ID: 21304003;

BBA 3rd semester; Session:2020-21

 What Is Financial Inclusion?
Financial inclusion refers to efforts to make financial products and services accessible and
affordable to all individuals and businesses, regardless of their personal net worth or
company size. Financial inclusion strives to remove the barriers that exclude people from
participating in the financial sector and using these services to improve their lives. It is also
called inclusive finance. _MITCHELL GRANT
 KEY TAKEAWAYS
• Financial inclusion is an effort to make everyday financial services available to more of the
world's population at a reasonable cost.
• Advancements in fintech, such as digital transactions, are making financial inclusion easier to
achieve.
• However, the World Bank estimates that some 1.7 billion adults worldwide still lack access to even
a basic bank account. [1] _INVESTOPEDIA
 Financial inclusion means that individuals and businesses have access to useful and
affordable financial products and services that meet their needs - transactions,
payments, savings, credit and insurance - delivered in a responsible and sustainable
way. Access to a transaction account is a first step toward broader financial
inclusion since it allows people to store money, and send and receive...WORLD
BANK
 Financial inclusion refers to the provision of equally available and affordable access
to financial services for everyone, regardless of their level of income. It applies to
providing services to both individuals and business. _CFI
 Summary
 Financial inclusion refers to providing greater access to financial services for poor
and low-income individuals, as well as businesses with limited resources.
 Financial inclusion initiatives help boost the economy of poorer regions and
countries.
 The rise of fintech is considered a major contributor to increased financial
inclusion.
 Financial inclusion is defined as access to formal financial services by
individuals & firms to use a range of quality payments, savings, credit
and insurance services which meet their needs with dignity and fairness.
_STATE BANK OF
PAKISTAN
 Understanding Financial Inclusion
Financial inclusion is not only important for people in undeveloped countries. It's
estimated that as many as one-fourth of people in the United Kingdom are low-
income individuals with limited access to financial service

 Why Financial Inclusion is Important

Lack of access to basic financial services can create crippling financial problems for people. They
may have no way to receive certain payments, have to pay higher amounts for basic services such as
electricity, and are prevented from making purchases due to having no easy means of submitting
payments.
For example, consider how much of modern commerce is conducted online - then think about how
an individual with no bank account or credit card could go about ordering something online - like
at Amazon.com

1.The Rise of Fintech

The rise and growth of financial technology - commonly referred to as fintech - has been an
important factor in increasing financial inclusion. It has not only greatly broadened access to
financial services, but also significantly reduced the cost of many financial services.
A. Online peer-to-peer lending, companies such as LendingClub and Upstart, have increased
access to loans and credit for people with less than impressive credit ratings.
B. Automatic savings and investment apps such as Acorn and SoFi have made it easier for
people to access savings and investments.
C. Robo-advisors, which charge fees well below those charged by personal financial advisors,
now provide many more individuals with professional investment guidance at a low, more
affordable cost.

2.More Resources
CFI is the official provider of the global Commercial Banking & Credit Analyst
(CBCA)™certification program, designed to help anyone become a world-class financial analyst.
To keep advancing your career, the additional CFI resources below will be useful:
A. Fintech (Financial Technology)
B. Personal Financial Statement
C. Banking Fundamentals
D. Robo-Advisors
 Relations among Variables
1.The relation of age and Financial inclusion
2.The relation of income and Financial Inclusion
3.The relation of gender and financial Inclusion
4.The relation of Education and Financial Inclusion

 Determinant Factors of Financial Inclusion

1.Age
2.Gender
3.Income
4.Education

 National Financial Inclusion Strategy Bangladesh (NFIS-B)

1.Background
2.National Plans
3.Impact of NFIS-B on SDGs
4.Financial Service providing Landscape of Bangladesh
5.Timelines of this Strategy
6.Key Base Approaches of NFIS-B
7.National Definition of Financial inclusion
8.Strategy vision of NFIS-B
9.Core Dimensions and key considerations of NFIS-B
10.Objectives of NFIS-B
11.Strategic Goals and Targets of NFIS-B
  Formulate target based specific policies and initiate dedicated programs by all
regulatory bodies and relevant government agencies on following aspects of
financial inclusion separately:
Youth Financial Inclusion
1. Financial Inclusion for Physically Challenged People
2. Financial Inclusion for Third Gender
3. Financial Inclusion for Children
4. Financial Inclusion for Bangladeshi Diaspora/Non Resident Bangladeshi (NRBs)
5. Financial Inclusion for extremely destitute and underprivileged people like tea labors,
floating communities, urban slum dwellers, poor people in remote hilly, forest, coastal,
haor, char with difficult terrain and similar areas; former enclave areas, sparsely populated
areas and relatively underdeveloped areas with poor infrastructure

