Financial Inclusion in India Status, Determinants and Roadmap

Abstract

Financial inclusion, as the name suggests, is a process ensuring access to financial services to the weaker sections of the society at affordable cost. It is very important in a country like India where millions of people at the grass roots level suffer from poverty, hunger and illiteracy. Agriculture is the main source of income for most of the people living in rural areas. But of late, agriculture has become un-remunerative. Given a chance, many farmers are ready to quit agriculture. It is believed that financial inclusion would improve the socio-economic living of the common masses by offering them access to banking, skill/ education and scope for taking up economic activities. Based on the available information, the paper tried to establish a relationship between financial inclusion and a set of independent variables. Financial inclusion is a process ensuring access to financial services such as savings, loans, insurance, payments and remittance facilities to the underprivileged segments of population at affordable cost. It assumes greater importance as our country continues to suffer from the problem of poverty, unemployment and insignificant progress in various socio-economic indicators. As the financial inclusion programme offers financial services such as savings, credit, remittance and insurance to low-income people at an affordable cost, it is vital for inclusive growth. Keeping this in view, an attempt has been made in this paper to understand the status of financial inclusion in India, initiatives taken by different agencies and key determinants of financial inclusion. Finally, based on the outcomes, a set of policy suggestions have been offered to improve the situation.