBT through Banks
• 100 Percent Financial Inclusion Drive
• Engaging business correspondents (BCs)
• Simplified branch authorization
• Opening of branches in unbanked rural centres
• Significant boost provided by Pradhan Mantri Jan Dhan
Yojana (PMJDY)-Rupay Debit Card, Insurance cover of
Rs.1,00,000

8. STATE-WISE INDEX OF
FINANCIAL INCLUSION
KERALA,
MAHARASHATRA,KARNATAKA
TAMIL NADU,PUNJAB,ANDHRA
PRADESH,SIKKIM,HIMACHAL PRADESH,
HARYANA
WEST BENGAL,GUJRAT,UTTAR
PRADESH,MEGHALAYA,TRIPURA,ODISHA,RAJASTHAN,ARUNA
CHAL PRADESH,MIZORAM,MADHYA PRADESH,BIHAR
ASSAM,NAGALAND,MANIPUR
http://www.fiaglobal.com/stateWiseIndexFinancialInclusion.php

9. CONCLUSION
• Even after nationalization of banks in 1969, the reach
of CBs, RRBs, Co-operative credit institutions have
remarkably increased in rural areas but a group of
society remains ignored from the financial services.
• Rising rural incomes, growing consumption, public
policy focusing on inclusive growth & rollout of
several Govt. schemes etc are giving several
opportunities for banks to play an active role in rural
India
• Banks should take a step forward to formulate specific
plans to enhance Financial Inclusion of unbanked
section of the society

10. • At the same time they should device the strategies
to reduce their transaction cost to actively
participate in the process of Financial Inclusion
• Expanding access to financial services are the
means for including the poor, reducing poverty,
and spurring economic development.
• Research has shown that unless financial
instruments are designed for specific needs of the
poor, they remain underutilized and costly for the
providers, and therefore, non-sustainable

11. • Government policies must build on the
strengths of indigenous financial institutions.
Post offices must also be brought within the
fold of national financial inclusion strategy due
to their extensive network and greater
accessibility.
• Raising awareness and imparting financial
literacy are also critical to the utilization of
financial instruments.