JournalofBusinessManagement&SocialSciencesResearch(JBM&SSR)ISSNNo:23195614

Volume2,No.6,June2013
_________________________________________________________________________________

A Study On Impact Of Financial Inclusion With Reference
To Daily Wage Earners
K. Hema Divya, Assistant Professor, KLU Business School, KLUniversity, Vijayawada, Andhra
Pradesh, India

ABSTRACT
Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low
income segments of society. It is argued that as banking services are in the nature of public good, it is essential that
availability of banking and payment services to the entire population without discrimination is the prime objective of
public policy. The objective of financial inclusion is to deliver banking services at an affordable cost to vast sections
of the low-income groups. Indian Finance Minister has set the ball rolling by articulating the Government's decision
to provide essential financial services like savings, credit, micro insurance and remittance, for all villages with
population over 2,000 by March 2012. Therefore, the present study attempts to find out the impact of financial
inclusion on daily wage earners.
Keywords: Financial inclusion, Reserve Bank of India (RBI), Daily wage earners.

Introduction: Review of Literature

Financial Inclusion is the process of ensuring access
to appropriate financial products and services needed
by all sections of the society in general and
vulnerable groups such as weaker sections and low
income groups in particular at an affordable cost in a
fair and transparent manner by mainstream
institutional players. The States like Bihar, Orissa,
Rajasthan Uttar Pradesh, Chhattisgarh, Jharkhand,
West Bengal and North-Eastern States are under-
banked. When compared to the developed world, the
coverage of our financial services is quite low. Then
the Reserve Bank of India has set up a commission
(Khan Commission) in 2004 to look into financial
inclusion and the recommendations of the
commission were incorporated into the mid-term
review of the policy (200506). In the report RBI
exhorted the banks with a view of achieving greater
financial inclusion to make available a basic "no-
frills" banking account. In India, Financial Inclusion
first featured in 2005, when it was introduced, that,
too, from a pilot project in UT of Pondicherry, by K
C Chakrabarty, the chairman of Indian Bank.
Mangalam Village became the first village in India
where all households were provided banking
facilities. In addition to this KYC (Know your
Customer) norms were relaxed for people intending
to open accounts with annual deposits of less than
50,000 rupees. General Credit Cards (GCC) were
issued to the poor and the disadvantaged with a view
to help them access easy credit.
According to Indian institute of banking and finance,
"financial inclusion is delivery of banking services at
an affordable cost ('no frills' accounts,) to the vast
sections of disadvantaged and low income group.
Unrestrained access to public goods and services is
the sine qua non of an open and efficient society. As
banking services are in the nature of public good, it is
essential that availability of banking and payment
services to the entire population without
discrimination is the prime objective of the public
policy."
According to Dr. K.C. Chakrabarty, Deputy
Governor, Reserve Bank of India, financial Inclusion
is the process of ensuring access to appropriate
financial products and services needed by all sections
of the society in general and vulnerable groups such
as weaker sections and low income groups in
particular at an affordable cost in a fair and
transparent manner by mainstream institutional
players.
According toV.Leeladhar, Reserve bank of India
bulletin, Jan 2006, financial inclusion is delivery of
banking services at an affordable cost to the vast
sections of advantaged and low income groups.
Unrestrained access to public goods and services is
the sine qua non of an open and efficient society. As
banking services are in the nature of public good, it is
essential that availability of banking and payment
services to the entire population without
discrimination is the prime objective of the public
policy.

