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Financial inclusion is the process of ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and low income groups at an affordable cost in a fair and transparent manner by mainstream Institutional players.
Financial inclusion efforts seek to ensure that all households and businesses, regardless of income level, have access to and can effectively use the appropriate financial services they need to improve their lives. Currently, the world’s poor live and work in what is known as the informal economy.
‘Poverty’ by definitions is, a state of scarcity of essential resources needed for a comfortable survival And Financial inclusion means giving opportunities of affordable and easily accessible banking facilities and credit to people.
Before I begin to elaborate upon how the inclusion of poor will lead to our country’s growth, it is very important to analyze the present scenario of our country.
In a diverse country like India, with a population exceeding 121 crore and with 83.3 crore population living in rural area, it is of utmost amazement that 276 million people ( 2011 statistics ) still suffer from poverty. There are more then 41% i.e 49.61 crore people still without a bank account. The average bank to area ratio is so poor, that is few places specially in rural areas people are unable to find banks within 5km sq area. Around 80 % of our population doesn’t have life insurance or health insurance. The knowledge about finance or the financial literacy rate is also very poor in the country.
Most of the people are still unaware of the government loans and interest rates and other financial policies. The population of the country is constantly at rise and so is the need for revenue generation, this has lead to need of including the low income group people into our financial system. So now the question which we all must be wondering about is how inclusion of poor who do not even have money for a standard lifestyle will contribute to our country’s growth.
• The first and foremost thing which is necessary for the financial inclusion of poor is opening of more and more number of bank branches which will directly contribute in increasing the job opportunities and also business opportunities as our government has realised the importance of banking business agents who will be the key player in providing banking opportunities to every household.
• Since the poor population in our country is very high so their inclusion will give a motivate people to put money in the bank accounts for the use and help of the poor. So the money, though very little will be utilised by banks for the investments plans and hence contribute in revenue generation.
• The subsidies given by our government to the needy can be directly transferred to their accounts which will save a lot of paper, work and the leakages which we face today. Hence the workload will decrease and the money could be easily utilised for the growth and welfare of the poor people.
• With opening bank accounts, people can be provided with health and life insurance which will make a huge impact by supporting the people when they really need help and hence there will be more healthy and confident population. This will also decrease the burden on government hospitals and hence provide a better hospitality to the people.
• Poor will be provided loans with less paper work which will give the young talent a platform to perform and I, with confidence can say that more entrepreneurs like Sachin Bansal(Flipkart), Bhavish Aggarwal(Ola Cabs) etc will emerge. In addition to this, poor who borrow money from money lenders at very high rate of interest and are trapped into poverty cycle will be benefited and hence contribute to the development.
• Education loans can be provided to the government school students so that they are able to pursue there higher studies. This will provide more skilled population and also fulfill the dreams of students which now are crushed because of the financial crisis.
• The financial inclusion will also have a positive psychological impact on people by providing them a sense of confidence ,inclusion and their own little contribution to the country and hence, will uplift there psychosocial status.
