Financial Inclusion
CONCEPT OF FINANCIAL INCLUSION
Financial inclusion denotes the provision of affordable financial services, (viz., access to payments and remittance facilities, savings, loans and insurance services) by the formal financial system to those who tend to be excluded. The various formal financial services include credit, savings, insurance, pension and payments and remittance facilities. The most commonly understood objective of financial inclusion is to extend the scope of activities of the organized financial system of banking services mostly, to include within its ambit people with low incomes. In India the emphasis of the financial inclusion programmes at present is restricted to ensuring a bare minimum access to a savings bank account without frills, to all. Globally, financial exclusion has been observed in a much wider perspective. Merely having a current account/savings account on its own, is not regarded as an accurate indicator of financial inclusion.
Narrowly, financial exclusion denotes a situation where people do not possess either a saving account or a loan account with a formal banking institution. Though this explanation is useful to recognize the “unbanked” individuals quickly, it does not seem to be appropriate to undertake an in depth study on the nature and drivers of financial exclusion. A more comprehensive definition of financial exclusion endeavours to relate it to the exclusion from the main stream financial system, comprising of banks and other financial institutions, insurance companies etc encompassing other ideas of financial illiteracy, financial discrimination and financial exploitation.
Financial literacy tends to be associated more with numeracy skills and also the ability to understand more complicated products. Financial awareness on the other hand would indicate a cursory understanding of what instruments are out there and which one can take advantage of. The low level of financial literacy is sometimes blamed on the failure of
Financial inclusion denotes the provision of affordable financial services, (viz., access to payments and remittance facilities, savings, loans and insurance services) by the formal financial system to those who tend to be excluded. The various formal financial services include credit, savings, insurance, pension and payments and remittance facilities. The most commonly understood objective of financial inclusion is to extend the scope of activities of the organized financial system of banking services mostly, to include within its ambit people with low incomes. In India the emphasis of the financial inclusion programmes at present is restricted to ensuring a bare minimum access to a savings bank account without frills, to all. Globally, financial exclusion has been observed in a much wider perspective. Merely having a current account/savings account on its own, is not regarded as an accurate indicator of financial inclusion.
Narrowly, financial exclusion denotes a situation where people do not possess either a saving account or a loan account with a formal banking institution. Though this explanation is useful to recognize the “unbanked” individuals quickly, it does not seem to be appropriate to undertake an in depth study on the nature and drivers of financial exclusion. A more comprehensive definition of financial exclusion endeavours to relate it to the exclusion from the main stream financial system, comprising of banks and other financial institutions, insurance companies etc encompassing other ideas of financial illiteracy, financial discrimination and financial exploitation.
Financial literacy tends to be associated more with numeracy skills and also the ability to understand more complicated products. Financial awareness on the other hand would indicate a cursory understanding of what instruments are out there and which one can take advantage of. The low level of financial literacy is sometimes blamed on the failure of