FINANCIAL INCLUSION – NEW DIMENSION TO REACH THE UNBANKED POPULATION

Banking industry had shown tremendous growth in terms of volumes and reach in the last few decades. Ironically today, after 60+ years of Indian independence, still a large section of the population remain unbanked especially in the rural, semi-rural and remote areas of the country. As per the latest 2013 Indian Population census, the rural & semi-rural class contributes close to 35% of the total population. Lack of access has caused financial instability among the lower income groups who do not have access to financial products and services.

Despite making significant improvements in the areas relating to financial viability, profitability, competitiveness, there are concerns that banks have not been able to reach and bring vast segment of the population, especially the underprivileged sections of the society, into the fold of basic banking services.

However in the recent years, Government and RBI are pushing this concept and idea of financial inclusion to reach the unbanked population to deliver financial services at an affordable cost to these vast sections of the lower income groups. Since unrestricted access to public goods and services without discrimination is the primary objective of the public policy, and banking service is a nature of public goods and services, it is essential that there is an availability of banking and payment services to the entire population.

The move by RBI to devise a new framework for issuing bank licenses has also been greeted and to consider alternative banking models that can target the needy more effectively. Under the financial inclusion initiative many banks are offering convenient options to the weaker sections of the society. Any one in rural areas can open an account to avail the products and services.

The policy makers have been focusing hard on financial inclusion mainly in the rural and semi-rural areas due to three aspects.

  • A Platform to inculcate the habit of Saving Money for the future

  • The lower income population has always been living under the constant shadow of financial stress mainly because of the absence of saving, which makes them vulnerable to other alternate inorganic channels to raise or save money at a higher premium. Presence of banking services and products will inculcate a habit to save money and move out people from traditional modes of parking money at lenders and on land, buildings etc.

  • To provide credit avenues through Organic channels

  • So far this underprivileged population has been feebly dependent on informal channels to raise money for credit like family members, friends, money lenders, who had exploited them for higher returns on the money, rose. Availability of credit from formal banking channels shall allow the population to access money at government sponsored subsidized rates.

  • To plug the gaps & leaks in Govt. Sponsored Public subsidies to the underprivileged

  • A considerable sum of money that is meant for the underprivileged does not actually reach them. Government bureaucracy is causing some gaps and leaks and is unable to reach the intended population. Government, in collaboration with RBI is promoting financial inclusion so push direct cash transfers to beneficiaries through their bank accounts.




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