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Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.

Being able to have access to a transaction account is a first step toward broader financial inclusion since a transaction account allows people to store money, and send and receive payments. A transaction account serves as a gateway to other financial services, which is why ensuring that people worldwide can have access to a transaction account is the focus of the World Bank Group’s Universal Financial Access 2020 initiative.

Financial access facilitates day-to-day living, and helps families and businesses plan for everything from long-term goals to unexpected emergencies. As accountholders, people are more likely to use other financial services, such as credit and insurance, to start and expand businesses, invest in education or health, manage risk, and weather financial shocks, which can improve the overall quality of their lives.

 

Financial Inclusion Schemes in India

The Government of India has been introducing several exclusive schemes for the purpose of financial inclusion. These schemes intend to provide social security to the less fortunate sections of the society. After a lot of planning and research by several financial experts and policymakers, the government launched schemes keeping financial inclusion in mind. These schemes have been launched over different years. Let us take a list of the financial inclusion schemes in the country:

  • Pradhan Mantri Jan Dhan Yojana (PMJDY)
  • Atal Pension Yojana (APY)
  • Pradhan Mantri Vaya Vandana Yojana
  • Stand Up India Scheme
  • Pradhan Mantri Mudra Yojana
  • Pradhan Mantri Suraksha Bima Yojana (PMSBY)
  • Sukanya Samriddhi Yojana
  • Jeevan Suraksha Bandhan Yojana
  • Credit Enhancement Guarantee Scheme (CEGS) for Scheduled Castes (SCs)
  • Venture Capital Fund for Scheduled Castes under the Social Sector Initiatives
  • Varishtha Pension Bima Yojana (VPBY)

 

Objectives of Financial Inclusion

  • Financial inclusion intends to help people secure financial services and products at economical prices such as deposits, fund transfer services, loans, insurance, payment services, etc.
  • It aims to establish proper financial institutions to cater to the needs of the poor people. These institutions should have clear-cut regulations and should maintain high standards that are existent in the financial industry.
  • Financial inclusion aims to build and maintain financial sustainability so that the less fortunate people have a certainty of funds which they struggle to have.
  • Financial inclusion also intends to have numerous institutions that offer affordable financial assistance so that there is sufficient competition so that clients have a lot of options to choose from. There are traditional banking options in the market. However, the number of institutions that offer inexpensive financial products and services is very minimal.
  • Financial inclusion intends to increase awareness about the benefits of financial services among the economically underprivileged sections of the society.
  • The process of financial inclusion works towards creating financial products that are suitable for the less fortunate people of the society.
  • Financial inclusion intends to improve financial literacy and financial awareness in the nation.
  • Financial inclusion aims to bring in digital financial solutions for the economically underprivileged people of the nation.
  • It also intends to bring in mobile banking or financial services in order to reach the poorest people living in extremely remote areas of the country.
  • It aims to provide tailor-made and custom-made financial solutions to poor people as per their individual financial conditions, household needs, preferences, and income levels.
  • There are many governmental agencies and non-governmental organisations that are dedicated to bringing in financial inclusion. These agencies are focussed on improving the access to receiving government-approved documents. Many poor people are unable to open bank accounts or apply for a loan as they do not have any identity proof. There are so many people who live in rural areas or tribal villages who do not have knowledge about documents such as PAN, Aadhaar, Driver’s License, or Electoral ID. Hence, they cannot avail many of the services offered by governmental or private institutions. Due to lack of these documents, they are unable to avail any form of subsidies offered by the government that they are actually entitled to.
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