Essay On Financial Inclusion

What is Financial Inclusion?

Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost (The Committee on Financial Inclusion, Chairman: Dr. C. Rangarajan).

Financial Inclusion, broadly defined, refers to universal access to a wide range of financial services at a reasonable cost. These include not only banking products but also other financial services such as insurance and equity products (The Committee on Financial Sector Reforms, Chairman: Dr.Raghuram G. Rajan). Financial Inclusion is defined as ensuring proper access to financial services (which include not only banking

However these norms have been simplified for easy opening of accounts, especially for small customers by using the ‘Aadhaar’ as one of the eligible documents for meeting the KYC requirements for opening a new bank account. Recently, RBI has also allowed for the banks to use E-Aadhaar facility for KYC purposes.

A Bouquet of financial products and services To achieve financial access across rural India, the viability is to achieve financial inclusion. The model should be devised carefully as a revenue generation model and providing banking services at doorsteps for the rural and remote India. The four products which are essential in delivering the banking services are:

• A savings account with overdraft facility.

• A product like a debit card/ ATM card.

• A pure savings product; ideally a recurring deposit scheme.

• Entrepreneurial credit/ overdraft in the form of a Kisan Credit Card (KCC)/General Credit Card (GCC)

Pricing of loans Banks are also provided the freedom to decide the price of loans given to customers with a view to ensure the economic viability of banks’ Financial Inclusion initiatives.

Financial