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The benefits of financial inclusion are wide-ranging: it helps people better manage their lives, smooth

their cash flows, overcome income shocks, and invest in their skills, health, or new businesses.

For standing out on a global platform India has to look upon the inclusive growth and
financial inclusion is the key for inclusive growth .There is a long way to go for the financial
inclusion to reach to the core poor according to K.C.Chakrabarty RBI Deputy Governor Even
today the fact remains that nearly half of the Indian population doesnt have access to
formal financial services and are largely dependent on money lenders. Mere opening of nofrill bank accounts is not the purpose or the end of financial inclusion while formal financial
institutions must gain the trust and goodwill of the poor through developing strong linkages
with community-based financial ventures and cooperative. Financial Inclusion has not
yielded the desired results and there is long road ahead but no doubt it is playing a
significant role and is working on the positive side.
The benefits of this development include economic growth and stability,both for the
customers and for the economies.
While there are a variety of pathways to financial inclusion ,having accessible and affordable
digital networks and appropriate regulatory frameworks is crucial.
Having greater access to financial services promotes entrepreneurship,lifts people out of
poverty,and gives greater hope for a brighter economic future.

Benefits of financial inclusion:

The rural masses will get access to banking like cash receipts, cash
payments, balance enquiry and statement of account can be completed using
fingerprint authentication. The confidence of fulfilment is provided by issuing an
online receipt to the customer.

Reduction in cash economy as more money is brought into the banking


ecosystem

It inculcates the habit to save, thus increasing capital formation in the


country and giving it an economic boost.

Direct cash transfers to beneficiary bank accounts, instead of physical


cash payments against subsidies will become possible. This also ensures that
the funds actually reach the intended recipients instead of being siphoned off
along the way.

Availability of adequate and transparent credit from formal banking


channels will foster the entrepreneurial spirit of the masses to increase output
and prosperity in the countryside.

What is the Impact of


Financial Inclusion Efforts?
An increasing body of evidence shows that appropriate financial services can
help improve individual and household welfare and spur small enterprise
activity. Different types of financial products can benefit poor people in different
ways.

Credit: Microcredit helps encourage investments into assets that enable


business owners to start or expand small enterprises. In many countries,
its been demonstrated that access to credit can lead to larger and more
profitable businesses. For example, with access to credit, farmers can
invest in larger quantities or more diverse livestock; the owner of a market
stall can purchase more wares to sell; an artisan can acquire more raw
materials.

Savings: Building savings helps households manage cash flow spikes and
smooth consumption, as well as build working capital.

Insurance: Vulnerability to risk and the lack of instruments to cope with


external shocks make it difficult for poor people to escape poverty.
Microinsurance can be an important instrument for mitigating risk. Weatherbased index insurance helps farmers by giving them the confidence to try
riskier cash crops, buy fertilizer, or hire labor, for instance. With index
insurance, farmers are less vulnerable in the face of drought or natural
disaster.

Payments and mobile money: Having an efficient way of making


payments reduces households transaction costs. Rather than travel long
distances, people have the ease of doing business on their mobile phones.

Research also shows that more inclusive financial markets are directly linked
with economic growth and employment. Additionally, policymakers increasingly
recognize that a financial market that reaches all citizens allows for more
effective execution of other social policies and development priorities.