This document discusses financial inclusion in India, including its definition, origins, need, challenges and progress so far. Financial inclusion refers to access to financial services at affordable costs for all households and businesses. It originated from bank nationalization and establishment of regional rural banks. Financial inclusion is needed to ensure balanced economic growth and enable rural poor access to services. However, it faces challenges like technical issues in covering a large population, lack of infrastructure in rural areas, and the need for training bank employees. While progress has been made through various government initiatives, more efforts are still needed for India to achieve full financial inclusion.

1. FINANCIAL INCLUSION-ISSUES AND
CHALLENGES
PRESENTED BY
S.KRISHNAN
S.CHAKKARAVARTHI
I B.COM STUDENTS
SRI KRISHNA ARTS AND SCIENCE COLLEGE

2. FINANCIAL INCLUSION-DEFINITION
• The United Nations :
“Access at a reasonable cost of all households and enterprises to the
range of financial services for which they are “bankable,” including savings,
short and long-term credit, leasing and factoring, mortgages, insurance,
pensions, payments, local money transfers and international remittances.”
• Rangarajan Committee on 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.’’

3. ORIGINS OF FINANCIAL INCLUSION
• Can be traced back to bank nationalization
• Further recognition with establishment of RRBs.
• Realization by banks , of the enormous business potential involved.
• Increased awareness about poverty alleviation, a related concept.
• Advent of Self-help Groups

4. NEED FOR FINANCIAL INCLUSION
• To ensure geographically balanced economic growth.
• Enabling access by the rural poor to formal financial and other
services.
• Making India financially literate.
• Lifting rural households out of social neglect.

5. CONSEQUENCES OF FINANCIAL
EXCLUSION
• Only 34% of India’s population has access to financial services.
• Farmers forced to resort to moneylenders due to continued neglect
by banks
• Farmer suicides due to inability to repay loans
• Has resulted in Financial Discrimination, Financial Illiteracy and
Financial Exploitation

6. CHALLENGES IN FINANCIAL INCLUSION
• Technical challenges
• Infrastructural challenges
• HR challenges
• Other challenges

7. TECHNICAL CHALLENGES
• Enormity of the Task-- covering the huge population under the
umbrella of financial services
• Dilution of KYC norms--recipe for fraud.
• Numerous Small Value Transactions-strain on bank resources.
• Need for designing products suitable for Rural Poor—Going beyond
mere “No Frills” Accounts

8. INFRASTRUCTURAL CHALLENGES
• Massive changes in technical and physical infrastructure
• Mammoth amount of manpower involved
• Upgradation of digital infrastructure
• Huge costs involved to Government and financial institutions.

9. HR CHALLENGES
• Sensitizing bank employees and others as to their role-rural
Attitudinal Training
• Mass Financial Literacy Campaign for rural people’s benefit
• Calls for strong political will to ensure sincere implementation
• Massive training required in the IT and banking sectors

10. OTHER CHALLENGES
• Ensuring Safety of transactions made through Kisan Credit Cards
• No proper ID system for rural people
• Absence of financial products to suite the rural poor
• Inadequacy of Credit Disbursal

11. PROGRESS SO FAR
• Has not been uniform
• More initiatives needed by Government, in collaboration with all
stakeholders concerned
• Setting up of Financial inclusion fund and Financial inclusion
technology fund
• Estimated 5,00,000 jobs being created in various sectors, including
those of Business Correspondents/Facilitators

12. PLANS FOR THE FUTURE
• RBI’s Vision—600 Million New Bank Customers by 2020
• A fully financially connected India
• Reduced dependence on cash transactions
• Transactions through UID- enabled ATMs
• Reduced transaction costs

13. CONCLUSION
• Economic growth is a by-product of Financial Inclusion
• Financial inclusion rectifies Social and Economic Imbalances due to
current lopsided growth of economy
• Primary internal growth engines of our country are the poor,
waiting to be financially included.
• We can boast of development, only when every villager in the most
remote area of the country has access to the entire gamut of
financial services , as enjoyed by his urban counterpart

14. “Poverty is not merely insufficient income, but
rather the absence of wide range of capabilities,
including security and ability to participate in
economic and political systems”—Amartya Sen

15. Thank You