Financial Inclusion Research Paper

5485 Words22 Pages
Financial inclusion and economic growth
Abstract
The era is of inclusive growth and for developing nations the crux for inclusive growth is financial inclusion. Finance has become an important part of an economy for development of the society as well as economy of nation. For, this purpose a strong financial system is required not only in under-developed countries and developing countries but also developed countries for sustainable growth. When financial services are delivered at affordable costs to the low income and disadvantaged groups of society it can be termed as financial inclusion or inclusive financing. There have been many dreadful disputes regarding the area of financial inclusion such as bringing the groups of society that are
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The financial inclusion term was first time used by British lexicon when it was found that nearly 7.5 million persons did not have a bank account. But financial inclusion concept is not a new one in Indian economy. Bank Nationalisation in 1969, establishment of RRBs and introduction of SHG- bank linkage programs were initiatives taken by RBI to provide financial accessibility to the unbanked groups. According to committee on Financial inclusion headed by Dr. C. Rangarajan defined financial inclusion 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.” Financial inclusion does not stand for delivery of financial services for all at all cost. But it means that the delivery of financial services and products at affordable costs of excluded sections of population and low income groups. It plays a crucial role to remove away the poverty from the country. Financial inclusion is to provide equal opportunities to vast sections of population to access mainstream financial services for better life, living and better income. It provides path for inclusive growth. Financial inclusion can be described as the provision of affordable financial services, viz saving, credit, insurance services, access to payments and…show more content…
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. 2. Sound institutions, guided by appropriate internal management systems, industry performance standards, and performance monitoring by the market, as well as by sound prudential regulation where required 3. Financial and institutional sustainability as a means of providing access to financial services over time 4. Multiple providers of financial services, wherever feasible, so as to bring cost-effective and a wide variety of alternatives to customers (which could include any number of combinations of sound private, non-profit and public providers). There has been a many objectives related to the need for financial Inclusion such as • Economic Objectives: For the equitable growth in all the sections of the society leading to a reduction of disparities in terms of income and savings the financial inclusion can serve as a boom for the underdeveloped and developing nations. • Mobilisation of Savings If the weaker sections are provided with the facility of banking services the savings can be mobilised which is normally piled up at their households can be effectively utilised for the capital formation and
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