In a diverse country like India, financial inclusion is a critical part of the development process. State the significance of financial inclusion in achieving economic growth in India. "Global Findex." This results in a high cost of credit. Which of the following is the objective of financial inclusion? Read how hawala works, where it is illegal, and how governments regulate it. The Financial Inclusion Index is a comprehensive index that will incorporate the details of banking, insurance, investments, pension and postal sectors. Financial Inclusion Index:- Download PDF Here, Your Mobile number and Email id will not be published. Fintech, the common-known name of financial technology, is used to describenew technology that seeks toimprove and automate the delivery and use of financial services. According to the 2017 Global Findex database, 83% of males above 15 years of age in India held accounts at a financial institution in 2017 compared to 77% females. The World Bank. This is quite low when compared to similarly placed economies like BRICS nations. Financial inclusion . Candidates preparing for the Civil Services Exam can download the NBFC UPSC Notes from here . Products must be designed and delivered intelligently to meet the customer where they are, and by keeping in mind that they use products to reach their goals. 82/2016: Presiden Pimpin Langsung Dewan Nasional Keuangan Inklusif", "Siaran Pers Survei OJK 2019 Indeks Literasi Dan Inklusi Keuangan Meningkat", "The Global Findex Database Measuring Financial Inclusion and the Fintech Revolution 2017", "Strengthening Women's Financial Control Through Personal Bank Accounts", "Igniting SDG Progress Through Digital Financial Inclusion", "Report of the TOT on Open Budgets for inclusion of Excluded Communities in Accessing Services and Development - Lokkatha: Voice of the Masses", "Is financial inclusion good for bank stability? However, results will not be known until sometime in 2021.. https://drishti.link/En-IASFoundation-Jaipur-27June According to the 2017 Global Findex database, 83% of males above 15 years of age in India held accounts at a financial institution in 2017 compared to 77% females. The all-India CRISIL Inclusix score of 58.0 is above average as of April 2016, this is a significant improvement from 35.4 in 2009. GS Paper 3: Topics Covered: Inclusive growth and issues arising out of it. The primary market is the part of the capital market that deals with the issuance and sale of securities to investors directly by the issuer. This article is based on "Women are key to financial inclusion" which was published in The Hindustan Times on 24/04/2021. However, an inadequate compensation structure makes correspondent banking unattractive. To The Point: https://bit.ly/3jeVXhP3. Payments through the USSD channel should be promoted (by reimbursing the charges incurred in the USSD process), as they have an advantage over the internet in that it can also cover a large proportion of non-smartphone users. Now watch this on our Youtube Channel. Enabling agricultural NBFCs to access low-cost capital and deploy a phygital (physical + digital) model for achieving better long-term digital outcomes. The main objective of this program is to cover all the relevant and important topics from UPSC and state PSC points of view. Despite various governmental initiatives, the state of financial inclusion is not very bright: Micro, Small and Medium Enterprises (MSME) sector, which provides 90 per cent of non-farming employment, could access only 4 per cent of institutionalized finance, leaving the rest to usurious money lenders, Financial Inclusion UPSC Notes:-Download PDF Here, Choose the correct answer from the below given options, A) All the above given Statements are false, B) All the above given Statements are true. It has also helped in weeding out duplication of entries, and bringing down the reliance on cash mode of payments. NITI Aayog and Mastercard have released a report titled Connected Commerce: Creating a Roadmap for a Digitally Inclusive Bharat. Financial inclusion is an effort to make everyday financial services available to more of the world's population at a reasonable cost. The FI-Index captures various aspects of financial . May 13, 2021May 13, 2021 by Insights Editor NITI Aayog report on digital financial inclusion Topics Covered: Inclusive growth and issues arising from it. As the World Bank notes on its website, financial inclusion "facilitates day-to-day living, and helps families and businesses plan for everything from long-term goals to unexpected emergencies." But, according to a report by the World Bank, about 190 million adults in India do not have a bank account, making India the worlds second largest nation in terms of unbanked population after China. Insta 75 Days Revision Tests for Prelims 2023, Insta 75 days Revision Tests for Prelims 2022, Foundation Program: OGP(Offline and Online Guidance Program). Required fields are marked *, Get up to 60% off on our LIVE Online Classroom Program. She responded, Yes, I know I am, But I do not want to take a loan from your bank because I require a loan in the morning and want to repay it in the evening or maybe next week. UPSC Mains 2022 Is inclusive growth possible under market economy ? This has now changed, and there has been an active participation of the private players (payment banks like paytm, airtel money and jio money), as they have also realised that bringing the poor into the financial net is beneficial to their business models as well. Microlending has also become a source of capital in places where it is otherwise hard to come by. GPFI member countries and. Join now! Accessed on Dec. 26, 2020. But, according to a report by the World Bank, about 190 million adults in India do not have a bank account, making India the worlds second largest nation in terms of unbanked population after China. 