This document discusses financial inclusion in India. It defines financial inclusion as ensuring access to financial services for vulnerable groups at affordable costs. It outlines various definitions of financial inclusion from organizations like ADB, UN, and the Rangarajan Committee. It discusses the historical perspective of financial inclusion in India since the 1950s. It notes that while access to financial services has increased, 100% inclusion has not been achieved. The document reviews several studies on topics like the level of inclusion in various Indian states and cities. It discusses the need for financial inclusion to promote equitable growth, poverty eradication, and sustainable livelihoods. Finally, it outlines the research methodology used in a case study on financial inclusion in an Indian village.

1. Assistant Professors
Taranpreet Kaur
Surinder Kaur
Praveen Kumar Bhatt
Ginni Syal
Priti Soni

2. Introduction
 Financial inclusion is new paradigm of economic growth
which plays a major role in driving away the poverty. Lack of
access to financial services in most of rural areas due to high
informative barriers and low awareness, poor functioning of
financial institutions, near absence of insurance and pension
service create the need and scope of financial inclusion.
 Even after 70 years of independence, a large section of Indian
population still remain unbanked. Fruits of development
have hardly reached to nearly half of Indian population
because no access to loan and insurance and this raises most
pertinent issue of financial inclusion.

3.  It is a policy of involving a wider section of
population deposit mobilization and credit
intermediation. Financial inclusion refers to
delivery banking services to masses including
privileged and disadvantaged people at an
affordable terms and conditions. It not only
enhances overall financial intensity of agriculture
but also help in increasing rural non-farm
activities which lead to development of rural
economy and improve economic condition of
people.

5. Definitions of Financial Inclusion
ADB 2000 Provision of a broad range of financial services such as
deposits, loans, payment services, money transfers and
insurance to poor and low income households and their
micro enterprises.
United Nations 2006 A financial sector that provides access to credit for all
‘bankable’ people and firms, to insurance for all
insurable people and firms and to savings and payment
services to everyone. Inclusive finance doesn’t require
that everyone who is eligible to use each of the services,
but they should be able to choose to use them if desired.

6. (The Committee on Financial
Inclusion, Chairman: Dr. C.
Rangarajan). 2008
• Financial inclusion may be defined as
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
World Bank 2008 Broad access to financial services implies
an absence of price and non price barriers
in the use of financial services: it is
difficult to define and measure but access
has many dimensions.

7. Financial Services includes
Savings
Credit
Insurance
Remittance facilities etc.

8. Historical Perspective
 1954 : All-India Rural Credit Survey Committee report -
suggested Multi-agency approach for financing the rural and
agricultural sector;
 1963 : Formation of Agricultural Refinance Corporation
 1969: Nationalization of 14 major Private Banks – The flow
of agricultural and rural credit witnessed a rapid increase
 1972–Mandatory system of Priority Sector Lending (PSL)
 1975 : Establishment of RRBs
 1980 : Nationalization of 6 more private banks
 1982 : Establishment of NABARD through the transfer of
RBI’s agricultural credit department Provision of bank credit
under Govt. Sponsored Subsidy Schemes Linking
Agricultural Credit Targets at 18% with individual bank’s net
bank credit

9. Historical Perspective Cont…
 1990–Implementation of the concept of Village level credit
planning for 15 to 20 villages allotted to each of rural, semi-urban
and urban branches of PSBs and RRBs under Service Area
Approach
 Formulation of potential linked credit plan for each district
annually by NABARD
 Agricultural Debt Relief Scheme and Financial Sector Reforms
 SHG-Bank Linkage as the most suitable model in Indian context
a/c to NABARD
 2000-Reforms sharply focused on Agricultural credit
 Doubling the flow of agricultural credit – implementation of
agricultural credit package

10. Why Financial Inclusion
 Directive Principles – equal opportunities
 Inclusive growth
 Economic development
 Social development
and
 Business opportunity

11. Review of Literature
 Tejani Rachana(2010) in the article titled “Financial inclusion
and performance of rural cooperative banks in Gujrat” evaluated
in the group of 23 states for which three dimensional index of
financial inclusion has been estimated that led to Kerala with
highest value of IFI followed by Maharashtra and Karnataka.
Gujarat was lagging behind at 11th place.
 There is a significance impact of occupation on having the bank
accounts. But those who are land laborers and are doing low
level jobs do not have account.
 The researcher finally concluded that through RRB’s and PACC’s
have a good coverage but most of them are running into losses.
The wide penetration of PACC’s across the nation as well as
villages would act like a catalyst while pursuing the objective of
100% financial inclusion.

