Inclusive Growth and Financial Inclusion
Inclusive growth defined as the equitable allocation of resources during the process of economic growth with benefits incurring to every section of society is the key to Financial Inclusion.
According to Rangarajan Committee,2008 financial inclusion is providing access to financial services at an affordable cost to the vulnerable groups of society (weaker sections and low-income groups). With six lakh villages, the main agenda before the government is to achieve financial inclusion in order to achieve financial stability for rural poor.
What are the major barriers to achieving financial inclusion?
In spite of the recent schemes like Jan Dhan Yojana around 51.36℅ of rural households are financially excluded. The reasons can be:
1. Lack of personal and financial identity
2. Lack of infrastructural facilities and effective business models
3. High illiteracy among rural poor.
4. The multiplicity of languages makes difficult to integrate the financial system.
5. Structural constraints of traditional commercial banks.
So what to be done to achieve financial inclusion?
1. Harnessing advances in Information and communication technology (ICT)
2. Giving focus to 5Ps [1. Product 2.price
3.place 4. Promotion.5.process.]
3. developing, testing, and implementing appropriate products with suitable delivery channels to extend financial services.
4 . Creating nationwide awareness of Financial Literacy.
5 . Disbursement of all social security benefits through electronic benefit transfer.
6. Establishing banking outposts at each gram panchayat and disbursement of benefit by banking correspondents.
7. Adopting simple technology with a track on transaction details.
8. Vendors should be ISO 27001 Certified With the above measures and a strong from zeal from banks, microfinance institutions, cooperatives, SHGs voluntary intervention can make a long difference in reducing financial instability among the low-income groups and from marginalized sections.