What is Financial Inclusion? Financial inclusion means everyone is given access to: BANKING Savings & payment (through ATM, cheques, e-transfer etc.) CREDIT loans @affordable interest rates. INVESTMENT mutual funds, pension plans, child investment plans etc. INSURANCE life insurance and non-life (general) insurance. We need financial Inclusion because It Turns savings into investment. Circular flow of income=helps the economy. (Compared to if everyone just hid their money under pillow.) Insurance/investment/savings =Protects family against unfortunate circumstances. Child future secured. Income inequality falls more rapidly in areas that have more developed financial intermediaries (banks, insurance companies). In the 80s, countries that focused on providing easy financial services to small businessmen =became large economies today be it Japan, South Korea or USA. Financial inclusion = cheaper loans=faster growth of agri and small business. (Because Banks charge less interest rate than private moneylenders and financers.) IF all of the government subsidy/benefit payments are done via netbanking/e-transfer then Rs.1 lakh crore rupee will be saved per year in terms of manpower-time-paperwork-leakages. [As per Mckinsey research.] If there are no formal channels to save money (like Bank), then low income households are more likely to fall victim to Ponzi schemes like Saradha chit fund in Bengal. IF everyone has bank account=> lowers the transaction costs, paperwork and time. (Compared to counting currency notes, maintaining records, manually recovering money vs cheque drop box and so on.) Economic well-being of the poor people also ensures social harmony, they’ll not fall into brainwashing by Maoists/Secessionist/Extremist elements
Posted on: Tue, 19 Aug 2014 17:31:49 +0000
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