Importance of Financial Inclusion of Banking Industry in India

by Mona Singh Writer

The financial growth rate of India reveals that it is one of the fastest growing economies worldwide. Indian GDP is growing at a growth of rate of over 7% for the past multiple years, which is more than the GDP growth rate of many developed economies. But Indian growth may not be distributed equally and there are large sections of the population that remain uneducated and financially weak. The large percentage of Indian population is also not financially educated and remains unbanked till date.
Financial Inclusion
The Government of India has initiated programs that aim at the financial inclusion of the majority of people of India, through policies and programs. The Indian government fully understands that long-term, complete and stable development of the country is only possible through the inclusion of all sections of the society within the development framework.
The road map
The government specifically aims to include the rural pockets of the population within the development programs and make them financially educated and banked. Banks of India will provide the necessary infrastructure and core/allied services. The BCs or the Business Correspondents will actually deal with the rural end-users and will both represent the banks and also execute a number of inclusion-related tasks. These BCs will be equipped with the GSM-enabled tablets, the portable "biometric" scanners, Bluetooth printers and the smart-card swipe machine, among other gadgets, so that they can easily enroll large crowds while being in the field. Banks will use the financial software solutions at rural operations as well. UIDAI or Unique Identification Authority of India will authenticate and confirm the information related to the customers via NSDL (National Securities Depository Limited) or NPCL after the rural financial institution is authorized. For greater and mass enrollments, the KYC (Know Your customer) rules have been relaxed and the process of opening both savings and current account has been improvised keeping in mind the rural customer characteristics. The infrastructure will support the management of saving and other income and finances later on as well when the income levels in rural India rise.
The importance and benefits of financial inclusion
Apart from RBI's efforts and pressure, the financial inclusion process implementation also involves bureaucratic support and political will.
● The rural masses of India will for the first time witness the technological advances of the financial service sector. They will be able to complete their financial transactions using state-of-the-art security measures like fingerprint authentication and can also get easy access to account statements, balance enquiry, cash payments etc. Further, they can also transact online.
● Least cash dependence as more money could be transacted using cards and online. More money will reach the banking system and illegal holding/lending will decrease.
● A habit towards saving money will be created amongst the rural masses as well. The economic betterment is bound to follow subsequently.
● Funds will not be mishandled, syphoned off or stolen, as the cash transfers could now be done online to any beneficiary account.
● Transparent, adequate and easy-to-access credit and finance will be available to all farmers and others in rural India. It will boost entrepreneurship and the output will increase.
The financial inclusion of rural India is the next revolution and milestone that India will achieve post its Independence pose 1947. The 19% unbanked population (2017 figures) will also join the growth/development bandwagon soon.