Financial Inclusion - the Scope and Effect in Indian Economy

1862 Words Oct 15th, 2012 8 Pages
FINANCIAL INCLUSION IN INDIA- IMPACT & CHALLENGES
Financial inclusion in India – The way forward

ABSTRACT:
The government of India & RBI has out with a major initiative towards ensuring the inclusive growth through financial inclusion so that the access of financial service will reach to the mass population.
The main theme of this paper is to highlight the requirement of financial inclusion and to estimate the social benefit from these initiatives.
As Reserve Bank of India data shows that as many as 139 districts suffer from massive financial exclusion, with the adult population per branch in these districts being above 20,000 and only 3 percent with borrowings from banks. On the assumption that each adult has only one bank account
…show more content…
High cost of credit and exploitative terms:( credit against collateral such as gold is even more expensive than the effective interest rates, similarly, rates paid by hawkers and vendors who repay on daily basis are very high. High cost and leakages in money transfers: the delays( in sending money home through all informal channels add to these. Near( absence of insurance and pension services : life, asset, and health insurance needs

Scope of financial Inclusion can put into effort

Recent developments in technology have transformed banking from the traditional brick-and-mortar infrastructure to a system supplemented by other channels like automated teller machines (ATM), credit/debit cards, internet banking, online money transfers, etc.

The Reserve Bank of India (RBI) has enabled branchless banking by facilitating the business correspondent/facilitator model, enabling non-government organizations, micro-finance bodies, co-operative societies, grocery shops, PCOs and individuals to collect small deposits, disburse and recover certain loans, and also sell other financial products, like insurance, pension and mutual funds, and to handle small remittances and payments. But is it also true that while a large number of no-frills accounts have been opened; those that are operational have yet to reach a meaningful level? On its part, the government has also unveiled a number of initiatives to

More about Financial Inclusion - the Scope and Effect in Indian Economy