Financial Inclusion in India -a Challenging Task Ahead

Financial Inclusion in India: A Challenging Task Ahead.

¹ S.Vinoth, ² P.Poornimadevi & ³ Buvaneswari

¹ Assistant Professor, ²& ³ PG Students – MBA RVS Institute of Management Studies & Research, Sulur, Coimbatore- 641 402. vinoth@rvsgroup.com

ABSTRACT: In India the focus of the financial inclusion at present is confined to ensuring a bare minimum access to a savings bank account without frills, to all. Especially, the delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups. The benefits of economic growth have not equitably reached different parts of our country. The rural and agricultural sector, in particular, has not gained the desired momentum of growth and development. Financial inclusion rests on three pillars viz., access to financial services, affordability of such services and actual utilization of such services. Financial inclusion can be achieved only if all the three pillars show affirmative results. In India, there are approximately 400 million people in nearly six million villages and semi-urban areas are waiting for small loans and other banking services. There is scope for lending Rs.45,000 Crores to these people. Against this potential, only about 20 million have been served so far by the organized financial sector, with total disbursements of about Rs. 3,900 Crore.

¬¬¬¬¬INTRODUCTION

Financial inclusion is the availability of banking services at an affordable cost to disadvantaged and low-income groups. In India the basic concept of financial inclusion is having a saving or current account with any bank. In reality it includes loans, insurance services and much more. The first-ever Index of Financial Inclusion to find out the extent of reach of banking services among 100 countries, India has been ranked 50. Only 34% of Indian individuals have access to or receive banking services. In order to increase this number the Reserve Bank of India had the Government of India take innovative...