In the Indian context, the term ‘financial inclusion’ was used for the first time in April 2005 in the Annual Policy Statement presented by Y.Venugopal Reddy, the then Governor, Reserve Bank of India.
It is believed that financial inclusion can initiate the next revolution of growth and prosperity.
Even though India as a country is big on savings the poor section lives hand-to-mouth. For them saving becomes very difficult due to lack of banking facilities. To address this issues government has launched financial inclusion program. It is all about delivering financial services at an affordable cost to a vast section of disadvantage and lower income groups.
Once the financial inclusion is accepted by the vast majority it will boost in the capital formation of the country.
More and more people will get into the habit of savings.
Financial inclusion will ensure proper credit facility for the otherwise un-banked population which has been vulnerable due to informal channels like money lenders and friends. This will encourage the entrepreneurial spirit leading to more job creation.
Government can do direct cash transfer to beneficiaries through their bank accounts rather than current way of subsidizing products and making cash payments. This would ensure that money is not leaked out and actually reaches the deserving person.
Cash economy will be reduced as more money will be part of the banking system.
All this will propel growth of the nation