Financial Inclusion among Rural Households in Haryana: Developing an Index of Financial Inclusion

It has been realised world over that any growth cannot be sustainable until and unless all sections of society participate in economic and financial activities of the nation. Financial inclusion is an important aspect of inclusive growth and development. As more and more people participate in banking and financial system, the size of formal financial system will enhance and will ultimately support economic growth. Financial inclusion is the provision of basic financial services to all people specially the vulnerable section of society such as poor farmers, labours and women at reasonable cost. Today, ‘financial inclusion’ is the highest priority area of Government of India.

This research work is focused on study of financial inclusion in rural areas of Haryana. The study aims to develop an index of financial inclusion (IFI) on the basis of bank account penetration, availability of bank branches and usage of banking facility in terms of deposits and credit.

The composite IFI has been constructed along with three dimension indices of banking penetration (D₁), availability of bank branches (D₂) and usage of bank account in terms of deposit and credit (D₃), IFI has been constructed taking reference from some milestone studies such as UNDP Global Findex, CRISIL Inclusix and others.

In this study, IFI is developed for various districts of Haryana. Results revealed that Bhiwani district out of 21 districts has highest rank in composite IFI. Two districts, namely Sonipat and Kurukshetra, have moderate level of financial inclusion in rural area. Rest of the districts have low level of financial inclusion according to composite IFI.