www.borjournals.comBlueOceanResearchJournals85

JournalofBusinessManagement&SocialSciencesResearch(JBM&SSR)ISSNNo:23195614
Volume2,No.6,June2013
_________________________________________________________________________________
According to committee of financial inclusion, The
process of ensuring access to appropriate financial
products and services needed by vulnerable groups
such as weaker sections and low income groups at an
affordable cost in a fair and transparent manner by
mainstream Institutional players.
According to M.K.Samantaray, General Manager,
Reserve Bank of India Guwahati, Large segment of
population remaining excluded from formal
payments system & financial markets when financial
market developing & globalizing Obvious market
failure Government & financial sector regulators
creating enabling conditions for inclusive &
affordable market.
From the article Impact of SHGs on Financial
Inclusion A Case Study in the District of Bankura.
The author Dr.Mnaiklal Adhikay, Supravat Bagli
used the methodology of multiple regression model
for estimating the financial exclusion and a binary
logic model for estimating the access to formal credit.
This paper discussed about the Socio-economic traits
as determinants of the financial exclusion and
inclusion. In order to accelerate the financial
inclusion through curbing the hegemony of village
moneylenders we suggest for implementing the SHG-
Bank/Co-operative Linkage more intensively in rural
areas under study.
From the article, Role of financial Institutions in
financial Inclusion. The author Mr. Joseph Massey
did a Periodical study. He discussed about Financial
institutions have a very crucial and a wider role to
play in fostering financial inclusion. Lack of financial
literacy is the major hindrance in spreading financial
inclusion. This has resulted in the more than 50 per
cent of savings of the household sector and of the
financially illiterate getting drained in non-financial
investments.
From the article Financial Inclusion:The Way
Forward by Mr. N K Maini, Deputy Managing
Director, SIDBI. He discussed about the Responsible
Finance Initiative - cross-linked to the financing -
could help improve management, governance,
operational practices and disclosure. SIDBI has been
playing an active role in impressing upon its partner
MFIs to adopt and practice good corporate
governance of managing the MF operations, besides
sensitizing them on other issues. Promoting
responsible finance and adherence to a laid down
www.borjournals.comBlueOceanResearchJournals86
Code of Conduct would be a major intervention by
SIDBI with support from the World Bank.
As part of its responsible finance initiative, SIDBI
has initiated the process of creation of a Lenders'
Forum comprising key MFI Funders with a view to
promoting cooperation among MFI lenders for
leveraging support to MFIs across the sector to
promote more responsible lending practices.
From the article, Financial Inclusion: Innovative
Approaches by the Author Mr. M V Nair, Chairman
and Managing Director, Union Bank of India did an
experimental study. He discussed about the
Branchless Banking project of the Bank was initially
launched in Chandauli district in the State of Uttar
Pradesh and subsequently extended to Wardha
district in Maharashtra and 8 districts of Andhra
Pradesh. Bank also provided this facility to the
migrant workers living in Mumbai, Karaikudi in
Tamil Nadu and Chandigarh City. Till date the bank
is serving in excess of 3 million branchless banking
customers through the BCs with about 3254 customer
Service touch points.
Research Design And Methodology
Objective:
This study examines the impact of financial inclusion
on daily wage earners at autonagar, Tenali.
Need of the study: The main purpose of this study is
to find the impact of financial inclusion on daily
wage earners. To find out whether the financial
services were reaching the low income groups or not
This study helps the financial institutions in and
around Tenali and they will get information that how
many low income segment people were utilizing
financial inclusion services.The financial institutions
also get the details of awareness about financial
inclusion for daily wage earners in Tenali region.
Scope Of The Study:
The study is undertaken in Tenali town in Guntur
District of Andhra Pradesh, South India. The scope of
data collection is restricted to only daily wage earners
located in autonagar, Tenali.
Research Design
A research design is the specification of methods and
procedures for acquiring the needed information.
Design to be adopted here is descriptive as well as
exploratory research. It basically seeks to extract
information about financial inclusion from daily
wage earners. In this study, a sample size of 210 is
JournalofBusinessManagement&SocialSciencesResearch(JBM&SSR)ISSNNo:23195614
Volume2,No.6,June2013
_________________________________________________________________________________

considered and the questionnaire was given to daily
wage earners. 160
140

no.ofrespondents
Sampling 120
An integral component of research design is the
sampling plan. Especially it addresses three 100
questions: who to survey (sample unit) how many to 80
survey (sample size) and how to select them 60
(sampling procedure). Making the census study of the
40
entire universe will be impossible on the account of
limitations of time and money. Hence sampling 20
procedures representative data of the entire 0
population. Male gender Female
Graph 1: Number of male and female daily wage
Sampling method earners utilizing financial inclusion services
Random sampling was used here because the study is
not restricted to one industry. Daily wage earners
were work in almost all the industries.
Analysis:
From the above graph it is observed that 147 male
daily wage earners and 65 female daily wage earners
Sampling tool
were utilizing financial inclusion services.
Questionnaire was used as a tool for the collection of
data, mainly because it gives the chance for timely
feedback from respondents. Moreover respondents Inference:
feel free to disclose all necessary detail while filling From the analysis 69% of male respondents and 31%
up a questionnaire. of female respondents are utilizing financial inclusion
services.
Sample size
The size of the sample is210 respondents. Table 2 Maritial Status
Frequency Percentage
Sampling unit
Daily wage earners Married 89 61
Unmarried 58 39
Data analysis and interpretation
Questionnaire Analysis (Collected from the daily
wage earners of autonagar, Tenali.) Graph 2: Marital status of financial inclusion service
utilizers.
Frequency Percentage 100
noofrespondents

Male 145 69 80
Femal 65 31 60
e
Table 1. Gender 40
20
0
Married Unmarried
marital status

Analysis:
From the above table, we see that 89 married daily
wage earners and 58 unmarried daily wage earners
are utilizing financial inclusion services.

www.borjournals.comBlueOceanResearchJournals87

 JournalofBusinessManagement&SocialSciencesResearch(JBM&SSR)ISSNNo:23195614
Volume2,No.6,June2013
_________________________________________________________________________________

Inference: Intermediate and above 1 1
From the analysis it is seen that more percentage of
married daily wage earners utilizing financial Graph 4: Educational Qualification Of The Daily
inclusion services when compared with unmarried Wage Earners Or The Respondents.
daily wage earners.

