#GS3 #Economy FINANCIAL INCLUSION Introduction Fi | CSE MAINS BOOSTER
#GS3 #Economy
FINANCIAL INCLUSION
Introduction
Financial inclusion in the broadest sense of the word implies universal access to bank accounts, easy access to insurance and social security services and better access to credit at a reasonable cost for those presently excluded.
Current status of Financial Inclusion in India
According to World Bank data, in 2017, 80 percent of adults had a bank account.
Even as the importance of financial assets is increasing for Indian households, physical assets continue to be the predominant asset class for savings for them. (More than 50% of the household savings still comprise of physical assets.)
In 2016, the percentage of the population using mobile money services in India was only 1 per cent, compared to Bangladesh (40 per cent), Pakistan (9 per cent) and Kenya (81 percent).
In 2016, the number of loan accounts per 1,000 adults was 154 in India compared to 88 in Bangladesh, 26 in Pakistan and 231 in Kenya.
Also, bank credit to GDP ratio in India was 51 percent, as compared to 98 per cent in China in 2016.
Constraints in Financial Inclusion
Lack of financial literacy amongst low income households and small informal businesses.
The high cost of operations of the traditional banking model.
Excessive regulatory requirements on products, and market entry, and conservative regulatory approach to new technologies.
To overcome these problems, government has taken several steps like- Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Mudra Yojana, Stand-Up India Scheme, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and Atal Pension Yojana.
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