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Is financial inclusion of India in the right track?

Created by : sumit patra, PGDM student of Siva Sivani Institute of Management  | 08 15 2010 02:28:15 +0000
Industry : BankingFunctional Area : India(Markets)
Keywords : financial inclusion is the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.
Activity:  306 views;  last activity : 08 16 2010 21:18:59 +0000

The Indian economy is growing at a steady rate of 7% to 8.5% in the last five years or so. Most of the growth is from industry and services sector. Agriculture is growing at a little over 2 %. The potential for growth in the primary and SME sector is enormous. Limited access to affordable financial services such as savings, loan, remittance and insurance services by the vast majority of the population in the rural areas and unorganized sector is believed to be acting as a constraint to the growth impetus in these sectors. Access to affordable financial services – especially credit and insurance – enlarges livelihood opportunities and empowers the poor to take charge of their lives. Such empowerment aids social and political stability. Hence financial inclusion is considered to be critical for achieving inclusive growth; which itself is required for ensuring overall sustainable overall growth in the country.

 
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 In 1991 along with reforms for liberalising and opening the economy, financial sector reform aimed at deregulation, increased competition and strengthening the banking sector through recapitalisation and adoption of prudential measures. The Indian banking industry today is quite robust and strong to be able to take on the challenges of achieving greater financial inclusion.

Pursuant to this, the Reserve Bank has undertaken a number of measures with the objective of attracting the financially excluded population into the structured financial system. In November 2005, banks were advised to make available a basic banking “no-frills” account with low or nil minimum balances as well as charges to expand the outreach of such accounts to vast sections of the population. Banks are required to make available all printed material used by retail customers in the concerned regional language.

These steps are the indicators of the proper direction of the financial inclusion in India.


By sumit patra, PGDM student of Siva Sivani Institute of Management  08 15 2010 02:28:15 +0000
 
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Sumit I agree with you......  since we see huge growth in the financial sector making small changes will give a huge impact......

Thanks for initiating the debate... 
By John Rajesh, Actuary Manager, Tata Aig Insurance Solutions  | 08 16 2010 12:53:30 +0000
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Consecutive governments have taken positive steps to promote financial and economic inclusion. The pace of progress is however concerning. The average standard of living, per capita income, health indices etc are all showing a gradual movement towards getting better.

The concern is that the base we started from was very low, hence its easy to show progress. The gap between the different social strata is increasing. We still have more number of malnourished kids then the entire 3rd world put together. Financial inclusion shall come in as a by product of basic infrastructure (roads, water, electricity) coupled with social security in terms of health (states like AP and TN taken steps towards this) education and job opportunities. The entire educational system needs a revamp.

As for the 1st gen entrepreneur for whom the basic hygiene factors are not a concern. Easy availability of debt and organized professional counseling/single window shall provide the impetus that the primary/SME sector start-ups need.
By KultarSingh , General Manager, COOGA Enterprises  | 08 16 2010 21:18:59 +0000
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" i am not interest with the inclusion of india . it is not right track becaz it make to liberal of money value in around country
By raja , mentor, einflexion pte ltd  | 08 16 2010 18:24:28 +0000
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