Financial Inclusion


Pradeep Raj. S
MBA Student
AMC Engineering College
18th KM, Bannerghatta Kalkere, Bangalore-560083

"One of the greatest problems of our time is that many are schooled but few are educated"
                                                                                                                                               - Thomas Moore


Banking the with the people who are without its services is the true test of banking industry in our country at present ,just about 45% of the Indian population have access to bank accounts, and there was a low ratio of one bank branch for 16000 people. The number of branch for per lakh of population was 6.33 this march 2010.In India eastern part of country is still not having much growth in the banking and financial sector causing economic imbalance in the countries overall economic development. Banking inclusion is the core business activity of increasing monetary development to match the sustainable development of the country therefore "Inclusive economy" needs strong banking sector development in all regions of the country.

Keywords:   Financial Inclusion, National Pilot Project for Financial Inclusion. Inclusive Economy, Banking Inclusion.


After the year 2004 and 2005 the idea of financial inclusion has a long distance to achieve its overall success according to the data from the National Sample Survey Organization 45.9 million farmer households out of total of 89.3 million do not access credit.

Reserve Bank of India studies show that only 54% adult in India have a bank account and of the 431 districts targeted for achieving 100% financial inclusion in 2006 only 204 have been successful.

At present, just about 45% of the Indian population has access to bank accounts, and there was a low ratio of one bank branch for 16000 people. The number of branch for per lakh of population was 6.33 this march 2010.

All these figures show that there is a need for strong banking inclusion in India in upcoming years to achieve economic development with strong "Inclusive Economy".

Meaning and Definition of Financial Inclusion

"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." --- (C Rangarajan)

Financial Inclusion refers to expanding access to financial services, such as payments services, savings products, insurance products, and inflation-protected pensions to every individuals of the country. (Raghuram Committee on   Financial Sector Reforms [CFSR])

The concept of Financial Inclusion

Banks are for people with the money hence poor are unbankables they are outside the banking and financial sector with lack of opportunities for financial products and services and increasing poverty and lack of awareness and financial illiteracy creating opportunities for unorganized banking sector s of indigenous bankers, money lenders ,chit funds and pawn brokers who often use the financial illiterate population to satisfy their own ends of wealth creation, at the economy at large it creates unequal distribution of wealth and income and other socio-economic imbalances in various parts of the country therefore there is a need for systematic organized banking system in these rural areas catering the needs of agriculturist, self help groups, low income groups and local entrepreneurs were tremendous potential with wide opportunities for banking business activity and growing into Inclusive economy and promoting the socio-economic development for all the common individuals for achieving balanced regional development of the country.

Need for the Financial Inclusion

1. Physical distance
At present one bank branch caters the needs of 16000 people which is low according to the  requirement of our country

2. Mutual disbelief  The poor people are not bankable; on other side they have a pessimistic view that banks and other Financial institutions are not for us

3. Lack of appropriate products/services
The common people of rural areas are not within the reach of modern financial and banking products and services offered to other parts of the economy

4. Lack of awareness, financial illiteracy
The low income group people and many agriculturalists are not aware of benefits of banking services and facilities provided to them by initiatives of government measures.

Financial Inclusion in India

Financial Inclusion ensures sustainable development of the country a majority part of eastern India where banking and financial industry area at the stages of introduction and growth there is a wide opportunity of banking the unbankables will contribute the improvement in economic activity and development of our country.

Dr.Janmejaya Sinha, chairman of the Boston Consulting Group said in his address at one of the CII conference that India is growing with a 570 million people being in the 0-25 age group who would be entering the workforce in the upcoming years their financial inclusion at this stage would be of great importance in the context of inclusive growth process and sustainable development.

As per Indian economy is concerned financial illiteracy in rural India is one of the major reason for the underdevelopment of Banking and Financial Industry therefore initiatives can be undertaken by private banking institution like identifying self help groups to utilize the banking facilities and financial products and services provided by them ,then educating rural areas customers with financial inclusion benefits by conducting financial literacy programme and encouraging people to participate in financial inclusion initiatives with monetary rewards or by providing employment opportunities for suitable competent persons of those regional districts.

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Source: E-mail December 27, 2010




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