Introduction
Financial inclusion generally refers to making financial services and products affordable and accessible to all businesses and individuals, regardless of their net worth or company size. It strives to remove challenges that exclude people from participating in the financial sector and the use of these services to improve their lives. Hence, it is also called inclusive finance.
According to the World Bank, financial inclusion daily living and helps businesses and families plan everything from unexpected emergencies to long-term goals. As account holders people are more likely to use other financial services such as credit, savings as well as insurance, start and expand businesses, manage risks, invest in health or education, and weather financial shocks. All of these can improve the overall quality of their lives.
One of the key reasons why financial inclusion is important is that it enables the reduction of inequality and poverty. In addition to that, it provides opportunities for low-income individuals and marginalized communities to access formal financial services such as credit, savings, and insurance. Moreover, it empowers people to build their wealth while allowing banks to extend their customer base. Furthermore, it helps families save for unforeseen emergencies or retirement and plan for recurring expenses such as rent or education.
Comprehending Financial Inclusion in India
Financial inclusion generally means a plan to provide affordable, adequate, and quality financial services or products at all levels of society. A country can grow only if its people have unlimited access to financial services. In banking, financial inclusion is like a bank account to pay, save, and transfer money, insurance for risk coverage and a borrowing facility for expansion and growth are of primary importance.
Financial inclusion is an important dimension for the economic development of India as it allows access to formal finance to improve job creation, increase investments, and eliminate the vulnerability to economic shocks. At the macro level, greater financial inclusion can help in supporting inclusive and sustainable economic growth. In addition to that, financial inclusion fights off extreme poverty reducing income inequality and encouraging human capital creativity in an indirect way which in turn has a significant impact on the economic growth of India.
Although financial inclusion is an important aspect of economic growth in India, there exist certain challenges to it. Illiteracy which affects nearly 1/4th of the population in India makes it difficult to comprehend different product offerings, financial conditions, and terms. In addition to that, low income and the inability to provide collateral security is another challenge. The unavailability of adequate rural bank branches continues to be another roadblock to financial inclusion. One of the major challenges to financial inclusion in rural India is more reliance on informal lending. Other challenges include socio-economic factors such as low-income households.
AISECT’s Mission and Approach
To strengthen the roots of our country, AISECT FI is an initiative that aims to provide easy savings and loan options along with other additional banking options at a low and affordable price to unbanked and disadvantaged populations and every segment of the nation. Financial inclusion is responsible for offering banking services at a reasonable cost to a large segment of disadvantaged and poor populations. Since banking services are intended to do good to the public, the provision of banking and payment services to all citizens without discrimination can be considered India’s most important developmental goal.
Collaborative Partnerships with Government Agencies
With the following vision and the comprehension of the need for financial inclusion across the country, AISECT is a partner with government organizations that offer progressively synergistic services through AISECT Multi-purpose ICT centers which are located in rural areas. In 2009, financial inclusion was added to the range of services offered by AISECT in collaboration with SBI.
Under the financial inclusion scheme, AISECT works as an NBC (National Business Correspondent) for 3 nationalized banks and 2 rural banks. The banking kiosks also offer a host of services under different government schemes such as Pradhan Mantri MUDRA Yojana, PMSBY (Pradhan Mantri Suraksha Bima Yojana, Atal Pension Scheme, etc.
Overcoming Challenges
- • Bank Kiosks that are linked online
- •GPRS-enabled Micro-ATMs
- • Smart cards, UIDAI authenticate consumers, and biometric fingerprints
- • Customer acquisition and delivery of services
- •Authentication by consumers
- •The BC/CSP handles cash handling
Future Prospects
The prospects of financial inclusion in India can be considered quite promising with significant contributions already being made in the field in recent years. Financial inclusion generally refers to the efforts to ensure that businesses and individuals, especially those in marginalized and underserved communities have access to convenient and affordable fiscal services.
One of the key factors shaping the aspect of financial inclusion in India is Digital transformation. The digital transformation in India in recent years has contributed to the widespread adoption of smartphones and increased internet penetration. This has created opportunities for the expansion of financial services through digital channels. The government’s initiative of Digital India and PMJDY has played a crucial role in the promotion of digital financial inclusion in India.
Conclusion
In conclusion, financial inclusion in India can be considered a critical driver of poverty reduction and economic growth. The provision of accessible and affordable fiscal services to all segments of society is responsible for empowering individuals, fostering job creation, and simulation of investments while reducing income inequalities and vulnerabilities to economic shocks.
Challenges such as lack of collateral security, illiteracy, and limited rural bank branches need to be addressed. AISECT’s mission and collaborative partnerships with government agencies efficiently demonstrate a commitment to overcoming these challenges. The future of financial inclusion in India seems promising driven by government initiatives and digital transformations which have expanded the reach of financial services to underserved and marginalised communities.
