FINANCIAL INCLUSION

What is financial inclusion?

In a broader sense, financial inclusion is providing or ensuring banking services at affordable costs to the weaker sections of society or the unbanked segment which does not have access to the formal banking system. In bigger cities, every household may have more than one bank account but thousands of villages in India do not even have a bank branch. The Indian central bank — Reserve Bank of India, or RBI — is keen on achieving 100 per cent financial inclusion and has nudged banks to extend the reach to as many citizens as possible.

What is the status of financial inclusion in India?

Despite the rapid advance in technology, after five decades since independence, close to 60 per cent of the population in India do not have a bank account. This ratio is especially higher in the North-Eastern part of the country. Of the six lakh villages, only 30,000 have bank branches. A government-sponsored report says only 10 per cent of Indians have a life insurance cover, 13 per cent have debit cards and just two per cent own credit cards.

Why is RBI keen on 100 per cent financial inclusion?

In a recent speech, RBI Governor D Subbarao said financial inclusion was the key to sustaining equitable growth. Access to financial services will provide the poor opportunities to build savings, make investments and avail of credit. Also, such access helps them insure themselves against income shocks and equips them to meet emergencies such as illness, death in the family or loss of employment. Further, 'it protects the poor from the clutches of the usurious money lenders,' he was quoted as saying.