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Most of the SHGs are formed for the purpose of better financial security among its members. To avoid these counterproductive outcomes, it is important that all stakeholders participate in such programmes with proper intent and not just for the sake of it. What is digital Continue reading "Digital Banking Units:" These initiatives have brought about major changes to increase the last-mile connectivity of financial services to its people. Given the infeasibility of locating branches in every nook and corner of the country, bank correspondents are used to reach out to prospective clients. It is a single value that ranges between 0 and 100. In a diverse country like India, financial inclusion is a critical part of the development process. The combination of a huge informal sector along with a high dependence on cash mode of transaction poses an impediment to digital financial inclusion. The state of financial inclusion has improved considerably over time. The Financial Services Forum is an organization representing the CEOs of the eight largest U.S. banks that advocates on financial and economic policy. Increasing the number of automated teller machines (ATMs). The offers that appear in this table are from partnerships from which Investopedia receives compensation. Parvatis case became an inspiration for the Mann Deshi Bank to design and launch a cash credit product for women. The deadline is decided to be March 2022. Who are the stakeholders of the National Financial Inclusion Strategy? Financial inclusion also mitigates the exploitation of vulnerable sections by the usurious money lenders by facilitating easy access to formal credit. Thus, there is a need to create better monetary incentives for banking correspondents as well as to provide them better training. Gives information on the level of financial inclusion in the country. The report on the committee of financial inclusion reforms mentioned the household access to financial services, depicted in the diagram below: There are three challenges to financial inclusion and those can be termed to be. The Public Credit Registry (PCR) is planned to be made fully operational by March 2020. It was developed by the RBI in 2021, without any 'base year', and is published in July every year. Competition to ensure choice and affordability for clients. The increasing use of financial technology (or fintech), for example, has provided innovative tools to address the problem of inaccessibility to financial services and devised new ways for individuals and organizations to obtain the services they need at reasonable costs. In this article, you can read all about the Financial Inclusion Index. The most common barriers to the adoption of digital technology which may promote financial inclusion: Non-availability of suitable financial products, Lack of skills among the stakeholders to use digital services, Low-income consumers who are not able to afford the technology required to access digital services. The convergence of JAM trinity with the Direct Benefit Transfer (DBT) scheme has largely been successful. No. low-cost credit for productive, personal and other purposes. To avoid these counterproductive outcomes, it is important that all stakeholders participate in such programmes with proper intent and not just for the sake of it. Technology should be used to improve the assessment of credit-worthiness for households and informal businesses. InsightsIAS has redefined, revolutionised and simplified the way aspirants prepare for UPSC Civil Services Exam. 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Self Help Groups and Their Origin Indian Microfinance Model. To complement your preparation for the upcoming exam, check the following links: In India, the government too has tried to financially include its citizens through initiatives like Pradhan Manri Jan Dhan Yojana (PMJDY), aadhar etc. Simplified: https://bit.ly/37cnefx5. Candidates can find the general pattern of the UPSC Civil Service Exam by visiting the IAS Syllabus page. However, the financial inclusion hasnt reached the poorest of the poor and there exist many bottlenecks and challenges which need immediate attention. The key driver of financial inclusion is the proliferation of. No. The combination of Aadhaar, PMJDY, and a surge in mobile communication has reshaped the way citizens access government services. If adequate measures are taken to tide over the existing problems, financial inclusion has the potential to amplify the benefits of economic growth to the poor. Read more on financial inclusion from the linked article. There are three broad parameters for calculating the FI-Index. Out of total 40.35 crore PMJDY accounts, 34.81 crore (86.3%) are operative. Central Bank Digital Currency (CBDC) is the digital form of a country's fiat currency, which is regulated by its central bank. This will lead authorized financial entities to assess the credit proposals from all citizens. It is important as it provides an avenue to the poor for bringing their savings into the formal financial system, an avenue to remit money to their families in villages besides taking them out of the clutches of the usurious money lenders. Improving the access of PMJDY account holders to Micro-credit and micro-investment such as Flexi-. Collins, J. M. (2011). It talks about gender-based