Financial Inclusion refers to universal access to a wide range of financial services at a reasonable cost by vulnerable groups such as weaker sections and low income groups. Financial Inclusion is the way the Governments strive to bring common man along into the formal channel of economy by encouraging the poor person to save, safely invest in various financial products and to borrow from the formal channel when he need to borrow. Financial inclusion also mitigates the exploitation of vulnerable sections by the money lenders by facilitating easy access to formal credit. The Government of India and the Reserve Bank of India have been making a lot effort to promote financial inclusion as one of the important national objectives of the country.
The government is committed to its target of increasing the inclusion of every household in the financial system so that the masses can get all the legitimate benefits arising out of the growth of the country and in turn, the funds mobilised from the people not earlier in the formal channel could also be brought in the formal channel thereby giving the economy of the country an extra thrust to lead the path of growth.
With a view to increase the inclusion of people in the financial system and to ensure that all households have at least one bank account, a National Mission on Financial Inclusion named as Pradhan Mantri Jan Dhan Yojna was announced by Prime Minister Shri Narendra Modi in his independence speech on 15th August, 2014 & the scheme was formally launched on 28th August, 2014.
In order to provide social security system for all citizens and especially to the poor and under-privileged people, the government has launched Pradhan Mantri Suraksha Bima Yojna and Pradhan Mantri Jeevan Jyoti Bima Yojna.
To provide formal access of financial facilities to Non Corporate Small Business Sector, the government has also launched Pradhan Mantri Mudra Yojna in April, 2015. The basic objective of the scheme is to promote & ensure bank finance to unfunded segment of the Indian economy.
The other Schemes launched by the government to increase financial inclusion includes Sukanya Samriddhi Yojana, Kisan Credit Cards (KCC), Atal Pension Yojna, Varishita Pension Bima Yojana, Stand up India, Venture Capital Scheme and BHIM App.
The launch of direct benefit transfers through the support of Aadhaar and Bank Account is also a big step to encourage people to use banking system and to retained people in the newly opened account. RBI has also removed all regulatory bottle necks in achieving greater financial inclusion in the country.
Financial inclusion plays an important role in the process of economic development. By bringing low income groups within the perimeter of formal banking sector, financial inclusion also protects their financial wealth.