refers to a certain section of the population or a certain group of individuals that has
denied the access to basic financial services
. The term came to prominence in the early 90s in Europe where the geographers found that a certain pocketsor regions of a particular country were behind the others in utilizing financial services. Itwas also found that these pockets or regions were poorer compared to regions whichutilized more of financial services. The term attained a wider connotation in the late 90swhen it was expanded to refer to individuals who were denied access to financialinclusion rather than geographical areas. Financial Exclusion could be a hindrance togrowth of economy. Without a formal and a legally recognized financial system in whichall sections of the population are a part of, it would be impossible even for the mostefficient of the governments to reach out to all sections of the people. A stable andhealthy financial service sector creates trust among the people about the economy andonly with this trust (which has legal validity) could a strong, stable and an inclusiveeconomy be created.
is individuals’ limited access to or use of formal financial services isa problem of epic proportions.
More than 3 billion people are financially excluded around the world.
34 percent of its population engaged in formal banking, India has the second-highest number of financially excluded households in the world—about 135million.
Among those who are financially excluded is a distinct and huge group of consumer,whose potential to become viable banking customers has been greatly under-estimated.Categorized by income, this segment sits just above the poorest of the poor and just below consumers who are currently targeted by most banks. It is served primarily by theinformal financial sector.