Financial inclusion is the delivery of financial services at an affordable cost to vast sections of disadvantaged and low income groups.
Why Financial Inclusion in India is important?
1. Creating a platform for inculcating the habit of savings among public.
- Lower income families often come under financial stress due to absence of savings.
- People move away from traditional modes of parking their savings like- land, building, bullion, etc.
- Unbanked population traditionally depend on their family, friends and money lenders for their credit requirements.
- Now adequate and transparent credit is available from formal banking.
- This encourages entrepreneurial spirit and increases the overall output of businesses.
- Considerable sum of money meant for poorest of poor does not reach them- due to leakages in the system. The money spent by the government is unable to reach the intended beneficiaries.
- The Central Government is therefore pushing Direct Benefits Transfer Scheme(DBT) to beneficiaries through their bank accounts. This effort is expected to reduce government subsidy bills and provide relief to only the real beneficiary.
- These efforts requires a efficient and affordable banking system.
Steps taken by RBI to support Financial Inclusion
1. Initiation of Basic Savings Bank Deposit Accounts(BSBDA) accounts.- RBI also eased KYC norms for opening such accounts.
- Affordable account provides basic facilities of deposit and withdrawal.
3. Introduction of Electronic Benefits Transfer.
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