Authors

1. Prof. Punam Mishra
2. Prof. Ritika Gauba

Affiliation

• Professor FMS-IRM Jaipur
• Professor FMS-IRM Jaipur

Abstract

The term “Financial Inclusion” has gained importance since the early 2000s, and is a result of findings about financial exclusion and its direct correlation to poverty. According to Rangarajan’s committee on financial inclusion, “Financial inclusion may be defined 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”.
A well-developed financial system brings poor people into the mainstream of the economy and allows them to contribute more actively to their personal economic development. In India 47 % of the population does not have access to any kind of financial services therefore in an attempt to improve access to this service the Reserve Bank of India (RBI) promulgated a drive for financial inclusion, where banks take the lead in providing all ‘unbanked’ households in a district, with savings accounts.
In the context of banks, financial inclusion is spreading of banking activities among different sections of the population. A significant part of bank credit in countries like India should be directed towards priority sectors such as agriculture and economically backward sections of the country. It is also necessary to ensure that persons belonging to low income groups do not face any difficulty in opening bank accounts because of procedures involved in the process.
The issue of financial inclusion is especially important today as India’s rural economy has shifted towards more commercialized agricultural and non-agricultural activities, both of which require banking facilities. The evidence on financial inclusion is mixed. The situation is not as poor as has been asserted in recent analyses. There appears to be relatively healthy access to secure formal facilities for savings, but access to credit in rural areas has not grown as might be expected. In particular, resort to informal sources for credit has increased for emergency and consumption purposes. Improvement in financial inclusion will help the further development of India’s financial system and accelerate economic growth.
The paper attempts to analyze & discuss the work done towards financial inclusion by various institutions in India & its importance & implications for the Indian economy. The paper also provides pointers to what can be done to increase inclusion as an important component of India’s overall economic growth strategy.

Keywords

Financial Inclusion , Self Help Groups, , Micro Finance Institutions

References

1. http://www.indianexpress.com/story/18680.html
2. http://economictimes.indiatimes.com/RBI_asks_banks_to_offer_credit_through_no-frill_accounts/articleshow/3477102.cms
3. http://planningcommission.nic.in/reports/genrep/rep_fr/cfsr_all.pdf
4. http://www.nabard.org/report_ comfinancial.asp
5. Tiwari, Ravish (2006). “Micro-finance Bill referred to GoM after objections”, The Indian Express, Dec 16.
6. “Report of the Committee on Financial Inclusion”, Chaired by Dr. C. Rangarajan, January 2008.
7. “RBI asks banks to offer credit through no-frill accounts”, The Economic Times. 12 September 2008.
8. “How Indian Earns, Spends and Saves”, Max New York Life – NCAER India Financial Protection Survey (2007).
9. Das, V (2006). “Financial Inclusion Initiatives” Innaugural Address for delivered at the ‘National Conference on Financial Inclusion and Beyond: Issues and Opportunities for India’. September 19-20, 2006, Cochin.
10. Basu, Priya (2005). “A Financial System for India’s Poor”, Economic and Political Weekly, September 10, 2005. pp. 4008 – 4012.