barriers to financial inclusion. She has a savings account with the Mann Deshi Sahakari Bank. Your Mobile number and Email id will not be published. For instance, the Jan Dhan scheme has resulted in the opening of many dormant accounts which never saw actual banking transactions. NITI Aayog report on digital financial inclusion: Context: NITI Aayog and Mastercard have released a report titled 'Connected Commerce: Creating a Roadmap for a Digitally Inclusive Bharat'. A non-banking financial institution (NBFC) is a type of financial institution that provides banking and other financial services without meeting the legal definition of a bank . The foreign exchange market is a global decentralized or over-the-counter market for the trading of currencies. Increasing access to and use of quality financial products and services is essential to inclusive economic growth and poverty . By significantly changing the concept of individual identity, Aadhaar has not only brought about a secure and easily verifiable system but also easy to obtain as well to help in the financial inclusion process. Women & Financial Inclusion. In the traditional financial system, the design and distribution cost on financial products at sachet size is high. Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost. Self Help Groups are groups of 10-20 people in a locality formed for any social or economic purpose. 12th, 1st and 2nd Floor, Adichunchanagiri Road, Block K, 1st Stage, Kuvempu Nagara, Mysuru- 570023, Karnataka. Expansion of financial services in Rural and Semi-Urban Areas, Enhancing Active Participation of Citizenry. What is the Financial Inclusion Index? However, an inadequate compensation structure makes correspondent banking unattractive. While 0 represents complete financial exclusion, 100 represents complete financial inclusion. Financial Inclusion Insights by Intermedia", "Tax Incentives: An Economic Basis for Charitable Giving | Learning to Give", "The future of microfinance in the United States: regulatory reforms for economic prosperity", "Who Gets Hurt When the World Stops Using Cash", "Perpres No. The government has also launched many flagship schemes to promote financial inclusion and provide financial security to empower the poor and unbanked in the country. This has been addressed to an extent by the. Which centres are included in this strategy? As per extant RBI guidelines, a PMJDY account is treated as inoperative if there are no customer induced transactions in the account for. Earlier, private institutions did not engage with the poor as customers on a significant scale. The Reserve Bank of India has released the Composite Financial Inclusion Index (FI-Index) for the year ended 31st March 2022. It aims to provide access to formal financial services in an affordable manner, broadening & deepening financial inclusion and promoting financial literacy & consumer protection. Digitizing registration and compliance processes and diversifying credit sources to enable growth opportunities for MSMEs. What's more, it adds, "As accountholders, people are more likely to use other financial services, such as savings, credit, and insurance, start and expand businesses, invest in education or health, manage risk, and weather financial shocks, all of which can improve the overall quality of their lives.". The candidates can read more relevant information from the links provided below: The Financial Inclusion Index is a comprehensive index that will incorporate the details of banking, insurance, investments, pension and postal sectors. By providing access to financial resources to underprivileged and marginalised sections of society, financial inclusion has the potential to reduce poverty, create jobs, among others. Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Since independence, the combined efforts of successive governments, regulatory institutions, and the civil society have helped in increasing the financial-inclusion net in the country. He is a financial content strategist and creative content editor. Strategic objectives for financial inclusion: RBI identified six strategic objectives of a national strategy for financial inclusion: (i) universal access to financial services, (ii) providing basic bouquet of financial services, (iii) access to livelihood and skill development, (iv) financial literacy and education, (v) customer protection and . Now watch this on our Youtube Channel. UPSC Civil Services Preliminary Examination 2023 (CSAT Answer Key). Deposits have increased about 5.7 times with increase in accounts 2.3 times between 2015 to 2020. "Financial Inclusion." Thus, there is a need to create better monetary incentives for banking correspondents as well as to provide them better training. This app is also being used for identifying villages which are not served by banking touchpoints within 5 km. According to the RBI, the third parameter of quality requires both demand and supply-side interventions. With the adoption of appropriate technology a new data-sharing framework (using Jan Dhan and Aadhaar platforms), to enable easier access to credit, with adequate safeguards for maintaining data privacy. For the success of financial inclusion in India, there has to be a multidimensional approach through which existing digital platforms, infrastructure, human resources, and policy frameworks are strengthened and new technological innovations should be promoted. The World Bank defines the term as the following: Financial Inclusion meansthat individuals and businesses have access to useful and affordablefinancialproducts and services that meet their needs