Financial Inclusion What do you think about the progress so far?

Discuss the challenges on the road

ahead.
Financial Inclusion
Financial inclusion is delivery of banking services at an affordable cost to the vast sections of
disadvantaged and low income groups.
The financial services include the entire gamut of savings, loans, insurance, credit, payments, etc.
The financial system is expected to provide its function of transferring resources from surplus to
deficit units
To achieve greater financial inclusion, financial services should reach the poor of socially excluded
groups particularly poor people private finance banks and other financial institution has played a
vital role in filling up this gap
This study helps us to know the financial inclusion position, awareness level, towards no frills
account and saving and credit behavior of the low income groups.

1. To understand the scope and coverage of financial inclusion in India.
2. To list the various measures & initiatives of state / central government with Respect to financial
inclusion.
3. To find out the implications of Indian Banks in Reaching out to the unbanked and backward Areas.
4. To evaluate & analyze the contributions of these initiatives to the Economic development of the
nation.


1. To understand the scope and coverage of financial inclusion in India.
Theories of development advocate that financial development creates enabling conditions for growth
through either a supply-leading (financial development spurs growth) or a demand-following
(growth generates demand for financial products) channel. Earlier theories of development
hypothesized that a rise in inequality was inevitable in the early stages of development. The early
literature on the subject focused on the need to develop an extensive financial system that could tap
savings and then channel the funds so generated to a wide spectrum of activities.

The modern development theory perceives the lack of access to finance as a critical factor
responsible for persistent income inequality as well as slower growth. A large body of empirical
literature suggests that developing the financial sector and improving access to finance may
accelerate economic growth along with a reduction in income inequality and poverty. Without an
inclusive financial system, poor individuals and small enterprises have to rely on their own limited
savings and earnings to invest in their education and entrepreneurship to take advantage of growth
opportunities (World Bank, 2008).
In an underdeveloped financial system, certain segments of the population experience difficulties in
obtaining appropriate access to financial services. As a result, they have to resort to high cost
informal sources such as moneylenders.
To list the various measures & initiatives of state /central government with respect to financial
inclusion.

The broad strategy for financial inclusion in India in recent years comprises the following elements:
(i) encouraging penetration into unbanked and backward areas and encouraging agents and
intermediaries such as NGOs, MFIs, and business correspondents (BCs); (ii) focusing on a included
nationalization of private sector banks, introduction of priority sector lending norms, the Lead Bank
Scheme, branch licensing norms with focus on rural/semi-urban branches, interest rate ceilings for
credit to the weaker sections and creation of specialized financial institutions to cater to the
requirement of the agriculture and the rural sectors having bulk of the poor population.

Expansion of Banking Infrastructure
(a) Opening of Bank Branches:
(b) Each household to have at least one bank account
(c) Business Correspondent Model
(d) Swabhimaan Campaign
(e) Setting up of Ultra Small Branches
(f) Banking Facilities in Unbanked Blocks
(g) USSD Based Mobile Banking:
(h)



The plans approach paper lists six pillars to promote universal access to banking services within a
reasonable distance. It envisages providing these services through multiple channelspost offices,
the proposed payment banks, business correspondents and microfinance institutions.