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Importance Of Financial Inclusion

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Financial inclusion activities become one of the important agendas globally. The World Bank estimates that nearly 2.5bn adults globally (50% of the total adult population) is currently ‘unbanked’ or does not have formal financial services. These estimates have huge disparities between different regions of the world. In developed countries (OECD countries) high proportion of the adult population uses the formal way of financial services. While in developing countries two-thirds of the adult population are still financially excluded.
The U.K government has committed to tackle financial exclusion and undertook special proposals in three key areas: Access to banking services, Access to affordable credit and Access to money advice. Besides, all …show more content…
Noteworthy initiatives had been taken by government in promoting financial inclusion for individuals like Know Your Customer (KYC) framework to promote simplified bank accounts and mobile banking, regulating financial cooperatives, expanding use of electronic payment of social grants, improving consumer protection and market conduct, creating a contestable and proportionately regulated payment sector, leveraging the national payment system for financial inclusion, and connecting the less developed economy. These innovative schemes have granted exemptions to some of the documentation requirements that have impeded use of formal financial …show more content…
Nationalization of commercial banks was done in 1969 and 1980. Lead Bank Scheme was launched in 1970 in rural areas to expand financial inclusion. Another feature of the Indian social banking program was direct bank lending to priority sectors (which includes agriculture and small-scale industries), and within these sectors to individuals belonging to weaker sections of society especially the scheduled castes and scheduled tribes (SC/ST). In the year of 1982 the National Bank for Agriculture and Rural Development (NABARD) was set up with the goal to provide refinance to the banks extending credit to farmers, workers in rural areas for development of agricultural activities75. After 1990, The term ‘Financial Inclusion’ introduced for the first time in RBIs Annual Policy Statement for 2005-06, it was introduced by K.C. Chakraborthy, the chairman of Indian Bank. Key objective of Eleventh Five Year Plan (2007-12) was inclusive growth. Through these plans Indian economy had achieved a high growth momentum but unable to bring down unemployment and poverty to the desired levels. Thus, the Eleventh Plan Document tries to restructure the policies in order to make the growth faster, broad-based and inclusive. The main aim of the plan was to increase the level of income and employment opportunities in the country26. 100% Financial

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