Concept
Financial inclusion is the process of delivering financial services to the segment of the society till now deprived of the same. In the broad sense, it aims at offering affordable financial services to the disadvantaged section of the population.
Also known as Financial Literacy, this idea gained attention since the early 2000s when United Nations found a direct correlation between financial exclusion and poverty. They describe banking service as a public good and that’s why it must be available to all without discrimination.
According to World Bank statistics, as of April 2015, around 2 billion people in the world are financially excluded. Not surprising that the majority of this population is living in developing and underdeveloped countries. And in most cases, the primary reason is the cost associated with maintaining an institutional financial account.
Objectives
The basic goals of financial inclusion are defined as:
- Offering access to a broad spectrum of financial service at affordable cost
- Creating regulated and standardized financial institutions
- Ensuring sustainable and safe investments
- Allowing enough competition to offer choice to the users
Indian scenario
Assuming office PM Modi promised a Comprehensive Financial Inclusion Plan with highly ambitious scopes. Initiatives have started in the form of Pradhan Mantri Jan-Dhan Yojana which includes something more than simply opening new bank offices in unbanked areas.
RBI has taken steps by licensing payment banks and small banks to reach the remote and rural population of the nation. The good news is that emphasis has now shifted to simplifying the banking procedures and using the latest technology to achieve the goal.
India has assumed a status of a fast developing economic entity in the world. Still 44% of rural households and 33% of urban households don’t have a bank account. If the planned schemes are really implemented it will be a win-win situation for all – banks, NBFCs, intermediaries and definitely the unbanked population of India.
