Financial InclusionFinancial inclusion simply means to ensure that everyone gets the benefit of the financial services of the nation at an affordable cost in spite of whatever background he belongs. It especially focuses on including Underprivileged and vulnerable group of the society into the economy and providing them with its benefit and thus further causing growth of GDP (Gross Domestic Product) of the country through increase of customer base of the financial institutes which will further results in high profits for future and this cycle will keep going with increasing profits.
It enhances GDP growth by broadening the resource base of the financial system by developing a culture of savings among large segment of rural population bringing low-income groups within the perimeter of formal banking sector thus plays its own role in the process of economic development
India and Financial Inclusion As far as India is concerned it has a long history of putting efforts to have financial inclusion, and to some extent, it has been successful as compared to starting stages of building up of Indian economy after independence but there are still many milestones yet to be achieved in this process. And efforts of current government have enhanced financial inclusion in the society to many folds but we still are in the process figuring out to use this in favoring our economy and make everyone in the reach of its benefit and for this, there are various government schemes available.
Steps and Schemes followed by India for Financial Inclusion
Swabhiman CampaignAs the name of this campaign i.e, Swabhiman which means "self-respect" and similarly this campaign aims at giving more self-respect and confidence to people by making them aware of the financial sector of their country and banking services. This Campaign was introduced in 2004 on the recommendations of C. Rangrajan Committee. It is especially focused on including people from Rural into Banking Services and linking them in the financial sector of India in a proper and organized way. Under this public is made aware of the benefits of financial services especially in rural areas.
Business correspondent ModelUnder this model financial Institutes appoint commission agents who provide financial Services at the doorstep of the public at remote areas where they are unable to open branches which result in large customer base at low cost. Therefore this model is also known as the cost-efficient model. These appointed agents have various functions such as identification of borrowers, the collection of small value credit, a collection of interest, recovery of principal, the sale of micro insurance, pension schemes and products, mutual funds, other payment instruments, creating awareness about saving and other products and advice on managing money and debt counseling.
For BankingVarious steps taken in area of banking for financial inclusion are:-
RBI's Compulsory Requirement of Opening Branches in Un-banked Villages, banks are directed to allocate at least 25% of the total number of branches to be opened during the year in un-banked (Tier 5 and Tier 6) rural centers.
Various kinds of saving account in past and present
For Loans-In order to control public to borrow from Schedule banks to lend fix amount in priority sector at affordable rate of interest along with certain government schemes such as – Pradhan Mantri Mudra Yojna, Pradhan Mantri Awas Yojna e.t.c
For Insurance Sector-Insurance sector also plays a major role in financial inclusion of a country and thus government has various schemes in this sector among which few most recent schemes are-
Recent steps still in progressOn Recommendation of Nachiket More committee there are various measures are going on among which one is opening of two special kinds of banks in India which are
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A lot of efforts have been done by the Govt in this direction and the results are very encouraging and specially low income group people are very much happy on this step by the present Govt. There was a time when a laborer from Bihar or UP was not able to open his account in Mumbai or Chennai or any other big city as the banks were asking for a local address proof and other documents.
Coming to the Jan Dhan account, it has a great potential for misuse as crores of accounts are opened in the nation in one go. Tax evaders can take advantage of distributing their black money in these accounts by paying some commission. It has in fact happened also. The Govt has taken a serious note of this and is confident that once the computerized tracking system is fully operative and culprits would be identified through online surveillance, this misuse will be automatically finished.
In the article the author has well knitted the steps Govt has taken for financial inclusion.
Detailed write up about financial inclusion tools that can benefit all of us. At the simplest level, it means even the underprivileged can have access and gain from these schemes.Empowering our rural fellow countrymen has been the talk for few years, the Swabhiman campaign certainly would be the right way in this direction. The business correspondent model is like a mobile bank for a financial institution at the doorstep. People in remote areas have to travel miles for drinking water and schools, this would be a boon for such people.
The various options of having a bank account to the village people should be encouraging, as having a bank account would encourage little savings and transfers from children and relatives who live in the cities.The life insurance part ( Fasal Bima Yojna, Jeevan Jyoti Yojna) is practically a good financial life line as some of the families live a hand to mouth existence and the families who have sadly lost an earning member would at least have some money in the hands to tide over the crisis.
I think these inclusion schemes would be a little step in narrow the rich-poor gap and improving the quality of life for the needy.