Friday, September 4, 2009


The term " FINANCIAL INCLUSION " was added in the budget 2008-09 on the recommendation of the central committee on financial inclusion.It refers to better access of the larger sections of the population to the vast organized and structured financial market of the country and ensuring availability of timely and adequate credit.In other words, it is extension of banking to the less privileged sections of the society.

Though regional rural banks and cooperative banks are larger in number in the rural areas, their contribution in total banking services is meager, 9% and 3% of the total as compared to the huge 78% of the commercial banks.Financial inclusion seeks to make corrections in such anomalies.

The financial inclusion policy of the government includes two fold policy- first to encourage the RRBs and cooperative banks to enroll more rural and semi urban households as their customers and to appoint retired bank officials and other ex servicemen to act as credit counselors or business facilitators.

This is a wonderful step in many ways.Firstly it will save the rural people from the clutches of the unscrupulous money lenders and intermediaries and help them to take benefits of the financial progress of the country.Secondly, this will boost up the overall financial health of the country as most of the population the country stll live in villages.

Suggested strategies:
  • Setting up a financial inclusion task force.
  • Setting up a Financial Inclusion fund like that of UK.
  • Better monitoring system to keep a vigil on the banking activities in the rural areas.
  • Creation of better business opportunities in the rural areas to help the rural people to utilize the credit available in better ways.
  • India must learn from the mistake of the US financial system that financial inclusion policy if not guided by a pragmatic approach may cause irreversible damage to the economic structure of the nation.

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