transactions, payments, savings, credit and insurance delivered in a responsible and sustainable way.. Extended on popular demand. Total deposit balances under PMJDY Accounts stand at Rs. The convergence of JAM trinity with the Direct Benefit Transfer (DBT) scheme has largely been successful. By significantly changing the concept of individual identity, Aadhaar has not only brought about a secure and easily verifiable system but also easy to obtain as well to help in the financial inclusion process. Download the BYJU'S Exam Prep App for free IAS preparation videos & tests -, In this article, you can read all about the Financial Inclusion Index. Total RuPay cards issued to PMJDY account holders: 29.75 Crore. Data & Facts for Mains 2022 by Sunya IAS PDF. What are Self Help Groups (SHGs)? Accessed on Dec. 26, 2020. For the success of financial inclusion in India, there has to be a multidimensional approach through which existing digital platforms, infrastructure, human resources, and policy frameworks are strengthened and new technological innovations should be promoted. Financial inclusion is defined as the availability and equality of opportunities to access financial services. Required fields are marked *, Get up to 60% off on our LIVE Online Classroom Program. It has also helped in weeding out duplication of entries, and bringing down the reliance on cash mode of payments. Since independence, the, Being able to have access to a transaction account is a. "UFA2020 Overview: Universal Financial Access by 2020." Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost. For instance, the Jan Dhan scheme has resulted in the opening of many dormant accounts which never saw actual banking transactions. These include white papers, government data, original reporting, and interviews with industry experts. The first G20 Global Partnership for Financial Inclusion (GPFI) meeting under G20 India Presidency is scheduled to be held during 9-11 January 2023 in Kolkata. And, Parvatis situation is not unique. Extended on popular demand. MindMaps for UPSC: https://bit.ly/3fmYky66. These include the opening of bank branches in remote areas. Investopedia does not include all offers available in the marketplace. Similarly, this program will help you a lot in making the answers authentic in the mains examination as well.We hope that you like this initiative of ours, and you will be able to take full advantage of it. Business correspondents model of Banking, etc. Today its Indias top website and an institution when it comes to imparting quality content, guidance and teaching for IAS Exam. InsightsIAS has redefined, revolutionised and simplified the way aspirants prepare for UPSC Civil Services Exam. Due to this, there has been a significant improvement in terms of targeted and accurate payments. However, the financial inclusion hasnt reached the poorest of the poor and there exist many bottlenecks and challenges which need immediate attention. Challenges in accelerating digital financial inclusion: Key recommendations in the report include: 3rd Floor, Nanda Ashirwad Building, Chandra Layout Main Rd, Maruthi Nagar, Attiguppe, Bengaluru, Karnataka 560040. The FII for the period ended March 2021 stood at 53.9 compared with 43.4 for the period ended March 2017. Financial inclusion promotes inclusive growth by making services, including credit and safety nets, available to the bottom of the pyramid. The index will be calculated in consultation with the government and respective sectoral regulators. A lot of direct questions asked in the preliminary examinations are covered in this program. It talks about impact and challenges pertaining to financial inclusion. Financial and institutional sustainability, to ensure continuity and certainty of investment. Peer-to-peer lending has become particularly important in developing countries, where people may not have access to traditional bank financing. What is the objective of the National Strategy for Financial Inclusion? Eligible PMJDY accountholders will be sought to be covered under Pradhan Mantri Jeevan Jyoti Bima Yojana. The Aadhar-enabled payment system (AEPS) enables an Aadhar enabled bank account (AEBA) to be used at any place and at any time, using micro ATMs. Discuss its implications and challenges faced by India in the path of financial inclusion. This is an important topic for the IAS exam, especially the IAS Prelims. 12th, 1st and 2nd Floor, Adichunchanagiri Road, Block K, 1st Stage, Kuvempu Nagara, Mysuru- 570023, Karnataka. A digital wallet is an application on an electronic device that stores payment information and allows you to securely make purchases without carrying cash or cards. Money Transfer Without Money Movement. This article is based on Financial Inclusion and Digital India: A Critical Assessment which was published in The Economic and Political Weekly on 29/04/2020. Since independence, the combined efforts of successive governments, regulatory institutions, and the civil society have helped in increasing the financial-inclusion net in the country. These include banking, loan, equity, and insurance products. Investopedia requires writers to use primary sources to support their work. However, the World Bank estimates that some 1.7 billion adults worldwide still lack access to even a basic bank account. As per the estimates in March 2020, the total number of beneficiaries under. A very large segment of the agricultural sector is starved of formal credit, forcing the farmers to borrow from the informal moneylenders at usurious interest rates. Discuss its implications and challenges faced by India . Improving financial literacy: The role