Pros And Cons Of Financial Inclusion

S MAHENDRA DEV (2006) says that even after nationalization of banks in 1969 and large development in financial sector, many areas are still there which do not have access to these facilities. P Chidambaram and C Rangarajan in 2005-06 tried to focus on these areas of financial inclusion. Some of the factors of financial inclusion that the author has reported are credits to farmer households, credits for small and marginal farmers etc. this arises the need for the separate financial institution for creating the awareness among people about the financial services. The author here has thrown light on public investment in irrigation, research and extension, infrastructure in rural areas, proper seeds and fertilizers, a good marketing system for

RAM A. CNAAN, M. S. MOODITHAYA and FEMIDA HANDY (2012) considers financial inclusion as the complete process from opening an account in the bank to availing all the current and upcoming facilities through the banks. The authors state financial exclusion is the process of not being able to access and avail the facilities provided to the people. They consider poverty and income disparity as the major factors for financial exclusion. they have identified different types of financial exclusion such as the ones caused when the conditions attached to the procedure are unacceptable to the customers, the ones where the prices are too high for the people to spend on such products, the ones where the people decided not to apply further due to past rejections etc. thus they found out two approaches to measure financial inclusion and exclusion (Beck and De la Torre, 2006). First being to calculate bank accounts as per population and secondly survey carried out among the particular sectors. In the very same year another scholar named Dr. Christabell & Raj (2012) said that microfinance can be a concept or strategy on which world believe to extends saving and credit to the poor. The concept is

They argue that access to all essential financial services is considered to be financially included instead of jut few services. They further add on that the problem of financial exclusion is not only restricted to India, it’s a problem faced by the world. India has adopted multiple means from around the world for achieving financial inclusion. They are very well convinced by the fact that financial inclusion and economic development are interrelated. Inclusive growth poverty reduction efforts can be accelerated by creating economic opportunities and plan their routine expenses more efficiently and effectively. They further add on by saying that roots for financial inclusion were laid down in 1969 but it got attention and pace only in 2005. Financial exclusion is mainly related to poverty, financial illiteracy, unavailability of banking and other financial services, lack of faith in banking system, complex process and procedures in availing the services. However many different models were devised by RBI and GOI for achievement of financial inclusion. Few of the models are lead bank system, correspondent banking, banking on mobile, and microfinance model. Various other efforts include the schemes of no-frills account in banks, introduction of general purpose credit card, provision for UID.