List of Government Schemes for Financial Inclusion In India


This article deals with various steps and measures taken by the Indian government to achieve the goal of Financial Inclusion so that every citizen of the country could become a beneficiary of its economic growth.

Financial Inclusion

Financial 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 Campaign

As 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 Model

Under 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 Banking

Various 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

  1. No Frill account- The central bank had introduced 'no-frills' accounts in 2005 to provide basic banking facilities to poor and promote financial inclusion. The accounts could be maintained without or with very low minimum balance. These were later converted into BSBDA
  2. BSBDA- RBI advised all banks to open Basic Saving Bank Deposit (BSBD) accounts with minimum common facilities such as no minimum balance, deposit, and withdrawal of cash at bank branch and ATMs, receipt/ credit of money through electronic payment channels, facility of providing ATM card
  3. JAN DHAN Account- These are similar to BSBDA but with little more features as Earlier bank were reluctant to open BSBDA account. Banks also do not provide good service to BSBDA account holder. They even denied service like the debit card. But after JHAN DHAN Yojna this scenario has been completely changed


  • JHAN DHAN account holder is compulsorily issued RUPAY debit card and many more services. It certainly increased the financial inclusion and made bank account opening a cake walk
  • It also provided premium free life insurance till the time accounts opened on 26 Jan 2015. It has life insurance of Rs 30000 and accidental insurance covers Rs 1 lakhs
  • Also, provide overdraft facility up to 5000 Rs per month without any Rate of Interest. And security but with few conditions which are


  1. Account age should be at least 6 months
  2. Account holder should visit ATM branches at least once in 90 days
  3. Income should be up to 1 lakh per year in rural areas and up to 1.5 lakh year for urban areas


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-

  1. Pradhanmantri Fasal Bima Yojna : This is a general insurance for crops and this scheme started from Feb 2016 by NDA government and replaced the earlier scheme of UPA government named "National Agricultural Insurance" with few more advantages such as low premium on crop insurance, use of technology for weather forecasting (like smartphones, drones, remote sensing satellites), Future generation of claim and post-harvest benefits e.t.c
  2. Pradhan Mantri Jeevan Jyoti Yojna : It is a life insurance scheme from age of 18-50 years (benefit until 55 years) at a premium of Rs 330+(18%gst). It covers till 2 lakh Rs and is under LIC India on behalf of the government of India. Pradhan Mantri Surksha bima yojna – started on Jan 2015 for accidental insurance and covers up to Rs 2lakh in case of death and Rs 1 lakh in case of physical disability at a premium of (Rs 12+GST) for the age group of 18 to 70 years and is under HDFC life on behalf of government of India


Recent steps still in progress

On 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
  • Payment banks- These banks will only accept deposit from public and will not lend loans, These payment banks will provide payment services and deposit products to its target customers which will be small businesses and low-income households. Till date 11 licenses have been granted out of which four banks are functional which are – Paytm, Airtel, Indian postal payment bank, Phinopayment
  • Small finance banks- Small finance banks are a type of niche banks in India. Banks with a small finance bank license can provide basic banking service of acceptance of deposits and lending


Comments

Author: umesh21 Oct 2017 Member Level: Gold   Points : 4

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.

Author: Natarajan21 Oct 2017 Member Level: Gold   Points : 5

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.



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