Table 3: Working Organization 180

Frequency Percentage
Public 15 7 160
Private 195 93
140
Graph 3: No .Of Respondents Employing In Public
And Private Sector Organizations. 120

noofrespondents
250 100

80
200
60
no.ofrespondents

150 40

20
100
0
Illiterate LKGto5th 6thto10th intermediate
50 andabove
educationalqualification

0
Public private Analysis:
workingorganization From the above graph 157 respondents are illiterates,
33 respondents are studied up to 5th class, 9
respondents are studied 6th to 10th and remaining 1
respondent is studied more than intermediate.
Analysis:
From the above table, 15 respondents are working in Inference:
public sector organizations and 195 respondents are From the analysis 78% are illiterates and 22% of the
working in private sector organizations. daily wage earners are iterates.

Inference: Table 5: Wage earning per day

From the above analysis 93% of daily wage earners Frequency Percentage
are working in public sector organizations and only
<199 0 0
7% of daily wage earners are working in private
sector organizations. 200-299 81 38
300-399 119 57
<400 10 5
Table 4: Educational Qualification
Frequency Percentage
Illiterate 157 78
LKG to 5th 33 16
6th to 10th 9 5

www.borjournals.comBlueOceanResearchJournals88

JournalofBusinessManagement&SocialSciencesResearch(JBM&SSR)ISSNNo:23195614
Volume2,No.6,June2013
_________________________________________________________________________________

Graph5: Income range for the daily wage earners. Graph6: How Many Daily Wage Earners Know
About Financial Inclusion.
140

160
120
140
100
120
no.ofrespondents

80

no.ofrespondents
100

60 80

40 60

40
20

20
0
<199 200299 300399 >400 0
wageperday(inrupees) YES NO
awarenessaboutfinancialinclusion

Analysis:
From the graph we can observe that <199 rupees
there is nil respondents, in rupees 200-299 there is 81
respondents, in rupees 300-399 there is 119
respondents and in >400rupees there is only 10
respondents are located.
Inference:
From the analysis we can say that most of the
respondents are earning rupees 300-399, then rupees
200-299, <199 and >400.
Table 6: Financial inclusion awareness
Analysis:
From the graph 147 respondents have awareness
about financial inclusion and 63 respondents are did
not have awareness about financial inclusion.
Inference:
From the analysis we can say that 70% of daily wage
earners have awareness about financial inclusion and
30% of daily wage earners did not have awareness
about financial inclusion.
Table 7:Number Of Schemes That Daily Wage
Earners Known

Frequency Percentage Frequency Percentage

Yes 147 70 2 80 55
No 63 30 3 to 5 40 27
6 to 8 27 18
8 0 0

www.borjournals.comBlueOceanResearchJournals89

JournalofBusinessManagement&SocialSciencesResearch(JBM&SSR)ISSNNo:23195614
Volume2,No.6,June2013
_________________________________________________________________________________

Graph 7 : Number of schemes that daily wage earner Graph 8: Number of schemes utilizing by the
known. respondents.

90 60

50

no.ofrespondents
80
40
70
30
60
noofrespondents

20
50 10
40 0

30

20

10

0
>_2 3to5 6to8 <8
noofschemesknown

Analysis Analysis:
From the above graph 80 respondents known less From the graph we can say that 15 respondents are
than or equal to two schemes, 40 respondents known utilizing self-help groups (SHGs), 21 respondents
3 to 5 schemes, 27 respondents know 6 to 8 schemes are utilizing no frills SB account, nobody utilizing
and nobody known more than 8 schemes in financial entrepreneurial credit scheme, 20 respondents are
inclusion. utilizing general credit card-income based scheme,
nobody utilizing small draft facility, 11 respondents
Inference: utilizing micro insurance scheme in financial
From the analysis 55% of daily wage inclusion, 55 respondents are utilizing spandana
earners known about two schemes, 27% of scheme and 25 respondents are utilizing dwakra
respondents known about 3 to 5 schemes, 18% of scheme.
respondents know about 6 to 8 schemes and no body
of respondents know above 8 schemes in financial Inference:
inclusion. From the analysis 37% utilizing spandana scheme,
10% are utilizing SHGs, 14% utilizing no frills
Table 8:Utilization of Schemes account scheme, 14% utilizing general credit card-
Frequency Percentage income based, 8% utilizing micro insurance and 17%
Self-help groups 15 10 respondents was utilizing dwakra scheme.
No frills SB account 21 14
Entrepreneurial credit 0 0 Table 9: Usefulness of schemes
General credit card-
20 14 Frequency Percentage
income based
Small overdraft facility- Yes 147 100
0 0
for general consumption No 0 0
Micro insurance 11 8
Spandana scheme 55 37
Dwakra 25 17