12. Cont……
 Rao, Maruti, N. & Talwar, Vishwanath (2010) in their paper
titled “Financial Inclusion in India - A Case Study of Belagavi
City” took five vulneravle areas of Belgaun City and 25
respondents from each vulnerable areas to access the level of
financial inclusion among the rural section of the society.
Further they also intended to understand the difficulties faced
by banks in the area of financial inclusion.
• The study found that majority have not opened their bank
accounts due to lack of awareness and those who have opened
are unaware of financial services offered by the banks.
• The study highlighted financial inclusion as delivery of
banking services atr an affordable prices in a fair and
transparent manner to the vulnerable sections of the society.

13. Cont…
Thimmaiah, Navitha. & Anitha, C.V (2010) in their
article titled, “Financial Inclusion and the Road Ahead”,
has taken secondary data to examine the strategies of
financial inclusion in other developing countries and its
relevance to India.
 The study concluded that still 100% financial
inclusion is not achieved in India. They found that a
concerted and structural effort by all stake-holders
multi-sector strategy and the ICT are necessary in
order to achieve 100% financial inclusion.

14. Cont….
Gowda, Kempe, G.N. & Nadeesha, H.K. (2010) in their
research paper titled, “Role of Banks in Achieving Financial
Inclusion: A Case Study of State Bank of Mysore in Mysore
District” took primary and secondary data from a sample of
200. Two taluks of Mysore district were taken.
 Their aim was to analyze different dimension of financial
inclusion and measures taken by banks for financial
inclusion in Mysore district.
 The study concluded that the state bank of Mysore
extending financial services to all the taluks in the district
but has not achieved the target to a large extent. Financial
illiteracy, time consumption, high cost, distance etc
continue to be a road block financial inclusion in many
areas.

15. Cont…
Bhatia, Shivangi & Singh, Seema (2015) in their article
titled, :Financial Inclusion: A Path to Sustainable Growth”.
 its objective of targets of banking facilities for all by the
end of 2018. Just framing the policies won’t do needful
rather supervising their implementation and devising such
mechanism which are for the ease of excluded people will
suffice the action and help in achieving the set goals.
 They concluded that India is at moderate level of financial
inclusion and thus it need to implement its policies more
efficiently and effectively so as to achieve

16. Need for Financial Inclusion
Economic Objectives Social and Political
Objectives
Equitable Growth Poverty eradication
Mobilization of savings Sustainable livelihood
Larger market for financial
system
Wider inclusion in society
Effective direction of good
programmes

17. Theoretical Frame Work
 Financial Services or products provided by banks, finance
companies, postal saving banks, credit unions, Insurance
Companies, Micro Finance Institutions and other formal
Financial Institutions generally form the basis for Financial
Inclusion.
 The financial services rendered by the informal sources
such as money lenders, traders etc. Do not come under the
preview of Financial Inclusion as they are limited in supply
and exploitative in nature.
 The formal financial institutions help in mobilizing savings
and efficient allocation of funds for development. Efficient
and well-functioning financial institutions are crucial in
channeling funds to the most productive uses and thereby
boost economic growth.

18. Theoretical Frame Work Cont….
 There are supply and demand side factors driving inclusive
growth. Banks and other financial services player largely
are expected to mitigate the supply side processes that
prevent poor and disadvantage social group from gaining
access to financial system.
 Access to financial products is constrained by several
factors which include lack of awareness about the financial
products, unaffordable products, high transaction costs
and products which are not convenient, in flexible , not
customized and are of low quality.
 Financial inclusion promotes thrifts and develops culture
of saving and also enables efficient payment mechanism
strengthening the resource base of financial institutions
which benefits the economy as a whole.

19. Dimension of Financial Inclusion
1. Penetration
- Per cent of all households that use services
- Per cent of households living in rural with no banking
facilities
2. Affordability
- Costs to use service
- Minimum requirement (for opening account)
-fees associated with service
3. Convenience
- Days to complete transaction.
- Documents required.

20. Rationale of Study
 Majority of world population do not have access to
formal financial services. The policy makers
recognized the fact that the potential of rural India
should not be under estimated.
 The banks have to play dual role in rural areas to
institutionalize the rural savings for development
activities as a part of commercial banking. Then the
help in the social up-liftment of the poor as a part of
social banking.
 The present study is an attempt to study the extent of
financial inclusion among the people of Village Majri.