 Objectives of NFIS-B:
1) Increase the level of financial inclusion (having at least one regulated financial service account)
of all adults to 100 percent by 2024 to be measured by nationally authenticated evaluation
framework;
2) Ensure the availability of a wide range of financial products and services capable of serving in
different segments of the financial market and having capacity to meet multiple needs and demands
of various population groups and different enterprises;
3) Develop the financial system to assure quality, relevance, and responsiveness of the financial
products and services such that these are appropriately designed, priced and tailor- made to fit the
specific needs and demands of the users;
4) Create effective interface using technology between financial products and services as well as
delivery channels used by different providers such as banks, nonbank financial institutions,
insurance companies, post offices, MFIs and other institutions;
5) Expand financial literacy and education supplemented by strong and robust consumer
empowerment framework to empower the people and the entrepreneurs to make rational and well-
informed financial decisions;
6) Create statistical capacity of regulatory bodies to collect and disseminate comprehensive and
quality financial inclusion data disaggregated by sex, age, location

 Financial Service Providing Landscape of Bangladesh:

Financial service providers (FSPs) in Bangladesh can be categorized in three segments, in

accordance with their degree of regulation:
1. Regulated: The regulated segment includes all regulated institutions, such as Banks, Non- Bank
Financial Institutions (FIs), Insurance Companies, and Capital Market Intermediaries, such as
Brokerage Houses, Merchant Banks etc.; Micro Finance Institutions (MFIs).
2. Quasi-Regulated: The quasi-regulated sector includes those institutions that are regulated by any
law or government agency but do not fall under the jurisdiction of Central Bank, Insurance
Authority, Securities and Exchange Commission or any other enacted financial regulator.
3. Unregulated: The informal sector includes private intermediaries, which are completely
unregulated.

 What are the four 4 key components of the financial system?

The main financial system components include financial institutions, financial services, financial
markets, and financial instruments.
 What are the 4 C's in financial management principles?
This includes strategic and tactical steps to continually evaluate and improve four key financial
indicators: cash flow, credit, customers, and collateral. We call these indicators the 4 C's.

 8 key approaches to accelerate financial inclusion

1. Foster a diversity of financial institutions.
2. Facilitate the use of innovative technologies and entry of technology-driven, non-traditional
institutions.
3. Expand agent-based banking and other cost-effective delivery channels.
4. Invest in supervision and leverage technology to optimize limited resources.
5. Implement risk-based, tiered AML/CFT requirements.
6. Encourage the development of low- cost, innovative financial products.
7. Strengthen financial infrastructure.
8. Protect consumers by establishing rules for disclosure, fair treatment, and recourse.

 Six Elements of Financial Inclusion.

