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What is Financial Inclusion? Knowledge of the objective of financial inclusion

 

What is Financial Inclusion? Knowledge of the objective of financial inclusion


Financial Inclusion

Financial inclusion is usually seen by linking with banks. Financial inclusion in India was needed to enable banks to reach the common people, which has been met. The scope of banks has increased after financial inclusion. They have access to rural areas, which are benefiting people. A loan is also being arranged for them. Financial inclusion is being described in detail in this article . Aspects related to its purpose and benefits to people will also be expanded. Read the article till the end to get complete information.



Financial Inclusion Initiative

The need was felt by the Reserve Bank of India (RBI) in 2005. The system was implemented by the RBI on the suggestion of the then Prime Minister Manmohan Singh. Banks were instructed to extend their reach to the common people. A large number of branches should be opened in rural areas so that the people of the village can also connect directly with the banks. Instructions were also given to open accounts of a large number of people. There was talk of increasing the digital program so that people can get most of its benefits easily without coming into the banking system.


RBI Guidelines

Guidelines for this were issued by the then RBI Governor Y Venugopal Reddy. Banks were instructed to install large numbers of ATMs in both urban and rural areas. Such ATMs should also be set up where both types of transactions can be facilitated. That is, customers can get the facility to withdraw and deposit money from one place. Banks had installed a large number of ATMs between 2005-2015, following RBI guidelines .


RBI said that minimum balance has been stopped

RBI had also made it clear that banks should implement minimum balance arrangement. For account holders, accounts should be opened on zero balance and after the commencement of the account, they should be kept away from restrictions like minimum balance. This system was introduced for all banks and all types of account holders in the country. Private banks were also brought under this ambit. Most of the private banks had also abolished the minimum balance system, but after 2014, this system has been resumed in most banks including State Bank of India.


Account number increases under Financial inclusion

After financial inclusion, the banking system has not only improved, but they have reached the common people. For this, the banks had advised banks to open more and more accounts of their people. Provide banking facilities for them. Enhance the system like electronic payment channels, so that people can get banking facilities from home. Under the Pradhan Mantri Jan Dhan Khata Yojana, more than 50 crore new accounts were opened in the country, which greatly benefited the common people. Especially those who live in rural areas.


Financial inclusion eases loan access

Similarly, RBI had also prescribed a loan issuance limit for banks. Banks were instructed to arrange loans for the economically weaker sections. Be it small scale industry, cottage industry or self-employment related schemes, large scale loans should be distributed to the people. The objective of formation of banks is not only to improve the economic condition of the country, but also to provide funds for the common people, so that they can meet all the legitimate needs along with employment, education. After financial inclusion, banks have done commendable work in terms of lending. Loans were also distributed extensively under the Pradhan Mantri Mudra Yojana.

Use of NGOs, microfinance institutions under financial inclusion

The RBI has also directed the banks to implement the objectives of financial inclusion and review the existing practices. Not only this, banks have been asked to use non-governmental organizations (NGOs), microfinance institutions and SHGs better. Similarly, instructions have been given to use civil society organizations. RBI believes that the use of such organizations and better work done for them can not only create employment opportunities, but also enhance the production capacity of the country.


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