For the economic growth of the country, It is mandatory to spread banking and financial system to every nook and corner of the country so that every person living in the country avails the banking facilities and with this he inculcates the habit to save money, thus increasing the capital formation in the country and indirectly giving an economic boost to the country.
Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost (The Committee on Financial Inclusion, Chairman: Dr C. Rangarajan).
Financial Inclusion, broadly defined, refers to universal access to a wide range of financial services at a reasonable cost. These include not only banking products but also other financial services such as insurance and equity products (The Committee on Financial Sector Reforms, Chairman: Dr.Raghuram G. Rajan)
Over the years RBI and GOI have taken many steps towards the Financial Inclusion in India. Today we will discuss the different initiative taken by RBI & GOI for the financial inclusion.
NO FRILLS ACCOUNT
- In India, The process of financial Inclusion started with NO FRILLS ACCOUNT
- An account maintained without or with very low minimum balance.
- No frills account was replaced by BSBDA
- Basic Saving Bank deposit Account
- No minimum balance required
- No limit on number of deposit
- ATM -cum debit card facility
- 4 withdrawals in a month
- Total credits – should not be over Rs 1 lakh in a year
- These are bank representative goes to the area allocated to them to provide
RELAXATION ON KYC NORMS
KYC – Know Your Customer
- KYC is a customer verification process which includes submission of documents to the bank in order to open the account
- Banks are also allowed to use aadhar card as proof of address and identity
LICENSING OF NEW BANKS
- Financial inclusion will be taken into consideration for the applications of
new bank licensing.
- RBI has permitted banks to use NGOs and SHGs, microfinance institutions to
facilitate financial and banking services.
USE OF TECHNOLOGY
- Finance industry for faster processing of work
- Mangalam in Puducherry became the first village in India where all the households were provided with facilities of Banking