Role of banks in financial inclusion - issues & challenges

An efficient banking structure can promote greater amount of investment which can help achieve a faster growth rate of the economy. World wise experience confirms that countries with well developed and market-oriented banking systems grow faster and more consistently than those with weaker and strictly regulated system.

India has, for a long time, recognized the social and economic imperatives for roader Financial inclusion and has made an enormous contribution to economic development by finding innovative ways to empower the poor. If we are advocating any kind of stability whether financial, economic, political or social and inclusive growth with stability, it is not possible to attain these goals without achieving financial inclusion.

Financial inclusion is the process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable groups such as weaker sections and low income groups in particular, at an affordable cost in a fair and transparent manner by regulated mainstream institutional players.

Financial inclusion, prima facie to be viewed as “money at the bottom of the pyramid” and business models should be so designed to be at least self-supporting in the initial phase and profit-making in the long run. The banking sector has taken a lead role in promoting financial inclusion. Legislative measures have already been initiated in some countries like US, France, UK, South Africa etc.

Banks that have global ambition must meet local aspirations. Financial inclusion will also attract global market players ti our Country that will result in increasing employment and business opportunities. Technology is a great enabler and has to act as a ladder, with a human touch, to achieve the ultimate gold of providing Financial services to the financially excluded.

Banks have made appreciable progress in achieving the goal set for financial inclusion. The Indian experience has proved that Financial inclusion can work within the framework of financial stability given an enabling regulatory environment.