FINANCIAL INCLUSION
FINANCIAL INCLUSION IN INDIA
Even after 60 years of independence, a large section of Indian population still remains unbanked. This malaise has led generation of financial instability and pauperism among the lower income group who do not have access to financial products and services. However, in the recent years the government and RBI have been pushing the concept and idea of financial inclusion.
WHAT IS FINANCIAL INCLUSION?
Financial inclusion is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups.
WHY FINANCIAL INCLUSION IN INDIA IS IMPORTANT?
The policy makers have been focusing on financial inclusion of Indian rural and semi-rural areas primarily for three most important pressing needs:
1. Creating a platform for inculcating the habit to save money to make the lower income category free from the constant shadow of financial duress and to move away them from traditional modes of parking their savings in land, buildings, bullion etc.
2. Providing formal credit avenues so that they do not depend on informal credit channels i.e. family, friends and moneylenders. This channelization of money will help in prosperity of financial condition of the country.
3. Plug gaps and leaks in public subsidies and welfare programmes: as a considerable sum of money that is meant for the poorest of poor does not actually reach them. While this money meanders through large system of government bureaucracy much of it is widely believed to leak and is unable to reach the intended parties. Government is therefore, pushing for direct cash transfers to beneficiaries through their bank accounts rather than subsidizing products and making cash payment.
STEPS TAKEN BY RBI TO SUPPORT FINANCIAL INCLUSION.
RBI set up Khan Commission in 2004 to look into financial inclusion and the recommendations of the commission were incorporated into the mid-term review of the policy (2005-06) and urged banks to review their
Even after 60 years of independence, a large section of Indian population still remains unbanked. This malaise has led generation of financial instability and pauperism among the lower income group who do not have access to financial products and services. However, in the recent years the government and RBI have been pushing the concept and idea of financial inclusion.
WHAT IS FINANCIAL INCLUSION?
Financial inclusion is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups.
WHY FINANCIAL INCLUSION IN INDIA IS IMPORTANT?
The policy makers have been focusing on financial inclusion of Indian rural and semi-rural areas primarily for three most important pressing needs:
1. Creating a platform for inculcating the habit to save money to make the lower income category free from the constant shadow of financial duress and to move away them from traditional modes of parking their savings in land, buildings, bullion etc.
2. Providing formal credit avenues so that they do not depend on informal credit channels i.e. family, friends and moneylenders. This channelization of money will help in prosperity of financial condition of the country.
3. Plug gaps and leaks in public subsidies and welfare programmes: as a considerable sum of money that is meant for the poorest of poor does not actually reach them. While this money meanders through large system of government bureaucracy much of it is widely believed to leak and is unable to reach the intended parties. Government is therefore, pushing for direct cash transfers to beneficiaries through their bank accounts rather than subsidizing products and making cash payment.
STEPS TAKEN BY RBI TO SUPPORT FINANCIAL INCLUSION.
RBI set up Khan Commission in 2004 to look into financial inclusion and the recommendations of the commission were incorporated into the mid-term review of the policy (2005-06) and urged banks to review their