History of Financial Inclusion
Financial Inclusion came into light in 2005 when Mr.Y.V Reddy, Governor of The Reserve Bank of India, coined the term ‘Financial Inclusion’ that gained a lot of momentum. In 2008, under the leadership of Mr C .Rangarajan, RBI governor, a committee was formed, where financial inclusion was acknowledged and recognized.
Meaning of Financial Inclusion
Financial Inclusion means making available the financial services to the last strata of the people, living in the remote villages, at a low cost. The purpose is to provide financial services to the poor people, for their benefit and inclusive growth. Most of the people in India are residing in remote villages without any access to financial and banking services.
Why there is a need for Financial Inclusion?
The poor and illiterate, believe that they have no other option but to borrow money from ‘Unlicensed people’. These unlicensed people comprise of moneylenders, sahukars etc, who lend money at exorbitant interest rates, taking undue advantage and making their lives of the borrower miserable.
Role of a Bank in Financial Inclusion In India
In order to prevent exploitation of the underprivileged, Government of India implemented the concept of financial inclusion. For its execution, banks were asked to provide a platform to financially weaker sections of the society so that all financial services are available to them at lower or reasonable cost. This includes all financial services whether it be banking services, loan/credit facilities, deposit facilities etc.
Growth of Urban Sector does not conclude the existence of inclusive growth. The economic growth of a country can be achieved only when the benefits and opportunities of financial services are accessible to every section of society.
Financial inclusion includes provision of banking services such as opening of bank accounts for savings and transactional purposes, insurance facilities, financial advisory services and equity products to the underprivileged at reasonable cost. This will ensure that the poor sections of the country also get and enjoy the same benefits as urban segment ensuring country’s growth.