After the nationalization of banks, the financial sector has become an important factor in reducing poverty, increasing employment and increasing economic growth of the country. But this sector has not been able to contribute to its utmost because of its unawareness about formal financial institutions among certain sectors of society. Those sectors are mainly the rural population of the country who are illiterate and who are unaware of the facilities provided by the Government of India in the field of finance which can help them maintain their income in an efficient way and introduce them to the investment schemes that are coming up to manage their income properly. Financially excluded people mostly include rural poor, low-income underprivileged people. Some of the authors carried out a survey in few states of India because these states have well-developed financial facilities available, but still there is a need for financial inclusion services in some areas because the available services are not utilized by the general public. For this reason, they went on and asked relevant questions about why the people are not interested in approaching formal financial institution and whether they are aware of these services and facilities or not. The data were collected and reported in a systematic manner. This author focused on whether the financial inclusion has really been implemented in the regions which the banks claimed to be completely financially inclusive. Survey of researchers concluded that more than half of the population from rural India are unaware of the financial facilities and services provided by formal institutions. Our empirical focus is on financial literacy that is needed to increase financial inclusion in rural sectors of India. The literature review done talks about the studies done by various researchers in this field and the strategies and approaches adopted by the government, RBI and NGOs to spread the awareness in order to involve them in contributing their part to the economic growth of the country. A detailed study is done by means survey by the help of a questionnaire and the data collected are worked on with the help of statistical tools which ultimately gave us the relation between various parameters considered for financial inclusion. This analysis and interpretation gave us the relation between financial literacy and financial inclusion and we were able to conclude that financial literacy has a role to play in the process of financial inclusion.

1. Financial Inclusion in Rural Areas
Research Paper

2. Research Problem
• H0 (Null Hypothesis) = Financial literacy will have an impact on
Financial Inclusion.
• H1 (Alternative Hypothesis) = Financial literacy will not have any
impact on Financial Inclusion.

3. Objectives
Objectives are the guiding lights of a study.
The present study was undertaken to achieve the following objectives:
• To study the impact of financial literacy on financial inclusion.
• To find out the steps taken and different approaches adopted by the
banks in the area of financial inclusion.
• To study the perception of rural population on Financial Inclusion

4. Background of the Topic
Financial inclusion stands for delivery of banking/financial services to vast section
of low income groups (called disadvantaged person) at affordable cost in a fair and
transparent manner by regulated mainstream institutional bodies
The present banking network of the India comprises of:
• branch network - 1, 15, 082
• ATM network - 1, 60, 055.
Out Of these, 43,962 branches (38.2%) and 23,334 1 ATMs (14.58%) are in rural
areas

5. Literature Review
As per Research Paper 1

6. Bank
Complicated & unaffordable
financial products
Hard to reach (Availability)
Seek creditworthy
profitable clientele
Non negotiable in
terms of cost
Oriented towards high and
upper middle income
population
Staff attitude, and language
Government
& RBI
Banking on mobile
Microfinance model
No-frills account
General purpose/
Kisan credit card
Rural
Residential
Financial illiteracy
Lack of confidence &
motivation
Lack of awareness
Unavailability
complex process
and procedures
Low/Insufficient income

7. Research Methodology
Sources of Data | Sampling Procedures and Data Gathering

8. DATA GATHERING
Primary data
• The primary data was collected
through field survey in rural
area.
Secondary data
• Government of India
• Reserve Bank of India
• Other reports
(generated by various government
financial institutions)
VARIABLES
Dependent Variable (Y):
• Preference in borrowing from financial institutions
Independent Variables (X):
• Educational level of the people
• Frequency of spreading awareness by various Financial
Institutions
• Motivation to use financial services provided by
financial institutions when people are already made
aware of them
• Financial Knowledge of people
STATISTICAL TOOLS USED: Correlation & Regression

9. Analysis & Result

10. Correlation:
A. Education Level
B. Motivation for using financial services
C. Financial institutions spreading awareness
amongst rural people
D. Financial knowledge of people
A B C D
A 1
B 0.125934768 1
C 0.50870989 0.043750676 1
D 0.731851473 0.018174015 0.670618314 1
Positively Correlated
• Educational level of people (A) & Financial Knowledge of people (D)
• Financial Knowledge of people (D) & Frequency of spreading awareness by various Financial
Institutions (C)
• Educational Level
Negatively Correlated
• Motivation to use financial services provided (B) & Educational Level (A)
• Financial institutions spreading awareness amongst rural people (C) & Motivation for using
financial services (B)

