Financial inclusion: Difference between revisions
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The United Kingdom was one of the first countries to realize the importance of [[Financial Inclusion]]. It published its strategy of financial inclusion in its report ''Promoting Financial Inclusion'' which was published alongside the Pre-Budget Report of 2004. The UK government also setup the '''Financial Inclusion Fund''' of £120m to help bring about Financial Inclusion. The Financial Inclusion Taskforce was formally launched on 21 February 2005 to monitor progress on Financial Inclusion and to make suitable recommendations. |
The United Kingdom was one of the first countries to realize the importance of [[Financial Inclusion]]. It published its strategy of financial inclusion in its report ''Promoting Financial Inclusion'' which was published alongside the Pre-Budget Report of 2004. The UK government also setup the '''Financial Inclusion Fund''' of £120m to help bring about Financial Inclusion. The Financial Inclusion Taskforce was formally launched on 21 February 2005 to monitor progress on Financial Inclusion and to make suitable recommendations. |
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==Financial Inclusion in India== |
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The [[Reserve Bank of India]] setup a commission (Khan Commission) in 2004 to look into Financial Inclusion and the recommendations of the commission were incorporated into the Mid-term review of the policy (2005-06). In the report RBI exhorted the banks with a view of achieving greater Financial Inclusion to make available a basic "no-frills" banking account.In India, Financial Inclusion first featured in 2005, when it was introduced, that, too, from a pilot project in UT of Pondicherry, by K C Chakraborthy, the chairman of Indian Bank. Mangalam Village became the first village in India where all households were provided banking facilities. In addition to this KYC (Know your Customer) norms were relaxed for people intending to open accounts with annual deposits of less than Rs. 50, 000. General Credit Cards (GCC) were issued to the poor and the disadvantaged with a view to help them access easy credit. In January 2006, the Reserve Bank permitted commercial banks to make use of the services of non-governmental organizations (NGOs/SHGs), micro-finance institutions and other civil society organizations as intermediaries for providing financial and banking services. These intermediaries could be used as business facilitators (BF) or business correspondents (BC) by commercial banks. The bank asked the commercial banks in different regions to start a 100% Financial Inclusion campaign on a pilot basis. As a result of the campaign states or U.T.s like [[Puducherry]], [[Himachal Pradesh]] and [[Kerala]] have announced 100% financial inclusion in all their districts. Reserve Bank of India’s vision for 2020 is to open nearly 600 million new customers' accounts and service them through a variety of channels by leveraging on IT. However, illiteracy and the low income savings and lack of bank branches in rural areas continue to be a road block to financial inclusion in many states.Apart from this there are certain in Current model which is followed.There is inadequate legal and financial structure.India being a mostly agrarian economy hardly has schemes which lend for agriculture.Along with Microfinance we need to focus on Microinsurance too. |
The [[Reserve Bank of India]] setup a commission (Khan Commission) in 2004 to look into Financial Inclusion and the recommendations of the commission were incorporated into the Mid-term review of the policy (2005-06). In the report RBI exhorted the banks with a view of achieving greater Financial Inclusion to make available a basic "no-frills" banking account.In India, Financial Inclusion first featured in 2005, when it was introduced, that, too, from a pilot project in UT of Pondicherry, by K C Chakraborthy, the chairman of Indian Bank. Mangalam Village became the first village in India where all households were provided banking facilities. In addition to this KYC (Know your Customer) norms were relaxed for people intending to open accounts with annual deposits of less than Rs. 50, 000. General Credit Cards (GCC) were issued to the poor and the disadvantaged with a view to help them access easy credit. In January 2006, the Reserve Bank permitted commercial banks to make use of the services of non-governmental organizations (NGOs/SHGs), micro-finance institutions and other civil society organizations as intermediaries for providing financial and banking services. These intermediaries could be used as business facilitators (BF) or business correspondents (BC) by commercial banks. The bank asked the commercial banks in different regions to start a 100% Financial Inclusion campaign on a pilot basis. As a result of the campaign states or U.T.s like [[Puducherry]], [[Himachal Pradesh]] and [[Kerala]] have announced 100% financial inclusion in all their districts. Reserve Bank of India’s vision for 2020 is to open nearly 600 million new customers' accounts and service them through a variety of channels by leveraging on IT. However, illiteracy and the low income savings and lack of bank branches in rural areas continue to be a road block to financial inclusion in many states.Apart from this there are certain in Current model which is followed.There is inadequate legal and financial structure.India being a mostly agrarian economy hardly has schemes which lend for agriculture.Along with Microfinance we need to focus on Microinsurance too. |
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Revision as of 15:03, 24 March 2010
Financial Inclusion is the delivery of banking services at affordable costs to vast sections of disadvantaged and low income groups. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. It is argued that as banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of public policy. The term Financial Inclusion has gained importance since the early 2000s, and is a result of findings about Financial Exclusion and its direct correlation to poverty. Financial Inclusion is now a common objective for many central banks among the developing nations.
