What is financial inclusion?
Financial inclusion means connecting all individuals, including those living in the remotest of rural areas, to a well-functioning financial system. This would include:
• Easy access to bank accounts for safe parking of savings
• Availability of cheap credit through appropriately designed loans for poor & low income households and small entrepreneurs
• Availability of basic financial products like insurance.
Why is the concept gaining currency in India?
It has been largely accepted that inclusive growth cannot happen without financial inclusion. With the UPA government stressing on inclusive growth, especially in its second stint in power, there is a lot of focus now on how to go about improving financial inclusion in the country.
How do we measure financial inclusion?
It can be measured in terms of access to institutions such as banks, insurance companies and MFIs and the services that they provide such as payments services, savings or loans and credits. Some countries also look at details on the use of specific financial products such as debit cards, credit cards, life insurance and home mortgages.
How has India fared so far in ensuring financial inclusion?
Like most developing countries, India has a long way to go to ensure financial inclusion. About half of India's population does not have access to bank accounts while three fourths is not covered by any form of insurance.
Which are the financially excluded sections in India?
Sections which do not have much access to financial institutions or financial products are:
• Marginal farmers and landless labour
• Migrants
• Urban slum dwellers
• Self-employed
• Unorganised industry
• Women and old people.
