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Financial Inclusion

Financial Inclusion

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Published by PRAO6005
Summer Training Project
Summer Training Project

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Published by: PRAO6005 on Jun 26, 2011
Copyright:Attribution Non-commercial


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Every project is based on a theme or has some specific objectives which are given moreimportance. The objective of my project is to know the level of Financial Inclusion & theimpact of initiatives taken by the bank in of Financial Exclusion. However, this broadobjective is defined more clearly as under:-
To know the measures and initiatives taken by PNB to help SHG and financiallychallenged people under Financial Inclusion project.
To know the level of Financial Exclusion and the progress that has been achieved by the 100% financial inclusion campaign.
To measure the reach ability & impact of student a/c’s opening campaign in thenearby areas of Gandhi Nagar.
Literature Review
Indian economy in general and banking services in particular have made rapid strides inthe recent past. Developing nations, like India have immensely benefited from theglobalizing economy. Wealth has been pouring into the country as investments. Wealthhas been also generated by Indian companies from global trade. This has directly affectedthe lives of many citizens in our country. For many, there has been a dramatic increase inthe disposable income. The savings, consumption and investment patterns have changedin the past few years. This has meant that there has been an increase in demand for manyfinancial services from different financial firms. An increasing financially aware middleclass have realized the importance of financial services. Banks have streamlined andrationalized themselves to meet up with the changing demands of the people.However, not all the reforms in the financial services sector have still been able to bringin the other half of India’s population who are un-banked. There are many reasons thatare obvious for this kind of financial exclusion. The new surge in the economy has notyet percolated into the lower strata of the society. It is easy to blame the capitalist growthfor this sort of income disparities; however, the inefficiencies and the inadequacies of thegovernment and its policies are equally at fault for lack of reduction in poverty.Most of the un-banked or financially excluded population of India lives in rural areas;nevertheless there is also a significant amount of the urban population of India who facethe same situation even with easy access to banks. Many of the financially excluded inthese areas are illiterates earning a meagre income just enough to sustain their dailyneeds. For such people, banking still remains an unknown phenomena or an elitist affair.It is easier for them to keep their money at their house or with some money lenders andeasily make immediate purchases (which make up most of their expenditure) rather thanto follow the cumbersome process at banks. By making them financially inclusive we aremaking their financial position less volatile. At the same time, we are treating them on anequal par with other members of the population so that they wouldn’t be denied of accessto a basic service such as banking.
Financial Exclusion
Financial Exclusion
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.
 Financial exclusion
is individuals’ limited access to or use of formal financial services isa problem of epic proportions.
More than 3 billion people are financially excludearound the world.
With barely
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.

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