Socio-Economic factors and financial capability of villagers in Gujarat

Access to financial services by each and every citizen of India is the core motive of financial inclusion in India and in the same direction triumph efforts has been done by government however later it is realized that financial literacy is must to ensure financial inclusion in India. Financial literacy refers to knowledge of financial matters and the ability to process financial information and make good financial decisions. However in Financial Inclusion 2020 conference in London a term “financial capability” was introduced which has more depth and breadth than financial literacy which basically focuses on knowledge acquisition and Skill development. Financial Capability focuses on behavioral aspect of an individual i.e. mainly confidence, attitude and ability to exercise and take money management related decisions but not limited to access to financial services. However in India Access to financial services was major concern earlier towards which government has taken concrete steps with help of all type of banks, SHG linkage and now also through payment banks which will be operating in India for main two banking services i.e. deposition and withdrawal. Access to Financial service represents supply side while financial capability from demand side. To achieve complete financial inclusion it is essential that demand meet supply side. This paper is an effort to understand the relationship between socio-economic factors and financial capability in rural area which is essential aspect to achieve financial inclusion once the accesses to financial services are assured.