Page 1 of 11
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
I SSN: 2395-0463
Volume 03 I s s ue 13
Dec ember 2017
Available online:http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 535
Financial Inclusion in India: An Analysis
Dr. Pardeep Kumar Duhan
Assistant Professor of Economics
Govt. College for Women, Mokhra (Rohtak)
Abstract
Government of India and Reserve Bank of India are promoting financial inclusion as
an important national policy objective because it is the primary condition for
sustainable economic development of the country. The population in rural areas does
not have access to formal banking system and are unable to take the advantages of
banking and credit facilities. Financial inclusion takes into account the participation of
vulnerable groups such as weaker sections of the society and low income groups,
based on the extent of their access to financial services such as savings and payment
account, credit insurance, pensions etc. Lack of information, low income level,
insufficient documentation, lack of awareness, lack of access and high transaction
costs are certain reasons behind low level of financial inclusion of Indian population.
Hence, the present study has been carried out to discuss the initiatives taken for
financial inclusion in India e.g. Swavalamban Pension Scheme, Swabhimaan Scheme,
PFRDA, No-Frills Accounts, Engaging Business correspondents and use of
technology for EBT etc. These measures provided substantial help in increasing the
level of financial inclusion in India.
Key Words: Financial Inclusion, Swavalamban Pension Scheme, Bank, Rural Area
etc.
Page 2 of 11
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
I SSN: 2395-0463
Volume 03 I s s ue 13
Dec ember 2017
Available online:http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 536
Financial Inclusion in India: An Analysis
Introduction
Government of India (GOI) and Reserve bank of India (RBI) are promoting Financial
Inclusion as an important national objective and making many efforts in this direction.
For sustainable and economic development of an economy, there must be an attempt
to include maximum number of participation from all the sections of the society. But
the lack of awareness and financial literacy among the rural population of the country
is hindering the growth of the economy as majority of the population does not have
access to formal credit. This is a serious issue for the economic progress of our
country. In order to overcome such barriers, the banking sector emerged with some
technological innovations such as Automated Teller Machines (ATM), Credit and
Debit cards, Internet Banking, etc. Though introduction of such banking technologies
brought a change in the urban society, but majority of the rural population is still
unaware of these changes and is excluded from the formal banking facilities (Singh,
2014).
Financial inclusion means the delivery of financial services, including banking
services and credit at an affordable cost to the vast sections of disadvantaged and low- income groups. Financial inclusion takes into account the participation of vulnerable
groups such as weaker sections of the society and low income groups, based on the
extent of their access to financial services such as savings and payment account, credit
insurance, pensions etc. Accessibility of financial services at affordable and
appropriate prices was always a global issue. Hence, an inclusive financial system is
required widely not only in India, but has become a policy priority in various
countries. Financial access can surely improve the financial condition and living
standard of the poor people and the deprived sections of the society. Therefore,
Reserve Bank of India (RBI) has been continuously stimulating the banking sector to
extend the banking network both by setting up of new branches and installation of
new ATMs (Dangi & Kumar, 2013). The different financial services include access to
savings, loans, insurance, payments and remittance facilities offered by the formal
Page 3 of 11
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
I SSN: 2395-0463
Volume 03 I s s ue 13
Dec ember 2017
Available online:http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 537
financial system. This aspect of financial inclusion has a vital importance in providing
economic security to individuals and families (Kelkar, 2014).
Definition
Financial Inclusion is defined as “the process of ensuring access to financial services
and providing timely and adequate credit where needed by vulnerable groups such as
weaker sections and low income groups at an affordable cost” (Rangarajan, 2008).
“Financial inclusion is the process of ensuring access to appropriate financial products
and services needed by all sections of society including vulnerable groups such as
weaker sections and low income groups at an affordable cost in a fair and transparent
manner by mainstream institutional players” (Chakrabarty, 2013). The aim of
Financial Inclusion (FI) is to make easy access of financial services to the large
segment of underprivileged population of the country. It is an attempt for achieving
inclusive growth of the society by making availability of finance to the deprived
section of population. In order to reap the benefits of the financial services, lot of
measures has been taken by Government of India in the favour of poor and neglected
sections of the society.
Objectives and Methodology
The objective of the present study is to study the initiatives taken for Financial
Inclusion in India. Secondary data has been used in the present study which was
collected from various sources to analyze the role of Government and Reserve Bank
of India in promoting Financial Inclusion in India.
Who are the Excluded and Why
Large segment of our population is excluded from the mainstream of banking
facilities. The sections that are generally excluded are unorganized sector, marginal
farmers, landless labourers, women and many more disadvantaged groups. These
