Role Comparison of RRBs and MFIs in financial Inclusion in India

The problem of inclusive finance is a global problem. The term financial inclusion refers to a process that ensures the feasible access, availability and convenient use of the institutionalized financial system to various cross sections of the society across the geography of a nation.

Mersland, Roy (January 2005) in his study on “The Agenda and Relevance Of Recent Research in Microfinance” highlighted that only a small part of the banking community is being reached by Micro Finance research. The lack of interaction with the banking community is notable. This raises the question if it is time to design a new research agenda, this time in cooperation with the banking community.

This paper makes an attempt to investigate the role of Regional Rural Banks (government bank) and MFIs (NGO-MFI, Co-operatives-MFI, Not for Profit NBFC-MFI, For Profit NBFC-MFI) in the states of Punjab, Haryana and Himachal Pradesh in bringing about total financial inclusion and to establish that the RRBs need to be at the forefront of the Financial Inclusion drive in Rural Areas. In the process of doing so the banks can aid the overall growth of the GDP of the country. Also, the paper suggests and recommends measures to the policy makers to help them meet the challenge of financial inclusion.