21. Research Methodology
The main instrument for the collection of primary data was set of structures
questionnaires.
Door to door survey was conducted from 72 individual household members.
Information on age, sex, marital status, relationship to the head of the
household and education was collected. Information was also collected on
religion, caste and ownership of land and the main occupation.
The questionnaire was mainly designed to collect information on the status of
deposit bank accounts of the family and also the cost associated in accessing
the banking services outside the village. Further, questions were asked on the
core banking services availed by the people of village Majri.
The sample was selected by administering convenience sampling technique.

22. Majri Village
Majri is a village panchayat located in the Rupnagar
district of Punjab state,India. Chandigarh is the state
capital for Majri village. It comprises of 116 villages .
The total population of this village is 111,598 as per 2001
census. The population in rural area is 88551, out of
which 47,892 are males and 40,659 are female.
The Scheduled Caste population in rural area is 25,531.

23. Majri Village Cont…..
Kurali is the only town in the block and has population of
23,047. All the villages numbering 116 have been allocated
among 8 branches of commercial banks and one branch of
Punjab Gramin Bank.
There are 16 branches operating in this block which
comprises 9 branches of commercial banks. 1 Pvt. Sector
Bank, One branch of PGB and SAS Nagar central co-operative
bank is having 5 branches.
Due to certain incentives being initiated by the Govt. many
large and small-scale industrial units have been established
around Kurali. The native language of Majri is Punjabi.. Majri
people use Punjabi language for communication.

24. Objectives of the study
 To assess the socio-economic status of the respondents
of Majri village.
 To identify the factors affecting the extent of financial
inclusion among vulnerable section of majri village.
 To check the association between economic category
and type of bank account opened by people of village
majri.

25. Techniques Applied
 The first objective socio economic status is analyzed
with the help of Frequency distribution Tables.
 The factor analyses technique has been applied to met
the second objective .
 Chi square test has been applied to met the third
objective.
 The hypothesis framed is as follows
Ho: There is an insignificant association between
economic category and opening of bank account among
people of majri village.

26. Analysis of the Data
The tables below shows the
frequency distribution of
socio-economic status of majri
village

27. Table below shows the frequency
tabulation of various categories
Category Frequency percentage Category Frequency percentag
e
Gender Religion
Male 28 38.9 Hindu 31 43.1
Female 44 61.1 Sikh 36 50.0
Education Muslim 5 6.9
illiterate 19 26.4 Category
primary 15 20.8 General 33 45.8
Upto matric 24 33.3 SC 34 47.2
graduation &pg 14 19.4 OBC 5 6.9
Occupation Economic
Category
agri&allied 11 15.3 APL 42 58.3
services 21 29.2 BPL 24 33.3
nonworkers 24 33.3 AAY 6 8.3
household 16 22.2

28. Type of Account
Frequency Percent
Valid saving 67 93.1
no frill 2 2.8
FD 3 4.2
Total 72 100.0
67
2 3
72
93.1
2.8 4.2
100.0
saving no frill FD Total
Valid
Chart Title
Type of Account Frequency Type of Account Percent

29. The table below shows the
awareness of Direct Bank
Transfer(DBT) and benefit received
from DBT.

30. Direct Benefit Transfers
Frequency Percent
Valid yes 56 77.8
no 16 22.2
Total 72 100.0
56
16
72
77.8
22.2
100.0
yes no Total
Chart Title
dbt Frequency dbt Percent

31. GAS Subsidy
Frequency Percent
yes 37 51.4
no 35 48.6
Total 72 100.0
37 35
72
51.4 48.6
100.0
yes no Total
Chart Title
gas Frequency gas Percent

32. pension
Frequency Percent
yes 20 27.8
no 52 72.2
Total 72 100.0
20
52
72
27.8
72.2
100.0
yes no Total
Chart Title
pension Frequency pension Percent

33. MGNREGA
Frequency Percent
yes 8 11.1
no 64 88.9
Total 72 100.0
8
64
72
11.1
88.9
100.0
yes no Total
Chart Title
mgnrega Frequency mgnrega Percent

34. Factor Analysis
 To identify the factors affecting the extent of financial
inclusion among vulnerable section of majri village
 KMO has been computed to measure sampling
adequacy. KMO with .633value, showed data has been
sufficient to proceed with the factor analysis

35. Factor table
Component
Socio-Economic
Status Support System Obstacles Use of Account Type of Account
Economic
Category
.797
Religion .776
Caste .612
Occupation .560
Education -.546
Who Facilitates .880
Purpose .707
Problems .841
Distance .503 .528
Purpose Of
Saving Account
.795
DBT .469 .539
Type of Account .864

36. Interpretation..
 The five factors have been identified which affect the
extent of financial inclusion among people of majri village.
These factors are named as Socio-economic Factors,
Support System, Obstacles, Use of accounts and type of
accounts.
 The first factor variance of 21.56%, which shows that this
factor highly affect the extent of financial inclusion in the
village majri, followed by factor 2 support system with
variance explaining 14.14% influence, factor 3 Obstacles
with variance 9.92%, factor 4 Use of accounts with variance
9.48% and factor 5 with variance 8.496%.

