Financial inclusion refers to the effort to define financial goods and services in a way that makes them accessible and affordable to any or all individuals and enterprises, regardless of their personal income or company size. It works to get rid of obstacles that prevent individuals from taking part in this industry and utilizing these services to better their lives. The Reserve Bank of India first proposed this proposal in India in 2005.
The Reserve Bank of India stated in December 2009: The facilities under financial inclusion are not limited to just opening a bank account but include services such as financial advice, credit facility, and remittance facility.
It improves the distribution of economic resources and cultivates the idea of saving among the poor. It is a significant step towards the economy’s inclusive growth as it aids in the general economic advancement of the poor population. By providing these customized financial products and services, effective financial inclusion is essential in India which assist the country’s poor and disadvantaged citizens.
It is currently a top priority across geographic borders through the provision of formal financial goods and services to all parts of a community, regardless of their economic standing. When preparing and creating solid policies for achieving sustainable economic development, has emerged as a significant phenomenon. It has generally thought to be an engine for economic growth. Through the provision of its goods and services, the financial services industry not only increases access to the creation of capital but also promotes investment, efficiency, and innovation that boost production.
Role of Technology in Improving Financial Inclusion
The COVID-19 situation made it even more important to expand financial inclusion online. It entails the use of cost-effective digital tools to provide communities that are currently underserved and financially excluded with a range of formal financial services that are ethically supplied at a cost that is reasonable for consumers and sustainable for providers. It is becoming simpler to achieve because of advancements in FinTech like digital transactions.
Digitally enabled financial services make it easier to manage daily life, assist families and businesses in making plans for anything from long-term objectives to unanticipated emergencies, and boost their resilience. The price and accessibility of financial services that were previously unavailable to the unbanked or underbanked masses in India have considerably improved thanks to technology. Our nation has quickened the pace of financial inclusion during the last nine years.
The banking industry has advanced quickly in great part because of the technology’s quick development. Automated Teller Machines (ATM), payment wallets, online and mobile banking, the implementation of Core Banking Solutions (CBS), and other innovations have substantially increased the user experience while also guiding banks in broadening their market.
Government Initiatives for Financial Inclusive Growth
- Digital India
- Aadhaar Card
- Direct Benefits Transfer
- Retail Banking
- Payment Banks
These are the main efforts being taken to attain greater financial inclusion, where individuals and businesses can safely utilize a large variety of adequate financial services like savings, payments, and insurance, which may be made possible with the help of technology.
The following are the criteria to achieve it:
- Improving technology in every business to attract customers.
- Make financial goods and services more widely available.
- Customers and financial institutions need to communicate more effectively.
- Expand access to banking services and enhance the financial wellbeing
- The impact of the biometry system on all financial activities.
True financial inclusion requires collaboration, which is a long-term objective. Government agencies and banking organizations must engage in cost-effective consumer education to increase the adoption of financial products at the grassroots level. A step in the right way may have been taken with the creation of the RBI’s FinTech regulatory sandbox. To achieve this, the public and commercial sectors should work together to seize every chance and address any issues in order to speed up the inclusion process.
I MBA, DSCE