Financial Inclusion: A New Era in Banking Awareness
by Yuvi K - December 16, 2023
What is Financial Inclusion?
Financial inclusion refers to the process of the financial services like credit, insurance, savings and payments to members of unbanked or neglected communities in countries. Financial Inclusion incorporates a wide range of services, including digital payments, access to banking products, micro-credit, credit bureaus, pensions and insurance. It has been extensively adopted by developing countries as a means of alleviating poverty and providing aid to the unbanked sections of society. It has been proven to open up new avenues of economic growth and alleviate some of the most pressing needs in the world.
The need for Financial Inclusion
In India, according to the census 2011, there are only 3.30 lakh BPL households out of the total 1.2 crore households in the country. This section has low financial access. To increase financial access to these sections of society, the RBI has been working with the Union Government to promote financial inclusion. The Government has taken steps towards this goal by launching the Jan Dhan Yojana, Pradhan Mantri Bima Yojana and Pradhan Mantri Jeevan Yojana.
How Financial Inclusion Can Help?
Financial inclusion can bring numerous benefits like improved quality of life, increased spending capacity, access to markets as well as access to savings. In particular, it has been able to affect the development of some of the most vulnerable communities in developing countries.
Benefits of Financial Inclusion
1. Increased Access to Financial Services
Financial incusion increases access to financial services such access to credit, insurance, savings and payments to members of unbanked or neglected communities.
2. Reduced Costs
Financial inclusion also reduces transactions costs for businesses, since they can now access services from the formal banking sector.
3. Increased Savings
Financial inclusion also encourages savings by households and businesses. This can provide a safety net against financial hardships and help individuals and families build a more secure future.
4. Improved Financial Literacy
Financial inclusion also encourages financial literacy, which is the knowledge and understanding of financial products and services. This can help people to make better financial decisions and protect them from exploitation.
Conclusion
Financial inclusion is a crucial tool in addressing poverty and promoting economic growth in developing countries. It provides access to services and products for people who are not served by traditional financial institutions and helps to build a more secure and sustainable future.
Financial inclusion is not just a nice idea – it is an essential component of a prosperous and just society. It has already been proven to open up new avenues of economic growth and alleviate some of the most pressing needs in the world. By encouraging financial literacy, reducing transaction costs and encouraging savings, financial inclusion represents a crucial step forward in the fight against poverty.