Financial Inclusion, UN
On 29 December 2003,Former UN Secretary-General Kofi Annan said: ”The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. Together, we can and must build inclusive financial sectors that help people improve their lives.”
According to the United Nations the main goals of Inclusive Finance are as follows:
- Access at a reasonable cost of all households and enterprises to the range of financial services for which they are “bankable,” including savings, short and long-term credit, leasing and factoring, mortgages, insurance, pensions, payments, local money transfers and international remittances
- Sound institutions, guided by appropriate internal management systems, industry performance standards, and performance monitoring by the market, as well as by sound prudential regulation where required
- Financial and institutional sustainability as a means of providing access to financial services over time
- Multiple providers of financial services, wherever feasible, so as to bring cost-effective and a wide variety of alternatives to customers (which could include any number of combinations of sound private, non-profit and public providers).
Financial Inclusion Taskforce, UK
The United Kingdom was one of the first countries to realize the importance of Financial Inclusion. It published its strategy of financial inclusion in its report Promoting Financial Inclusion which was published alongside the Pre-Budget Report of 2004. The UK government also setup the Financial Inclusion Fund of £120m to help bring about Financial Inclusion. The Financial Inclusion Taskforce was formally launched on 21 February 2005 to monitor progress on Financial Inclusion and to make suitable recommendations.
Financial Inclusion in India
The Reserve Bank of India setup a commission (Khan Commission) in 2004 to look into Financial Inclusion and the recommendations of the commission were incorporated into the Mid-term review of the policy (2005-06). In the report RBI exhorted the banks with a view of achieving greater Financial Inclusion to make available a basic "no-frills" banking account.In India, Financial Inclusion first featured in 2005, when it was introduced, that, too, from a pilot project in UT of Pondicherry, by K C Chakraborthy, the chairman of Indian Bank. Mangalam Village became the first village in India where all households were provided banking facilities. In addition to this KYC (Know your Customer) norms were relaxed for people intending to open accounts with annual deposits of less than Rs. 50, 000. General Credit Cards (GCC) were issued to the poor and the disadvantaged with a view to help them access easy credit. In January 2006, the Reserve Bank permitted commercial banks to make use of the services of non-governmental organizations (NGOs/SHGs), micro-finance institutions and other civil society organizations as intermediaries for providing financial and banking services. These intermediaries could be used as business facilitators (BF) or business correspondents (BC) by commercial banks. The bank asked the commercial banks in different regions to start a 100% Financial Inclusion campaign on a pilot basis. As a result of the campaign states or U.T.s like Puducherry, Himachal Pradesh and Kerala have announced 100% financial inclusion in all their districts. Reserve Bank of India’s vision for 2020 is to open nearly 600 million new customers' accounts and service them through a variety of channels by leveraging on IT. However, illiteracy and the low income savings and lack of bank branches in rural areas continue to be a road block to financial inclusion in many states.Apart from this there are certain in Current model which is followed.There is inadequate legal and financial structure.India being a mostly agrarian economy hardly has schemes which lend for agriculture.Along with Microfinance we need to focus on Microinsurance too.