What Is Financial Inclusion
What is financial inclusion? term as “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”1
Poverty versus financial inclusion: (a) India is home to one-third of the world’s poor, who make up 42 percent of the more than 1 billion Indian people; (b) out of India’s population, 76 percent, i.e., 800 million people, live below the poverty line of $2.50 a day; and (c) about 87 percent of poor rural farmers still do not have access to formal credit. 2
• Financial data vis-à-vis financial inclusion: (a) In India, only 55% of the population has deposit accounts and 9% has credit account with banks; (b) there is only one bank branch per 14,000 people; (c) only 18% have debit cards and less than 2% have credit cards; and (c) less than 20% of the population has any kind of life insurance.3 Extent of financial exclusion: (a) The National Sample Survey data reveals that 45.9 million farmer households in the country, i.e., 51.4 per cent of nearly 89.3 million total households do not access credit either from institutional or non-institutional sources; (b) despite the vast network of rural branches, only 27 per cent of the total farm households are indebted to formal sources; of them one-third also borrow from informal sources; (c) there are vast regional differences – in some parts of the country more than 95 per cent of the farm households do not get any credit from institutional or non-institutional sources; and (d) the more backward the region, the more backward the social class and the poorer the individual, the greater is the exclusion in broad terms.4
Ineffectiveness of bank branch-based delivery model: (a) Of nearly 28.23 million nofrills accounts, only less than 11% are active – that too not necessarily conducting financial transaction; (b) The number of rural bank branches is only 31,727 as against more than 6,00,000 villages; (c) Of a
Poverty versus financial inclusion: (a) India is home to one-third of the world’s poor, who make up 42 percent of the more than 1 billion Indian people; (b) out of India’s population, 76 percent, i.e., 800 million people, live below the poverty line of $2.50 a day; and (c) about 87 percent of poor rural farmers still do not have access to formal credit. 2
• Financial data vis-à-vis financial inclusion: (a) In India, only 55% of the population has deposit accounts and 9% has credit account with banks; (b) there is only one bank branch per 14,000 people; (c) only 18% have debit cards and less than 2% have credit cards; and (c) less than 20% of the population has any kind of life insurance.3 Extent of financial exclusion: (a) The National Sample Survey data reveals that 45.9 million farmer households in the country, i.e., 51.4 per cent of nearly 89.3 million total households do not access credit either from institutional or non-institutional sources; (b) despite the vast network of rural branches, only 27 per cent of the total farm households are indebted to formal sources; of them one-third also borrow from informal sources; (c) there are vast regional differences – in some parts of the country more than 95 per cent of the farm households do not get any credit from institutional or non-institutional sources; and (d) the more backward the region, the more backward the social class and the poorer the individual, the greater is the exclusion in broad terms.4
Ineffectiveness of bank branch-based delivery model: (a) Of nearly 28.23 million nofrills accounts, only less than 11% are active – that too not necessarily conducting financial transaction; (b) The number of rural bank branches is only 31,727 as against more than 6,00,000 villages; (c) Of a