What is Financial Inclusion?

Financial inclusion is defined as access to institutionalised, transparent and unbiased

system for personal & business money management, credits, insurance and other
financial products & services. More than 2 Billion (29% of the population) are not
included in the system.

Poor access to financial institutions in rural areas results in unviable business models.
Global & local Governments, Non – Government and Private agencies are working
towards solving this issue.

A focused effort in this direction was initiated in 2005 by Govt of India under “Financial
Inclusion” which was further reinforced in 2014 as a policy entitled “Jan Dhan Yojana.”
The Indian Ministry of Finance, through the Department of Financial Services is
responsible for conceptualisation, model finalisation, planning roll out, monitoring and
driving progress.

The country has been approximately divided into 225 Sub Service Areas (SSA) and
public sector banks were allocated responsibility to setup an entrepreneur at each SSA
as the head point, to engage with the population and leverage bank’s backend
technology . It started with opening of the personal savings bank account providing
cash deposit, cash withdrawal, personal medium & long term fixed savings deposits as
basic services. Over time, general credit cards, kisan credit cards, accident & health
insurance products were available through the same infrastructure.

Though a major step forward, it has implementation problems in terms of high

dependencies on human involvement at multiple levels resulting in frauds, system-
inefficiencies and biased decision-making, leading to higher cost of delivery of service
and management of the system.