Currently in India, one of the hottest topics is Financial Inclusion. In recent times, Government took various steps for financial inclusion and RBI is also playing its part for the same. Debate on financial inclusion is not new, for the first time it started in India in 2005 when the then Governor of RBI Y. Venugopal Reddy expressed his concerns on the exclusion of majority of population from the financial system.
Since then many things happened in the Indian financial system. For e.g., rules were relaxed related to annual deposits of less than Rs. 50,000 and general credit cards were issued to the poor with a view that they will be availed credit easily. There are number of things which have been adopted by RBI:
- Opening of no-frills accounts
- General Credit Cards
- Adoption of EBT
- Opening of branches in rural areas
- Usage of advanced technology, Etc.
According to the last financial inclusion index, we are performing very badly at it. On June 25, 2013 CRISIL gave score of 40.1 out of 100, although it is good as it improved from 35.4 in 2009 but still it is very low.
From last 10 years Government and RBI is very active for the following 3 important reasons:
- Creating a habit of saving money
- Stopping unbanked people from lending money through unauthorized channels
- Plugging gaps when providing subsidies to poor people
Our new Government is hyper-active in this particular area. In its one and a half year rule, Government took various initiatives on this front, for e.g. Pradhan Mantri Jan Dhan Yojana. Prime Minister Narendra Modi inaugurated it on 28 August 2014 and created record of most accounts opened in 1 week in 18,096,130. By 7th October 2015, this number has reached to 18.70 crore with Rs. 25,146.97 crore deposited under the scheme.
Apart from this, on 15th October 2015 RBI merged two funds to create a new Financial Inclusion plan with a corpus of Rs. 2,000 crore. The two funds which have been merged are Financial Inclusion Fund and Financial Inclusion Technology Fund into a single Fund — Financial Inclusion Fund (FIF). This has been done to support developmental and promotional activities for expansion of reach of banking services. This fund will be administered by Advisory Board constituted by government and will be maintained by NABARD.
Another major development that happened on 15th October is the ruling of Supreme Court on usage of Aadhaar Card in more financial schemes as it will help in financial inclusion. It will help RBI to track the people who are taking multiple loans and will also help banks to tackle NPAs.
Apart from all these things, one indirect step which has been taken by Government is “Make in India” project. Make in India will help Government to create jobs nation-wide which in turn will help in financial inclusion drive.