Need for Financial Inclusion and challenges ahead - an Indian Perspective

Abstract

Financial inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income group. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. As banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of the public policy. But in the Existing Banking System segment of the population, especially the underprivileged sections of the society still out of banks' fold. Percentage of adult population having bank account is only 59 %, means 41% of population is unbanked unfortunately this percentage is higher in rural areas. Extent of exclusion from credit markets much more. Number of Loan accounts only 14 % of Adult population and its coverage is only 9.5 % in rural areas. 51.4% Farm Households have no access to formal or informal sources of credit, 73 % had no access to the formal sources of credit. Considerably, marginal farmers, landless laborers, oral lessees, self employed and unorganized sector enterprises, urban slum dwellers, migrants or ethnic minorities and socially excluded groups, senior citizens and women are out of the purview of financial inclusion. Hence an attempt has been made to analyze the extent of financial inclusion, prevailing lacunas and challenges therein in Indian perspective.