Determinants of financial inclusion in rural Punjab

Financial inclusion is the ease of access to, and the availability and use of, formal financial institutions by all the members of the economy. This study attempts to understand the determinants of financial inclusion in Punjab. The study highlighted that of the total 324 accounts, 51.85% were not functional. The awareness level about Jan Dhan Yojana was exceptionally low in the non-banking villages compared to the banking villages. The sampled households used bank accounts to take crop loans (32.67%) and bank loans (38%). Low saving was perceived by the sampled respondents to be the major reason for financial exclusion in the study area. The other reasons were low income, poor and difficult physical access to banks, absence of bank branches or rural branches at the village level and lack of awareness. The regression analysis indicated that financial inclusion in rural areas was significantly affected by caste, farm size and savings.