of nonprofit providers. You can learn more about the standards we follow in producing accurate, unbiased content in our. Strengthening the payment infrastructure to promote a level playing field for NBFCs and banks. In reality, if you go to any remote area in India and ask any woman how much she has saved in the post office, you will find huge numbers. P2P lending has proved particularly beneficial to people in emerging markets, who may be ineligible for loans from traditional financial institutions because they lack a financial history or credit record to assess their creditworthiness. Your Mobile number and Email id will not be published. The Center for Financial Inclusion. The Aadhar-enabled payment system (AEPS) enables an Aadhar enabled bank account (AEBA) to be used at any place and at any time, using micro ATMs. A mobile application was launched to provide a citizen centric platform for locating banking touchpoints such as bank branches, ATMs, Bank Mitras, Post Offices, etc. The Objective of the project is to disseminate information regarding the central bank and general banking concepts to various target groups, including, school and college going children, women, rural and urban poor, defence personnel and senior citizens. Building information sharing systems,including a fraud repository, and ensuring that online digital commerce platforms carry warnings to alert consumers to the risk of frauds. UPSC Civil Services Preliminary Examination 2023 (CSAT Answer Key). Unsuccessful Banking Correspondent Model. Since its launch, hundreds of women vendors in the area have benefited from the product. Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost. The efforts have resulted in a significant decrease in the number of such villages. The state of financial inclusion has improved considerably over time. If adequate measures are taken to tide over the existing problems, financial inclusion has the potential to amplify the benefits of economic growth to the poor. Financial Literacy: Implications for Retirement Security and the Financial Marketplace, 268287. All such activities incur costs on the institutions, and thus, huge operative costs only proved to be detrimental to the actual objective. Financial Inclusion is a process that ensures the ease of access, availability and usage of the formal financial system for all members of an economy. The Reserve Bank of India has constructed a composite Financial Inclusion Index (FIIndex) to capture the extent of financial inclusion across the country. 505 likes, 4 comments - Drishti IAS English (@drishtiiasenglish) on Instagram: "Drishti IAS applauds the accomplishments of 216+ students who aced the UPSC Civil Services examin." Drishti IAS English on Instagram: "Drishti IAS applauds the accomplishments of 216+ students who aced the UPSC Civil Services examination 2022! All such activities incur costs on the institutions, and thus, huge operative costs only proved to be detrimental to the actual objective. The combination of a huge informal sector along with a high dependence on cash mode of transaction poses an impediment to digital financial inclusion. Use of technology to lower cost & widen reach. The Objective of the project is to disseminate information regarding the central bank and general banking concepts to various target groups, including, school and college going children, women, rural and urban poor, defence personnel and senior citizens. Microloans, micro-savings, and microinsurance are some of the services including microfinance. The World Bank Group, which includes both the World Bank and the International Finance Corporation, is also sponsoring an initiative called Universal Financial Access 2020, the goal of which is to ensure that by the year 2020, an additional 1 billion adults will "have access to a transaction account to store money, send and receive payments as the basic building block to manage their financial lives. This compensation may impact how and where listings appear. Given the infeasibility of locating branches in every nook and corner of the country, bank correspondents are used to reach out to prospective clients. To accelerate financial inclusion to promote economic well being, prosperity and sustainable development. This has now changed, and there has been an active participation of the private players (payment banks like paytm, airtel money and jio money), as they have also realised that bringing the poor into the financial net is beneficial to their business models as well. The objective is to help school students understand the value of money and the importance of saving, investing and financial planning. Discuss its implications and challenges faced by India in the path of financial inclusion. This editorial is based on Toxic disaster which was published in The Hindu on May 8th, 2020. The index is responsive to ease of access, availability and usage of services, and quality of services for all 97 indicators. Promotion of digital payments including RuPay debit card usage amongst PMJDY account holders through creation of acceptance infrastructure across India can be taken into account. Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development (NABARD) have taken initiatives to promote financial inclusion in rural areas. What Is a Central Bank Digital Currency (CBDC)? This market determines foreign exchange rates for every currency. Download the BYJU'S Exam Prep App for free IAS preparation videos & tests -, Aspirants can find information on the structure and other important details related to the. Pradhan Mantri Jan-Dhan Yojana (PMJDY) - National Mission for Financial Inclusion, completed its six years of successful implementation. The bond market is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, A stock market, equity market or share market is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses. Unbanked population: Case study of a vegetable seller: Present challenges in Financial Inclusion in India: supply side issues: While the above are supply side issues, the demand side has its own set of challenges. Financial inclusion is one of the most important cornerstones of an economy. Continuous increase in no of accounts under PMJDY. India is the heavily dominated cash economy, this poses a challenge for digital payment adoption. As informed by banks, about 8 crore PMJDY account holders receive, Pradhan Mantri Jan-Dhan Yojana (PMJDY) is. Hawala is a way to send money informally without the movement of actual currency. Financial Inclusion is a national priority of the Government as it is an enabler for inclusive growth. Adding more focus on financial literacy and digital literacy for the common man. As per the estimates in March 2020, the total number of beneficiaries under. The G20 indicators assess the state of financial inclusion and digital financial services, nationally and globally. About: It is a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with the government and respective sectoral regulators. How Israels Iron Dome intercepts rockets? Gender Gap in Financial Inclusion. Valid till 12th June. Accessed on Dec. 26, 2020. Linkage of self-help groups (SHGs) with banks. The first G20 Global Partnership for Financial Inclusion (GPFI) meeting under G20 India Presidency is scheduled to be held during 9-11 January 2023 in Kolkata. This results in a high cost of credit. This involves tailoring the products to the needs and income profile of the customer, including being cognisant of their environment, geography, and demography. Ensure access of financial products & services at an affordable cost. To move towards a less-cash society is one of the aims encompassed in this strategy. Improving financial inclusion has been possible because of digital ID (Aadhaar), the rapid increase in the use of mobile phones and exceptional payment systems, as per the RBI. Contact Us: Call us at 080 69405205 (toll-free). Financial Inclusion: The pursuit of making financial services accessible at affordable costs to all individuals and businesses, irrespective of net worth and size respectively. The topic, Financial Inclusion is important for Civil ServiceExam from the perspective of GS-III (Economics.). UPSC-2023 GS-I Answer Key UPSC CSE 2022 Final Result UPPCS-2023 GS-II Answer Key UPPCS-2023 GS-I Answer Key UPSC Civil Services 2023 Notification. The World Bank. General Studies Paper - 3, Topic: Inclusive Growth Dec 30, 2022 2 min read Expansion of financial services in Rural and Semi-Urban Areas, Enhancing Active Participation of Citizenry. RBI unveiled the Financial Inclusion Index (FI-Index or FII) in August 2021. This is attributed to socio-economic factors, including the availability of mobile handset and internet data facility being higher among men than women. Thus, there exists both a great need and the potential to tap into the unbanked population and bring them into the financial net. To enhance the Financial Inclusion, the Reserve Bank of India has undertaken a project titled. Female, people with disability as well as migrant workers, communities in disadvantaged and remote areas, the elderly, former convicts, homeless communities, students and youth. While these innovative services have brought more participants into the financial marketplace, there is still a significant portion of the world's populationincluding in the United Statesthat lacks such access and remains, for example, either unbanked or underbanked. Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner. The Findex 2017 report also estimates that 77% Indian women have bank accounts, against 43% in 2014. Well, you are on the right page. Mitchell Grant is a self-taught investor with over 5 years of experience as a financial trader. One of the main constraints in providing credit to low-income households and informal businesses is the lack of information available with formal creditors to determine their credit worthiness. Bank accounts are a gateway to all financial services. The FII for the period ended March 2021 stood at. 500/- per month for three months (April 20 to June 20), was credited to the accounts of women account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY). [1] It refers to a process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. Financial inclusion is one of the most important cornerstones of an economy. It is also critical we recognise that the conventional method of. . To make city transit seamlessly accessible to all with minimal crowding and queues, leveraging existing smartphones and contactless cards, and aim for an inclusive, interoperable, and fully open system such as that of the London Tube. compared with 43.4 for the period ended March 2017. I also would like to take the second loan immediately. The scheme was launched based upon the following 6 pillars: There must be an endeavour to ensure coverage of PMJDY account holders under micro insurance schemes. Also, according to the International Labour Organization (ILO), about 81% of the employed persons in India work in the informal sector. Insurance facilities (life and non-life) etc. This is attributed to socio-economic factors, including the availability of mobile handset and internet data facility being higher among men than women. While the barriers to financial