37. Contd…
 Soci0-Economic status factor comprise of variables economic category,
occupation, religion, caste and education. It has been observed that
government has given various aids to the rural people like MNREGA,
SHG in collaboration with banks. This would encourage people to open
accounts in bank and avail the facilities and services provided by the
banks.
 Second factor named Support System explains that people get
motivated if they have help of their known who help them in opening a
bank account.
 Third factor named obstacles also determines the extent of financial
inclusion. Hurdles like distance, time, financial literacy hinders the
growth of banking services in the rural areas. Obstacles have negative
influence on the growth of financial inclusion in the vulnerable section
of village.

38. Contd…
 Use of account forms the fourth factor. People can get
the benefit of direct benefit transfer to there account
the money of pension gas subsidy and MGNREGA
wages. It has led to transparent transfers of money.
 Last factor type of account opened also helps in
increasing the access of financial services provided by
banks. People can easily avail loans from the banks for
commercial purpose and creating assets.

39. Chi Square- the table below shows us that people of all
economic categories prefer to open bank account.
Economic Category * Type of Account Crosstabulation
Type of Account
Totalsaving no frill FD
Economic
Category
APL Count 39 1 2 42
% within Economic Category .9 .0 .0 1.0
% within Type of Account .6 .5 .7 .6
% of Total .5 .0 .0 .6
BPL Count 22 1 1 24
% within Economic Category .9 .0 .0 1.0
% within Type of Account .3 .5 .3 .3
% of Total .3 .0 .0 .3
AAY Count 6 0 0 6
% within Economic Category 1.0 .0 .0 1.0
% within Type of Account .1 .0 .0 .1
% of Total .1 .0 .0 .1
Total Count 67 2 3 72
% within Economic Category .9 .0 .0 1.0
% within Type of Account 1.0 1.0 1.0 1.0
% of Total .9 .0 .0 1.0

40. this table shows the results of the "Pearson Chi-Square" row. We can see here that
χ(1) = 0.679, p = .954. This tells us that there is no statistically significant
association between Gender and Preferred Learning Medium; that is, both Males
and Females equally prefer online learning versus books.
Chi-Square Tests
Value df
Asymp. Sig. (2-
sided)
Pearson Chi-Square .679 4 .954
Likelihood Ratio 1.072 4 .899
Linear-by-Linear
Association
.195 1 .659
N of Valid Cases 72

41. Phi and Cramer's V are both tests of the strength of
association. We can see that the strength of
association between the variables is very weak.
Symmetric Measures
Value Approx. Sig.
Nominal by Nominal Phi .097 .954
Cramer's V .069 .954
N of Valid Cases 72

42. The results of chi square shows that there is an insignificant association
between economic category and opening of bank account among people of
majri village as value of pearson chi square has found to be insignificant. This
shows that the income of people has no influence on opening of account.
People open account as a result of saving, pension, gas subsidy and availing
services of direct benefit transfers.

43. Finding of the study
 As majority of the respondents have opened bank
accounts but are not aware about the financial services
provided by banks. Majority of respondents who have
opened bank accounts but are unaware of the core
banking services offered by the banks such as ATM
cum debit card, Credit card, net banking, insurance
schemes, bill payments and SMS facility.

44. Findings cont…..
 The accessibility of banking services has been poor on
account of various constraints such as distance, no
money to save and difficult to understand banking
services.

45. Suggestions and
Policy Recommendations
 The need of the hour is therefore the banks in majri
village should organize financial literacy programmes
for the benefit of vulnerable sections of the society.
This may help in creating awareness among the
vulnerable groups.
 Bank should appoint business correspondent to
disseminate its service to the unreached area.

46.  It is suggested that financial literacy can be organized
to educate bank -holders.
 The government should include financial literacy in
the curriculum of school and colleges.
 Government should pay all the social security
payments through the bank of the beneficiary.

47. Conclusions
 Financial inclusion and infrastructure should go hand
in hand for all round development of vulnerable
section of the society in order to ensure that they
should have access to education information and
insurances apart from financial services.
 Financial services should channelize through
increasing marketing operations thereby, increasing
banking habits among rural household.
 Financial literacy, time consumption, high cost,
distance etc continue to be a road block to financial
inclusion in many areas.

48. TOGETHER WE CAN
AND
WE WILL - - -!