11. Regression:
Model Summary
Model R R Square
Adjusted R
Square
Std. Error of
the Estimate
1 .881a .775 .764 .64092
a. Predictors: (Constant), Financial Knowledge,
Education Level
ANOVA
Model
Sum of
Squares df
Mean
Square F Sig.
1 Regression 55.313 2 27.657 67.328 .000a
Residual
16.020 39 .411
Total
71.333 41
a. Predictors: (Constant), Financial Knowledge, Education Level
b. Dependent Variable: Preference in borrowing from financial institutions
Coefficients
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig.B Std. Error Beta
1 (Constant)
.535 .230 2.332 .025
Education Level .213 .072 .322 2.948 .005
Financial Knowledge .559 .099 .620 5.676 .000
a. Dependent Variable: Preference in borrowing from financial institutions

12. Looking at the output of regression analysis we can formulate the
equation for dependent variable as follows:-
Y = Constant + V1*coefficient1 + V2* coefficient2
Preference for using financial services by financial institutions i.e. ;
Financial inclusion = 0.535 + (0.213* education level of people) + (0.559* financial knowledge of people)
By above equation we can say that,
• Education level of rural people can impact the financial inclusion by a factor of 0.213,
• Whereas the financial literacy will impact it to the extent by a factor of 0.559.
Third independent variable i.e., awareness of the various financial schemes doesn’t have a good impact
on financial inclusion.
Thus, the educational level of people and their financial literacy
have 77.5% impact on financial inclusion.

13. Limitations
This research is conducted in a rural area in State of Bihar (India).
Other study may have different outcomes due to different geographical locations, respective
environmental and economic situations and conditions.
To achieve data of financial literacy (X) in our research, we separately recorded the knowledge of
rural people on various parameters:
(a) savings account, (b) kisaan card, (c) group loan, (d) crop loan, (e) crop insurance, (f) personal
loan, (g) recurring deposit account, (h) fixed account, and (i) bank loan secured on property.
The average of this is considered as financial literacy (X) of rural people. It is not necessary that only
the above specific parameters solely define the term “financial literacy”.

14. Future Scope
In future, we could continue the study regarding the benefits that the
rural population got from the implementation of the recommendations
in above literature review.
Also we can further research how technology can be leveraged to reach
out to the rural population and how that can be used to overcome the
barrier of financial literacy in the path of financial inclusion.

15. References
i. Dr. Christabell. P. J. & Vimal Raj (2012, Oct). A. Financial Inclusion in Rural India: The role of Microfinance as a Tool. IOSR Journal of Humanities and Social
Science.
ii. Shashank Bansal (2014) Perspective of Technology in Achieving Financial Inclusion in Rural India. Procedia Economics and Finance.
iii. Dr. Nagaraja. S & Dr. Pallavi. S. Kusugal (2013, July 7), Financial Inclusion and Rural Development, Global Research Analysis
iv. Ashima Thapar (2013, June 6), A Study On The Effectiveness Of The Financial Inclusion Program In India, VSRD International Journal of Business and Management
Research.
v. Dr.A.Tamilarasu (2014, February), Role of Banking Sectors On Financial Inclusion Development In India, Galaxy International Interdisciplinary Research Journal.
vi. Dr Sabita Mahapatra (2013, December), Feasibility Study of Integrated Banking Product for the Rural Poor in India, IJMT.
vii. Dr. Bedabrat Saikia, Ms. Farah Hussain, Ms. Tilottama Bora, Ms. Parijat Bora (2013, May), Financial Inclusion: An Overview In Rural Economy Of Assam, IJMT.
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x. Dr. Devendra & G. Bhave (2014), A Study of Development towards Financial Inclusion in India, Journal of Commerce & Management Thought.
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xii. S. Mahendra Dev (2006, October 20), Financial Inclusion: Issues and Challenges, Economic and Political Weekly
xiii. Hema Gwalani & Shilpa Parkhi (2014), Financial inclusion - Building a success model in the Indian context, Procedia - Social and Behavioral Sciences.
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xv. Pallavi Gupta & Bharti Singh (2013, August), Role of Literacy Level in Financial Inclusion in India: Empirical Evidence, Journal of Economics, Business and
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xvi. K. G. K. Subba Rao (2007, Feb 9), Financial Inclusion: An Introspect, Economic and Political Weekly.
xvii. FICCI, Promoting Financial Inclusion,
(http://www.undp.org/content/dam/india/docs/promoting_financial_inclusion_can_the_constraints_of_political_economy_be_overcome.pdf)
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xxi. Canara Bank (2013, June), Canara Bank’s Initiatives Under Financial Inclusion (http://www.canarabank.com/Upload/English/Content/FI%20Initiatives%20-
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16. Thank You
Presented By:
Uday Pratap, N024
Parishi Shah, N035
Ambuj Soni, N042
SVKM’s Narsee Monjee Institute of Management and Studies,
Mukesh Patel School of Technology Management & Engineering,
Vile Parle (W), Mumbai