inclusion have been a longtime problem, a number of forces are now helping broaden access to the kinds of financial services that many affluent consumers take for granted. Helps in research regarding financial inclusion and other macroeconomic variables. Important Government Schemes: https://bit.ly/3jcwLZq====================================================== - Daily News \u0026 Editorial: https://bit.ly/3BZb4EK Daily Current Affairs MCQs: https://bit.ly/3xlZfVH Weekly Revision MCQs: https://bit.ly/3iiwoND Previous Year Paper: https://bit.ly/3igYTv6#LatestUpdateDrishtiIASEnglish #FirstGlobalPartnershipForFinancialInclusion #G20IndiaPresidency Thus, there exists both a great need and the potential to tap into the unbanked population and bring them into the financial net. It is also called inclusive finance. Due to this, in 2016, the number of loan accounts per 1,000 adults was 154 in India. Drishti Mains Question. Technology should be used to improve the assessment of credit-worthiness for households and informal businesses. According to the World Banks Global Financial Inclusion Database or Global Findex report (2017), 80% Indian adults have a bank account against the 53% estimated in 2014. Aspirants can find information on the structure and other important details related to the IAS Exam,in the linked article. GPFI member countries and international organizations invited by India will participate in the meeting.To watch this video in Hindi, visit our Hindi Channel:Dear Viewers,The Latest Update Program is Team Drishti IAS English's new initiative. UPSC Civil Services Preliminary Examination 2023 (CSAT Answer Key). Today its Indias top website and an institution when it comes to imparting quality content, guidance and teaching for IAS Exam. The report identifies challenges in accelerating digital financial inclusion in India and provides recommendations for making digital services accessible to its 1.3 billion citizens. #B-10, 3rd Floor, Bada Bazar Rd, Old Rajinder Nagar, New Delhi, Delhi 110060, B22, 2nd floor,sector k near bati choka restuarant Aliganj, Lucknow Uttar pradesh Pincode -226024, 3rd Floor, Opposite Hotel Solar Residency, Aramwari, Pathanbagh, Rajbagh, Srinagar-190008, No 12, 1st floor, loukya complex building, saptapur last bus stop Beside sarvamangala hospital petrol bunk Dharwad 580001. Now We are Sharing With You Data & Facts for Mains 2022 by Sunya IAS PDF. This is quite low when compared to similarly placed economies like BRICS nations. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas. Bank accounts are a gateway to all financial services. But whenever she needs money, she takes a, One day, while buying vegetables at the weekly market, I struck up a conversation and asked her why. The objective is to help school students understand the value of money and the importance of saving, investing and financial planning. UPSC Mains GS-III Strategy, Structure & Syllabus, UPSC Books In Hindi For Civil Services/IAS Exam, UPSC Mains Answer Writing Practice 2021-22. However, the financial inclusion hasnt reached the poorest of the poor and there exist many bottlenecks and challenges which need immediate attention. Financial Technology (Fintech): Its Uses and Impact on Our Lives, Financial Services Forum: Definition, Mission, and Accomplishments, Microfinance Definition: Benefits, History, and How It Works, What Is Hawala? The top three states are Kerala, Karnataka and Andhra Pradesh. Financial Market players like banks, non-banking financial companies (, Only about 5% of Indias 6 lakh villages have bank branches. Due to this, in 2016, the number of loan accounts per 1,000 adults was 154 in India. Indias Financial Inclusion Index has improved to, It is a comprehensive index incorporating, The FI-Index is responsive to ease of access, availability and usage of services and quality of services, consisting of, It captures information on various aspects of financial inclusion in a single value. Today's GK: https://bit.ly/3igEupX4. UPSC Civil Services Preliminary Examination 2023 (CSAT Answer Key). The payment system has been made more accessible due to offline transaction-enabling platforms, like, The Reserve Bank of India has undertaken a project titled. Topics Covered: Inclusive growth and issues arising from it. Sound and safe institutions governed by clear regulation and industry performance standards. According to the World Banks Global Financial Inclusion Database or Global Findex report (2017), 80% Indian adults have a bank account against the 53% estimated in 2014. Context: Finance Minister Nirmala Sitharaman has reiterated her Budget announcement on setting up 75 digital banking units in 75 districts of the country this year. These include the opening of bank branches in remote areas. Accessed on Dec. 26, 2020. These two factors helped address the parameters of access and usage greatly. Business correspondents model of Banking, etc. Differentiated Banks like Payment banks and small finance banks can be leveraged to scale up payments systems in underserved areas. The index will be calculated in consultation with the government and respective sectoral regulators. Increasing the number of automated teller machines (ATMs). Digitizing land records will also provide a major boost to the sector. 