Even after 6 decades of Independence, there is a long way to go for financial inclusion in India. This has led to a generation being financially insecure and pauperism in lower income groups who do not find financial service as an affordable one. With the Indian Government campaigning for financial security of its citizens, the Central Banks & other financial institutions have joined hands to further these efforts.
What is financial inclusion?
Financial inclusion attempts to make the financial services and products reachable to the last mile citizen of a country so as to reach out to the disadvantageous and low income groups. This involves providing sustainable business model for banking solutions and branchless banking by using technology in every sphere of marketing the financial products.
Role of RBI
Many efforts are put in by Reserve Bank of India towards achieving the desired levels of inclusion through micro banking. Some of the efforts are:
Stressing upon the banks to introduce no-frills account. This is aimed at making banking an affordable service to low income groups. The services include basic deposit and withdrawals of finances so as to incline the rural India towards bankable savings. For such no-frills account, even the norms of KYC is relaxed and the account holders are exempt in many cases from having minimum balance.
Relationship managers are now allowed to reach out to potential customers where banks cannot afford to have a traditional brick and mortar branch. This is more like the branchless banking where the banker makes use of technology so as to make banks reach the door step of individuals
Electronic benefits transfer; the idea of mooting tax benefits for electronic transfer of funds without levy of transaction charges or tax charges is in progress. Also, many government schemes are being implemented by arresting the slippages of cash transfers by moving towards direct crediting of beneficiary’s account. This has effectively, attracted the masses who have been remained unbanked for a long time. They have started opening a bank account to avail benefits of government schemes. This creates a formal credit avenue, thus eliminating the informal channels of slippages in the hands of money meanders.
What remains to be done?
Despite all efforts, branchless banking still remains an achievable target which requires technology up gradation in rural India where literacy rates are low. Also the political will, bureaucratic support and continuous persuasion by the Central bank is the need of the hour to encourage micro banking.
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