www.borjournals.comBlueOceanResearchJournals90

JournalofBusinessManagement&SocialSciencesResearch(JBM&SSR)ISSNNo:23195614
Volume2,No.6,June2013
_________________________________________________________________________________
Graph 9: Whether The Financial Inclusion Services
Are Useful Or Not.
200
noofrespondents
150
100
50
0 4.
Yes No
usefulnessoffinancialinclusion
Analysis
From the graph we can say that the financial
inclusion services are useful to the respondents or
daily wage earners.
Inference
From the analysis we can say that financial inclusion
is very useful for daily wage earners.
Findings
1. 69% of male and 31% of female population is
utilizing financial inclusion services.
2. It is seen that more percentage of married daily
wage earners utilizing financial inclusion
services when compared with unmarried daily
wage earners.
3. 93% of daily wage earners are working in public
sector organizations and only 7% of daily wage
earners are working in private sector
organizations are utilizing financial inclusion
services.
4. 78% are illiterates and 22% of the daily wage
earners are iterates.
5. Daily wage earners who earns rupees 300-399
was more interested in utilizing financial
inclusion services, then rupees 200-299, <199
and >400 earners.
6. 55% of daily wage earners known about two
schemes, 27% of respondents known about 3 to
5 schemes, 18% of respondents know about 6 to
8 schemes and no body of respondents know
above 8 schemes in financial inclusion.
7. From the analysis 37% utilizing spandana
scheme, 10% are utilizing SHGs, 14% utilizing
no frills account scheme, 14% utilizing general
credit card-income based, 8% utilizing micro
insurance and 17% respondents was utilizing
dwakra scheme.
www.borjournals.comBlueOceanResearchJournals91
Suggestions
1. Financial inclusion is a very useful tool for
financial growth of daily wage earners.
2. Conduct awareness programmes in various
industrial areas to increase the utilization of
financial inclusion services.
3. Smart card i.e. for financial inclusion service
transactions is very necessary for rapid
growth and smart card should have access in
any bank ATM.
For the daily wage earners services, local
banks should provide there service at their
door step.
5. Banks should establish separate counters in
the bank for financial inclusion services.
Conclusion
From the above study, it is concluded that there is
more need to educate and create some new
instruments for daily wage earners and also make
them a part of financial inclusion.
References:
[1] Impact of SHGs on Financial Inclusion A Case
Study in the District of Bankura.
Dr.Mnaiklal Adhikay, Supravat Bagli, Journal of
Management and Information Technology, Vol.2,
No.1 (2010).
[2] Role of Financial Institutions in Financial
Inclusion, Mr. Joseph Massey, MD & CEO,
MCX Stock Exchange, FICCI's Banking &
Finance Journal, Issue: 4, October-2010.
[3] Taking Banking Services to the Common Man -
Financial Inclusion. V. LEELADHAR.
[4] CGAP Technology Programme (2009), Notes on
Branchless Banking, Policy and Regulation in
Mexico.
[5] Chakrabarthy K.C (2009), Financial Inclusion,
RBI Initiatives at National seminar on launching
a National initiative for financial inclusion, DFS
GoI.
[6] Arunachalam .R.S (2008), Scoping Paper on
Financial Inclusion, UNDP.
[7] Ansari, S. A (2007), Microfinance in India
Asian Economic Review.
[8] V. Leeladhar, Taking Banking Services to the
Common Man - Financial Inclusion,
a. Reserve Bank of India Bulletin, January 2006.
[9] Financial Inclusion: Innovative Approaches. Mr.
M V Nair, Chairman and Managing Director,
Union Bank of India.
[10] Financial Inclusion by Sameer Kochhar, R.
Chandrashekhar, K. C. Chakrabarty, Deepak B.
Phatak.
JournalofBusinessManagement&SocialSciencesResearch(JBM&SSR)ISSNNo:23195614
Volume2,No.6,June2013
_________________________________________________________________________________

[11] http://www.ixgw.com/2011/04/money-weapon-
tips-earners
[12] http://www.nabard.org/pdf/report_financial/full%
20Report.pdf

www.borjournals.comBlueOceanResearchJournals92