16 September 2021, Insta 75 Days Revision Tests for Prelims 2023, Insta 75 days Revision Tests for Prelims 2022, Present challenges in Financial Inclusion in India, Foundation Program: OGP(Offline and Online Guidance Program), Financial inclusion may be defined as the process of, Since independence, the combined efforts of successive governments, regulatory institutions, and the civil society have, Parvati sells vegetables in the weekly market in Maharashtra. During the first year of the scheme 17.90 crore PMJDY accounts were opened. The main concept of financial inclusion is to ensure delivery of financial services : bank accounts for savings and transactional purposes. ", If successful, that effort would significantly reduce the number of adults who currently lack even rudimentary financial services, which the World Bank recently estimated at some 1.7 billion. International evidence", "Impact of financial inclusion in low and middleincome countries: A systematic review of reviews", https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB423, https://en.wikipedia.org/w/index.php?title=Financial_inclusion&oldid=1138780452. For Prelims: Financial Inclusion, Initiatives to Promote Financial Inclusion, RBI, For Mains: Significance of Financial Inclusion Index. Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses, regardless of their personal net worth or company size. Linkage of self-help groups (SHGs) with banks. Ensure access of financial products & services at an affordable cost. The state of financial inclusion has improved considerably over time. The Objective of the project is to disseminate information regarding the central bank and general banking concepts to various target groups, including, school and college going children, women, rural and urban poor, defence personnel and senior citizens. The combination of Aadhaar, PMJDY, and a surge in mobile communication has reshaped the way citizens access government services. What is the strategy of the National Strategy for Financial Inclusion? Microfinance is a banking service that is provided to low-income individuals who have no other means of gaining financial services. In India, USSD can be particularly useful in rural areas where some segments still do not have reliable access to the internet. For its part, the financial industry is continually coming up with new ways to provide products and services to the global population, and often turn a profit in the process. Your Mobile number and Email id will not be published. Now you have made up your mind to become IAS officer and looking for the books and study materials to achieve your goal. Financial inclusion strives to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives. Financial Inclusion Inclusion through technology Economic growth and social development: Addressing the divergences Inclusion of MSMEs (Micro, Small and Medium Enterprises) Financial inclusion is one of the most important cornerstones of an economy. Financial inclusion broadens the resource base of the financial system by developing a culture of savings among large segment of rural population and plays its own role in the process of economic development. Definition of Financial Inclusion: Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost. The World Bank defines the term as the following: "Financial Inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs - transactions, payments, savings, credit and insurance - delivered in a responsible and sustainable way." This article is based on Financial Inclusion and Digital India: A Critical Assessment which was published in The Economic and Political Weekly on 29/04/2020. In addition to greater digitization, there is also a need to strengthen cyber security and data protection regime in the country. In a diverse country like India, financial inclusion is a critical part of the development process. The payment system has been made more accessible due to offline transaction-enabling platforms, like, The Reserve Bank of India has undertaken a project titled. Earlier, private institutions did not engage with the poor as customers on a significant scale. Latest Update: https://bit.ly/3ihWbFT 2. This is an important topic for the IAS exam, especially the. The World Bank. Differentiated Banks like Payment banks and small finance banks can be leveraged to scale up payments systems in underserved areas. #B-10, 3rd Floor, Bada Bazar Rd, Old Rajinder Nagar, New Delhi, Delhi 110060, B22, 2nd floor,sector k near bati choka restuarant Aliganj, Lucknow Uttar pradesh Pincode -226024, 3rd Floor, Opposite Hotel Solar Residency, Aramwari, Pathanbagh, Rajbagh, Srinagar-190008, No 12, 1st floor, loukya complex building, saptapur last bus stop Beside sarvamangala hospital petrol bunk Dharwad 580001. How Blockchain Can Help Emerging Economies, How to Go From Unbanked or Underbanked to Banked, How Banks Can Serve Customers with Language Barriers. There has been extensive improvement in services going beyond just bank accounts to credit, payments, micro insurance and gradually mutual funds. SHGs can exist with or without registration. Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development (NABARD) have taken initiatives to promote financial inclusion in rural areas. In this program, one particular topic of current affairs will be discussed in a concise manner. https://doi.org/10.1093/acprof:oso/9780199696819.003.0015, This page was last edited on 11 February 2023, at 15:37. There is no base year taken to calculate the FII and the value will represent the actual cumulative result of efforts taken over the years. For the success of financial inclusion in India, there has to be a multidimensional approach through which existing digital platforms, infrastructure, human resources, and policy frameworks are strengthened and new technological innovations should be promoted. There are 296 under-banked districts in states with below-par banking services. 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