What Is Financial Inclusion

Financial Inclusions

Strong financial institutions provide a platform for the smooth functioning of a country and also to maintain its economic growth. In order for a country to grow from strength to strength, it is truly essential that the banking sector envelopes all the population of the country, from the richest of the rich to the very poor. The participation of the economically backward is very vital for the prosperity of a country. We believe financial inclusion is a path, which India needs to tread towards to help her gain a stand in the global environment. The introduction of Legislation towards Financial Inclusion is one of the key measures towards this step. World over, countries have taken measures to include the financially weaker

Only 55% of India has a deposit account and less than 9% have credit accounts. In terms of debit cards, the percentage is a paltry 18% and for credit cards , it is 2%.

The aim of Financial Inclusion is to broaden the scope of the financial system to include even those with very low income. This process ensures that the financial system is easily available, easily accessible and is usable by all members of an economy.

The Center for Financial Inclusion proposes a multi-dimensional definition of Financial Inclusion as ‘Full Financial Inclusion is a state in which all people who use them have access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, and with dignity for the clients. Financial services are delivered by a range of providers, most of them private, and reach everyone who can use them, including disabled, poor, rural and other excluded populations.’

Importance of Financial Inclusion

In a country like India, where more than half the population is unbanked, the need for financial inclusion is very high. The situation can be improved with the aid of community led projects that can help improve the standard of living of poor farmers, rural non-farm enterprises and also other susceptible groups of the

PRODUCT INITIATIVES

The ‘No Frills Account’ (NFA) is a product initiative to provide financially underprivileged individuals to access banking services for savings and NFA also provides the facility of overdraft. General Credit Card is another innovative product offered .

Nowadays, more and more people in rural areas are looking towards banks for insurance products. However, very few of these are readily available to the poor sections of the society. One reason could be the transaction costs, as from a banker’s point of view it is simply not feasible to write policies with values below a certain limit.

Currently only insurance agents, banks, MFIs, NGOs and SHGs are permitted to sell micro-insurance policies and the BC is allowed only to offer cash transaction services to customers. BCs can be used to increase the reach of micro-insurance.

PRESENT SCENARIO OF FINANCIAL INCLUSION

In 2010, SCBs adopted Financial Inclusion Plans (FIPs) containing targets for three years. Under 2013, banks completed three years following the plans and the findings are listed in table