1. Access
2. Usage
3. Quality
4. Education
5. Social
6. Infrastructure

 There are 5 pilars of financial inclusion. Those are: (1) Full access to financial
services (loans, savings, insurance, and other payments); (2) appropriate and suitable services
according to the principles of dignity and consumer's protection; (3) equal services for everyone
who is able of using financial services, which includes disable people, minority tribes, and
marginalized or minority people); (4)road financial service suppliers supported by adequate
financial insfrastructure as well as clear regulations; and (5) society with understanding and
capabilities to promote the use or benefits of the financial services (Fadun, 2014).
  The roadblocks to financial inclusion in Bangladesh
In Bangladesh the pursuit of financial inclusion has gained some momentum; but the whole
idea is still stuck in the box of opening bank accounts only. We have not reached the stage
where we can ask the question whether the bank account can give access to
savings/credits/payments solution or insurance. There is a huge potential for the insurance
market to develop, especially an insurance that can reduce people's out of pocket expenditure
for health. Globally, Bangladesh ranks in one of the top countries for out of pocket expenditure
on health and that is one of the key drivers to push back people into poverty again. An
insurance or similar mechanism that allows people to access healthcare without burning out
their lives' savings or putting their families into an endless cycle of debt or cutting off children's
education can create huge difference in the quality of the life of poor people. But alas, we don't
quite have that kind of a solution in Bangladesh.
Fintech and Financial Inclusion and the Case of Bangladesh:
Gaps in financial inclusion remain large-both within and across countries in Asia and the
Pacific. IMF research shows that close to half of the adult population in low- and middle-
income economies in the region still do not have a bank account. Less than 10 percent of them
are able to borrow from formal financial institutions. Small and medium enterprises, as well as
farmers, face limited access to credit. They often rely on informal markets for finance, where
costs are high- leaving poor households vulnerable to shocks and poverty traps.
Let me now turn to Bangladesh, the focus of our event today. In Bangladesh, financial
inclusion has been a decades-long journey to include segments of the population that previously
had limited access to formal finance. This journey, which first began with microcredit, has since
evolved to cover all aspects of financial inclusion-from access, to usage, and to quality.
Today, the use of mobile phones for financial transactions is commonplace in Bangladesh.
People are accustomed to digital financial services, agent banking, branchless banking, and
mobile money.
Government policies have enabled small and medium-size enterprises and supported women
entrepreneurs. And benefits have accrued not just to those in urban areas; the agricultural and
rural sectors have also advanced thanks to policies, such as floors on credit, which are backed
by refinancing lines on concessional terms.
Of course, more work needs to be done to maintain this momentum, to expand access even
more and to bridge the gender gaps that persist. But I must commend the Bangladeshi
authorities for the rich policy tapestry laid out in their latest financial inclusion strategy, which
covers important aspects such as credit growth in priority sectors, MSME financing, gender
priority, access to finance in rural areas, and green financing.
Bangladesh's financial system has experienced rapid changes, especially in
response to on-going transformation and changing structure of the real economy. 2017 Global
Financial Inclusion (Global Findex) data shows that, despite recent gains, Bangladesh still
possesses the scope to reach the South Asian average in case of most indicators on financial
inclusion which themselves are low relative to global standards. In Bangladesh, financial
inclusion is conceived in a comprehensive manner with at least five dimensions:
Access to a full range of quality financial services, including credit, savings, insurance, and
payments;
 Financial services need to be affordable and suitable to the consumers, and delivered
with quality and convenience that ensure dignity and client protection;
 Consumer have to be capable of making informed and good finance- management
decisions;
 Financial services need to be available to all, without anyone excluded and underserved;
and
  There is a need for a range of providers, a robust financial infrastructure a clear
regulatory framework, and financial services to be provided as per the client's choice
through a diverse and competitive financial market.

Features of Financial Inclusion

 References
1. World Bank, Global Findex Database
2. https://openknowledge.worldbank.org/bitstrea
m/handle/10986/38148/IDUObbc001f30973f04 bf00a8db0909f3bff190a.pdf?
3. sequence=5&isAllowed=y
4. Ibid
5. https://www.humanitarian response.info/site s/www.humanitarianresponse.info/files/docum
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16. Dupas, P., Robinson, J. (2009), Savings Constraints and Microenterprise Development:
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17. National Financial Inclusion Strategies: Current State Of Practice, October 2015,Alliance
for Financial Inclusion (https://www.afi-global.org/sites/default/files/publications/fisplg-
state_of_practice.pdf)
18. National Financial Inclusion Strategies: A Toolkit, August 2016, Alliance for Financial
Inclusion(https://www.afi-global.org/sites/default/files/publications/2016- 08/Guideline
Note-20 FIS-Toolkit.pdf)
19. Bangladesh: Bringing the Light into the Blind Spot, August 2018, Alliance for Financial
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20. National Financial Inclusion Strategy: Strategic Considerations, A Presentation by Dr.
Faisal Ahmed, Former Chief Economist of Bangladesh Bank, February 2016
(https://www.faisalahmed.org/wp-content/uploads/2017/03/NFIS.pdf)
21. The comprehensive diagnostic study report on NFIS-B prepared under the Policy
component of BFP-B project.