Financial inclusion impact on indian economy

Financial inclusion impact on indian economy

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  FINANCIAL INCLUSION IMPACTON INDIAN ECONOMY SREEKANTH.K
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  WHAT IS FINANCIALINCLUSION??? Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low- income segments of society, in contrast to financial exclusion where those services are not available or affordable. It was estimated that 2.5 billion working-age adults globally have no access to the types of formal financial services delivered by regulated financial institutions
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   The termfinancial inclusion has evolved since late 2000 and its directly correlated to poverty.  The Reserve Bank of India (RBI) set up the Khan Commission in 2004 to look into financial inclusion and the recommendations of the commission were incorporated into the mid-term review of the policy (2005–06). In the report RBI exhorted the banks with a view to achieving greater financial inclusion to make available a basic "no- frills" banking account.
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   In India,financial inclusion first featured in 2005, when it was introduced by K.C. Chakraborthy, the chairman of Indian Bank.  India has 600 districts totally and there are more than 400 undeveloped districts in India and GOI aims at giving over 600million “nofrill”.
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  RBI has initiatedseveral measures to achieve financial Inclusion such as:  Opening of no-frills accounts  Relaxation on know-your-customer (KYC) norms  Engaging business correspondents (BCs)  Use of technology  Simplified branch authorization  Opening of branches in unbanked rural centres
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  CONTROVERSY  Financial inclusionin India is often closely connected to the aggressive micro credit policies that were introduced without the appropriate regulations oversight or consumer education policies.  The challenge for those working in the financial inclusion field has been to separate micro-credit as only one aspect of the larger financial inclusion efforts and use the Indian crisis as an example of the importance of having the appropriate regulatory and educational policy framework in place.
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  TRACKING FINANCIAL INCLUSIONTHROUGH BUDGET ANALYSIS  While financial inclusion is an important issue, it may also be interesting to assess whether such inclusion as earmarked in policies are actually reaching the common beneficiaries. Since 1990s, there has been serious efforts both in the government agencies and in the civil society to monitor the fund flow process and to track the outcome of public expenditure through budget tracking. Organisations like International Budget Partnership (IBP) are undertaking global surveys in more than 100 countries to study the openness (transparency) in budget making process. There are various tools used by different civil society groups to track public expenditure. Such tools may include performance monitoring of public services, social audit and public accountability surveys. In India, the institutionalisation of Right to information (RTI) has been a supporting tool for activists and citizen groups for budget tracking and advocacy for social inclusion.