IMPORTANCE OF BANKS IN

FINANCIAL INCLUSION

EFFORTS BY : SHEETAL SAINI

ROLL NO : 19001433047
WHAT IS FINANCIAL INCLUSION

• Financial inclusion is the delivery of financial services at affordable costs to sections of

disadvantaged and low income segments of society, in contrast to financial exclusion
where those services are not available or affordable. It was estimated that 2.5 billion
working-age adults globally have no access to the types of formal financial services
delivered by regulated financial institutions.
• The term financial inclusion has evolved since late 2000 and its directly correlated to
poverty.
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• The Reserve Bank of India (RBI) set up the Khan Commission in 2004 to look into financial
inclusion and the recommendations of the commission were incorporated into the mid-term
review of the policy (2005–06). In the report RBI exhorted the banks with a view to
achieving greater financial inclusion to make available a basic "no-frills" banking account.
• Financial inclusion may be defined as the process of ensuring access to timely and adequate
institutional credit and financial services by vulnerable groups such as weaker sections and
low income groups at an affordable cost. A sizeable majority of the population, particularly
the low income groups, continue to remain excluded from the opportunities and services
provided by the financial sector.
CURRENT STATUS OF FINANCIAL INCLUSION IN
INDIA
• 65% of people in our country who still do not have any bank account
• Largest cities in India have 11 percent of the country’s bank branch while there are four districts
in north India which has only one bank per district
• South India is much ahead in financial inclusion compared to the rest of the country, where it has
scored 62.2 percent of financial penetration where as in all India level it stands at 40.1 percent
• In India, more than 50 percent of population who just have a simple savings bank account.
• Out of 1.2 billion of population, only 684 million of population have bank account.
RBI HAS INITIATED SEVERAL MEASURES TO
ACHIEVE FINANCIAL INCLUSION
• Opening of no-frills accounts
• Relaxation on know-your-customer (KYC)
• Engaging business correspondents (BCs)
• Use of technology
• Simplified branch authorization
• Opening of branches in unbanked rural centres
 FINANCIAL PRODUCTS AND SERVICES LIKE:

• No frill Bank accounts – check in account

• Micro Credit
• Savings products
• Remittances & Payment services
• Insurance - Healthcare
• Mortgage
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• Financial advisory services

• Pension for old age
• Business correspondence &self help group
• Branchless banking
• Micro finance & micro credit facility
• Investment plan for child's education
RBI INITIATIVES FOR FINANCIAL INCLUSION
ROLE OF BANKS IN FINANCIAL INCLUSION IN
INDIA
• Financial inclusion may be referred to as a process of providing financial services and easy access to
credit to all the people in the country. Financial inclusion will enable banks to provide credit to
vulnerable groups such as weaker sections and low income at a reasonable cost. It will also help banks
to provide financial products to such sections and enable them to understand the importance of saving
and investing money.
• Many economically weaker sections in India still do not have access to basic banking facilities. Thus
they end up borrowing money from private moneylenders at high interest rate. Inclusion of the society
a whole would enable people to understand the concept of saving and investing money. Thus it may
gradually help to elitimate many economic problems in the country and will boost the economic
growth of india.
HOW BANKS ARE DRIVING FINANCIAL
INCLUSION?

• Financial institution means delivering services of the banks to all sections of

the society. Financial inclusion plays a major role in driving away poverty and
will help in surplus capital formation. Banks are now opening avenues to
extend banking services to all at affordable terms. It enables to reduce the
economic gap between the rich and the poor and enables fast-paced economic
progress and development of the nation.
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• In India , the government had taken some active steps to prioritize financial inclusion. It
has implemented several important schemes like Pradhan mantri Jan dhan yojana through
major public sector banks. The state bank of India had laid active efforts in opening
PMJDY accounts and has been a strong proponent of the rupay debit card. The customers
using these cards are liable to get accidental insurance cover for free. The number of
people visiting bank branches and ATMs has significantly increase in both rural and
urban areas.
FINANCIAL INCLUSION SCHEMES IN INDIA

• Pradhan mantra Jan dhan yojana

• Atal pension yojana
• Pradhan mantra vaya vandana yojana
• Stand up India scheme
• Pradhan mantra mudra yojana
• Pradhan mantra suraksha bima yojana
• Sukanya samridhi yojana
• Jeevan suraksha bandhan yojana
• Varishtha pension bima yojana
OBJECTIVE OF FINANCIAL INCLUSION

• Financial inclusion intends to help people secure financial services and products at economical
prices such as deposits, fund transfer services, loans, insurance , payment services, etc.
• It aims to establish proper financial institutions to cater to the needs of the poor people . These
institutions should have clear cut regulations and should maintain high standards that are existence
in the financial industry.
• Financial inclusion aims to build and maintain financial sustainability so that the less fortunate
people have a certainty of funds which they struggle to have.
• Financial inclusions also intends to have numerous institutions that offer affordable financial
assistance so that there is sufficient competition so that clients have a lot of options to choose from.
MEASUREMENT OF FINANCIAL INCLUSION

• India’s first FI index was launched in 2013 based on four critical dimensions: 1)branch
penetration 2) deposit penetration 3) credit penetration 4) insurance penetration.
• The last dimension was added for the first time to make the index much more
comprehensive.
• CRISIL, inclusix measures progress on FI 7down to the level of each of the 666 districts
in the country in 2013.
• The index is based on data provided by RBI , the micro finance institutions such as world
bank that measure the progress of FI information bureau of India.
Thank you