Financial inclusion in India

The banking industry has shown tremendous growth in volume and complexity during the last few decades. Despite making significant improvements in all the areas relating to financial viability, profitability and competitiveness, there are concerns that banks have not been able to include vast segment of the population, especially the underprivileged sections of the society, into the fold of basic banking services. The problem of financial exclusion is not exclusive to the developing world. The developed countries too have been affected by it and many poor and disadvantaged people in the world still lack access to financial services. However, the type, degree and magnitude differ between the two worlds. In developing countries like India both market and government as institutions have their limitations, but it is necessary to design government policies that are attentive to those limitations. Financial Inclusion is one such intervention that seeks to overcome the friction that hinders the functioning of the market mechanism and operate it in favour of the poor and underprivileged. This paper is an attempt to examine the present scenario of financial inclusion in India.