Financial inclusion in India

Financial inclusion in India
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A methodology oriented towards providing banking and financial solutions to every individual in society, by cancelling any form of discrimination is termed financial inclusion. The agenda is to provide basic financial services to every citizen, overlooking aspects based on income or savings. The primary focus is on the economically underprivileged section of society, providing them with reliable financial solutions without any discrimination. It is committed to offering transparent financial assistance and assuring participation in monetary management judiciously.

The Importance of Financial Inclusion in India

India has been able to boost its economic growth rate higher as compared to the developed countries, but much of the population remains unbanked. With this whole new socio-economic concept of financial inclusion, the aim is to provide financial services at an affordable cost to the deprived section who fail to reach or take advantage of the same. Global trends show, to accelerate growth and development the reach of financial services to the entire society is vital. Financial inclusion in the underprivileged sections would benefit everybody involved: the banks/NBFCs, intermediaries, and the crowd that remains financially sick.

  • The core infrastructure and services would be looked after by the banks

  • Business correspondence (BC) will be the executor who deals with the end users acting as the face of banking and financial Institutions

  • To ease the process of online banking activities, the business correspondents would be supported with handheld terminals like tablets (GSM enabled) along with suitable biometric scanners, smart card swipe machines, thermal Bluetooth printers, etc.

  • UIDAI will oversee providing authentication and customer information through NPCI or NSDL

  • With the increase in income levels and savings in rural areas, it is essential to facilitate incoming and outgoing payments to help the earner manage funds. This would eventually give way to the creation of simple, no-frills current and savings accounts, relaxing KYC norms and hence encouraging finance and banking in rural areas.

Financial Inclusion Via Financial Technology (Fintech)

The use of advanced technology in the finance sector is termed financial technology (fintech). The introduction of fintech has smoothened the entire process of financial inclusion. India has been supported by numerous fintech companies, providing entangled and hassle-free financial services and products at a minimal cost.

One need not waste time standing in long queues to meet their desired financial service. Numerous fintech companies are supporting people in rural areas to apply for loans, open bank accounts, and transfer payments at just a click with the use of mobile phones. Mobile phones and access to the internet are the only components required to get reliable financial services provided by fintech companies. Crowdfunding, digital payment systems, peer-to-peer (P2P), electronic wallets, etc. are some latest fintech options commonly used by individuals.

In order to access the financial benefits put forth by the government for the weaker sections, the people need to have bank accounts. Opening up a bank account is a challenge for this group, they fail to provide the hard copies required at the time of bank account opening. 

To make the process of storing vital documents easier Zoop Wallet app is a blessing in disguise. People can scan and store all the documents in the Zoop Wallet app securely. This makes it easy to access all documents required anytime, anywhere. Zoop Wallet app indeed is an ideal electronic wallet.

Financial Inclusion Via Digital Payment Systems

In this advancing era, electronic wallets or e-wallets are used to make payments for products and services. To avail the benefits of these electronic payment systems electronic means such as mobile phones can be used. Bharat Interface for Money (BHIM), Aadhaar Pay are some of the electronic wallet systems launched by the government of India that can be accessed through Smartphone apps.

E-wallets have attained supremacy over physical wallets, supporting users in making cashless payments through online as well as offline means. From mobile recharge, and paying bills, to transferring money, any form of transaction can be done with the help of an e-wallet. All that one requires is downloading the preferred e-wallet app on the mobile phone.

These digital financial tools surprise users with numerous attractive offers and discounts. Adding benefit to the economically underprivileged section of society. The offers, cash-back, and rewards received to act as an incentive for the user, helping them save a lot of money.

Objectives of Financial Inclusion

  • Financial services and products such as deposits, fund transfer services, loan insurance, payment services, etc. can be secured by underprivileged people at economical prices

  • The underprivileged people struggle to obtain funds, and financial inclusion is working in the direction of building and maintaining financial sustainability for such groups.

  • Financial inclusion aims at providing and spreading awareness about the benefits of financial services among the economically weaker section of society. Thus, improving financial literacy and financial awareness in the nation.

  • It is also taking the digital financial solution to the doorsteps of the economically weaker section.

  • There are various governmental and nongovernmental agencies/organizations dedicatedly working towards bringing financial inclusion. These agencies focus on resolving the complexities people face in receiving government-approved documents. The rural population fails to apply for loans as they do not have identity proof. Also, rural, and tribal populations have no/insufficient knowledge about documents such as PAN, Aadhaar, Driver’s License, or Electoral ID and this disables them from availing various beneficial financial services/subsidies offered by the government or private institutions.

Benefits of Financial Inclusion

  • With the aid of digital payments, there would be a reduction in the cash economy as more money would be clubbed into the banking system

  • It introduces the habit to save thus, uplifting the capital formation in the country and giving a boost to the economy

  • With the surety of attaining adequate and transparent credit from the formal banking system, people can have their hands on their desired entrepreneurial plan.

  • It protects people from financial scammers. When the illiterate and economically weaker section engages in financial transactions via cheque or cash they tend to get cheated.

  • Also, they end up paying high fees at the bank while applying for a loan, or opening a deposit, in the form of processing fees, transaction fees, money order fees etc. The NBFCs and fintech companies have collaborated to save the underprivileged economically backward people with simpler and quicker banking processes that demand no unnecessary fees and charges.

Financial Inclusion Schemes in India

After proper planning and research, keeping the concept of financial inclusion in mind, several financial experts and policymakers have launched schemes over different years. A few financial inclusion schemes in the country are listed below:

  • Pradhan Mantri Jan Dhan Yojana (PMJDY)

  • Atal Pension Yojana (APY)

  • Pradhan Mantri Vaya Vandana Yojana (PMVVY)

  • Stand Up India Scheme

  • Pradhan Mantri Mudra Yojana (PMMY)

  • Pradhan Mantri Suraksha Bima Yojana (PMSBY)

  • Sukanya Samriddhi Yojana