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Financial Inclusion – A Way Forward To Inclusive Development


Financial inclusion is buzz word today in Indian banking sector So what is financial inclusion and how it is important .

Financial inclusion is the initiative of the government of India ,RBI and banks to provide basic banking services to all section of society in urban areas or rural areas at affordable cost. 

After independence most of banking was in hands of private sector ,so they only cater to the needs of rich and affluent people ,so to over come this and provide banking services to every section of society nationalization of banks was done in 1969 in which fourteen banks were nationalized and than six more banks were nationalized in 1980 but sill vast section of our society lack financial services like basic bank account ,credit facilities. 

As financially excluded people go to informal sector to meet their credit needs. They charge exorbitant rate of interest which put them in vicious cycle of moneylenders. So GOI and RBI with help of banks has initiated financial inclusion program to provide banking services to dis advantaged and ,low income groups of our society at affordable cost.

Initiatives taken by RBI and GOI towards financial inclusion:


Swabhimaan is financial inclusion scheme launched by GOI to provide banking facilities in habitation with a population in excess of 2000 by March 2012. This nationwide programme on financial inclusion, was launched in February, 2011 with its focus on bringing the deprived sections of the society in the banking network. 

Granting of new bank licenses to set up new banks

RBI has initiated a process of granting new bank licenses to open bank In this RBI has recently granted new bank licenses to two companies IDFC and Bandhan .

Making it mandatory for all banks to set up minimum 25 percent branches in rural areas.

Easing of KYC norms to open bank account

KYC  is known as Know Your Customer ,so it is mandatory for all banks to take document proof of address ,identity proof, pan no. ,so person who don’t have these documents are unable to open bank account .RBI has simplified the procedure ,a person can open small bank account by giving only aadhar card as proof .

Use of technology

Many banks has initiated steps to leverage technology to provide financial services at cheap cost. Banks on wheel is adopted by many banks to provide banking services to unbanked areas in which a mobile vehicle connected to central server via a telecommunication link provide banking services.

Banking Correspondent Model

Banking correspondent model is adopted by many banks to provide banking services where banks find it not feasible to open brick and mortar branches .In this bank appoint banking correspondent who visit particular areas on set day to provide banking services like credit ,deposit ,withdrawal.

Many initiatives has been taken by RBI ,GOI towards financial inclusion .Latest being the Pradhan Mantri Jan –Dhan Yojana (PMJDY),in which financial inclusion is taken as national mission .In this every Indian family enrolled in a bank for opening zero balance account which can be open by giving only one document either proof of address and proof of identity and also provides various different profit to account holder like insurance cover, overdraft facility ,Atm card .PMJDY is focus on opening one bank account in every family where as swabhimaan is focused on rural India.So financial inclusion is always priority for RBI and GOI, nowadays many financial services are delivered to disadvantaged section of society in their bank accounts by DBT scheme of directly transferring subsidies in their any accounts which help in preventing leakages in delivering of subsidies to dis advantage and low income section of our society. 

Thus Financial inclusion is an enabling element, both in the fight against poverty and in reaching the goal of inclusive economic development.


Financial Inclusion Fund (FIF) by RBI- Key Points Explained



Financial Inclusion Fund (FIF) was formed by merging FIF and Financial Inclusion Technology Fund (FITF) and established by RBI



  • FIF and FITF were established in the year 2007 – 2008 over a period of five years
  • Initial corpus was 500 crore
  • Contribution of GOI, RBI and NABARD was in the ration 40:40:20
  • RBI framed guidelines for both these funds
  • RBI merged both funds into a single entity named FIF and came into effect in 2016

Nodal Agencies

  • RBI established FIF with a corpus of 2000 crore
  • NABARD maintains the funds of FIF
  • GOI administers the FIF

Need for FIF

  • To create awareness among people about financial inclusion
  • To set up financial literary centres at every block level
  • To cater to the services of Jan Dhan Yojana account holders
  • To set up standard kiosks to create financial literacy in gram panchayats
  • The Kiosks will be highly interactive to educate the masses
  • NABARD support to establish skill development centres (SETI)
  • SETI aimed at imparting skills necessary for generating income
  • To provide linkages in a forward manner and establish marketing activities
  • To improve network connectivity by sharing government projects pertaining infrastructure and telecommunication development

Objectives of FIF

  • To enhance financial inclusion on a large scale
  • To support promotional and development activities
  • Increased technological absorption capacity
  • To provide ICT solutions
  • To increase stakeholder capacity building
  • FIF funding is done through ICT – BC model (Information and Communication Technology – Business Correspondent Model)
  • To support banks investment in purview of business expansion in future
  • To address the various issues pertaining to financial inclusion including training, skill development, creating awareness and lack of infrastructure and ICT etc

Eligible Institutions to get FIF

  • Self Help Groups (SHG)
  • NGO
  • Cooperatives
  • Farmer clubs
  • Panchayats
  • Village knowledge centres
  • Agricultural societies
  • IT enabled rural entities
  • Rural multipurpose Kiosks etc

Other Guidelines

  • Contribution to FIF in excess of 0.5 percent from STCRC and RIDF deposits
  • NABARD to maintain all the fund sources and FIF
  • FITF funds transferred to FIF
  • RBI decides operation of FIF for a fixed period of years
  • Union government in consultation with other stakeholders decides important amendments on FIF
  • FIF will be included as a part of National E-Governance plan


  • FIF not to be used for normal banking transactions
  • FIF not to be used for normal business transactions


  • FIF seems to a positive step forward to enhance financial inclusion
  • This is yet another measure of GOI to move towards a digital lifestyle and a cashless economy
  • Financial inclusion and its benefits will be known to the common people through training programs conducted through FIF
  • This will help majority of the Indians to come into the formal banking sector
  • Subsidies will reach the beneficiaries directly in the bank accounts
  • FIF is a positive step of RBI, GOI and NABARD to educate the rural masses and bring them under financial inclusion


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