1st Answer:

Financial Inclusion refers to a method to provide equally available and affordable

access to all financial services for each person, irrespective of their income. It implies
providing services to businesses as well as individuals. Financial Inclusion is extremely
important as lack of it can lead to crippling problems of money for the poor and the
middle-class. They may not have many ways to receive and make various payments,
and due to this, they may have to pay more amounts for certain basic services such as
telephone and electricity bills and are prevented from making any purchases as they
don’t have any easy means to submit payments.

Having access to financial services is extremely important to both individuals and

companies, as it renders a means to store and manage money and cash flows,
accumulating savings and making investments.

The rise and growth of financial technology – usually known as fintech has played a
very important role in increasing financial inclusion. It has broadened access to financial
services, but also hugely reduced the cost of many financial services.

Online peer-to-peer lending startups such as Lending Club and Upstart have made
available the credit and loan facilities to individuals having less credit scores.

Savings and investment apps such as SoFi have made it easier for people to access
savings and investment. Companies such as Robo-advisors, which charge service fees
less than many professional financial advisors, now provide more people with guidance
on how to invest at a less, much affordable price.

The following are the benefits of financial inclusion, which has helped the economy to
progress:

Benefits to the banker: Low-cost deposits will offer banks the opportunity to lower
their dependence on bulk-deposits from corporates, and help in management of liquidity
and risk. Banks can benefit as they get a huge opportunity to cross-sell asset products,
micro-insurance and micro-pension products.

Benefits to user: Business opportunities for each and every person depend on a huge-
scale on how many individuals have access to financial resources. This kind of access
is extremely useful in urban cities where there are ample of opportunities but always a
cash-crunch when it comes to starting a new business. Financial inclusion provides
opportunities to build savings, making investments and avail credit. For some new users
of bank accounts who have an online bank account using a fintech application, the
following could be some of the great benefits:
Having an access to insurance which gives them a cushion against unplanned expense
in the form of emergencies such as illness, death or disability of a family member.
Financial inclusion helps an individual to come out of the clutches of moneylenders.

It helps to enable economic independence and support improved economic well-being.

It relieves individuals of the lengthy and cumbersome process of validating the various
social security measures. Since everything has become online, it makes it easy for ever
educated individual to avail services online.

With the help of customized bank accounts, the challenge of sending the money
periodically to native place can be solved. Migrants sitting in urban centers are able to
send money without too much of an effort and without paying any extra commission to
the intermediaries.

Benefits to regulators: The main role of regulator is to keenly regulated and make
sure that no rules are violated. This is to protect the consumer, protect the interest of all
stakeholders, to view the activities in a broader perspective and give a purposeful
direction to accomplish larger societal goals.

If banks and other financial institutions can execute the financial inclusion on their own,
then these regulators will be relieved of their responsibility.

Also, urban intermediaries benefit as financial inclusion makes way for additional
income without any additional investments.

Benefits to society: Financial inclusion encourages the central and state government
to shift distribution of subsidies from an indirect system to direct in the hands of target
groups through directly crediting their account; the cost of distributing subsidies and
social security payments gets reduced to a great extent. This will enable to plug the
leakage. These leakages easily tend to cost more than 1000 billion rupees each year.

Conclusion: Reduced cash economy as more money can be brought into the
ecosystem of banking. It helps to inculcate the saving habit, which increases the
formation of capital in the nation and gives it an economic boost. Smooth and direct
transfers of cash to bank accounts of beneficiary, instead of physical cash payments
against subsidies are made possible. This also makes sure that the funds actually reach
the intended recipients rather than being siphoned off along the way.
2nd Answer

In the Indian eco-system of financial markets, there are four main regulatory authorities
keeping a strict tab on the activities of all the financial bodies. So, they are known as
financial regulators.

1. Reserve Bank of India: It is the apex of the Indian monetary system controlling the
issue and supply of the Indian rupee. It has a major role to play in the financial
strategies of the government of India. It helps to control the money supply, monitors key
indicators such as GDP and inflation. It helps to ensure that the individuals and general
public always has confidence in the banking system. For this, it designs certain rules to
ensure that the money of the general public is safeguarded.

2. Securities and Exchange Board of India: SEBI has the responsibility to regulate
the security and commodity market of India. The main objectives of SEBI are to
maintain transparency in Indian security and commodity markets. It has the duty to
create and enforce bye-laws. It ensures that the grievances of investors are heard and
correct action is taken to resolve them.

SEBI has also created a grievance support system for the investors, which is known as
SCORES.

3. Insurance Regulatory and Development Authority of India: It was established

after the Indian Government passed the Insurance Regulatory and Development
Authority Act, 1999. Its headquarters are located in Hyderabad, Telangana and is
responsible to regulate the insurance and re-insurance industries of India.

4. Forward Market Commission of India (FMC):

FMC refers to regulatory authority which is governed by the Ministry of Finance and
was established in 1953. It is responsible to regulate and ensure that smooth exchange
of commodity trading happens in 22 exchanges in India.

5. Pension fund regulatory and development authority: It is a statutory body

regulating the pension in India. The main functions of this body are as follows: It is
responsible to regulate the national pension system and other schemes applicable as
per PFRDA Act. It protects the interest of the users of pension fund. It develops and
regulates the pension funds. It regulates and registers intermediaries. It establishes
grievance redressal. It is responsible to approve terms, schemes and norms for corpus
management in pension funds. It helps to settle disputes in intermediaries and
subscribers. It promotes a regulatory organization with pension mechanism. It conducts
investigations, inquiries and audit and calls for information regarding intermediaries and
other pension bodies.
Conclusion: Hence, we can conclude that the above are the main financial regulatory
institutions in India and they have a major role to play in the smooth functioning of the
financial markets.
3rd Answer

3a. Mutual fund refers to a common pool of money where investors contribute. This
collective amount is then invested as per the objective of the investment of the fund,
which is different for different kinds of funds. The money can be invested in stocks,
bonds, money market instruments, gold and other similar assets. Money Managers
operate these funds, and they invest in line with the specified investment objective
attempt to create growth or appreciation of the investor’s amount.

For instance, a debt fund has its specified objective of investing in fixed income
instruments or products such as bonds, government securities and debentures.

Sunita should invest in mutual funds due to various advantages of mutual funds:

The main advantage of mutual fund is that you she will get exposure to a variety of
shares or fixed income instruments. For example, if you normally invest in shares, you
will get one or two shares. On the other hand, if Sunita invests through a mutual fund,
she gets a basket of shares/stocks for the same amount.

Currently, there are more than 2000 active schemes. Sunita can find funds that match
her risk appetite, investment horizons, and personal financial goals.

Debt funds refer to the least risky, balanced or hybrid funds contain a moderate risk,
and equity funds involves more risk. Higher the risk, higher the returns.

3. Benefit from high liquidity: If Sunita invests in open-ended mutual funds; he or she
can buy or sell her units at any time.

4. Invest in a lumpsum or through SIP: One of the advantages of mutual funds is

flexibility. Lumpsump investments work well if she has idle cash. It is recommended to
invest through SIPs because she can invest relatively lesser amounts

5. Invest in lesser amounts: Sunita can begin investing in small amounts. She can
begin with as less as Rs. 500 per month. The advantage here is that she would not
have to wait until she accumulates good amount of cash.

3b.The following are the various kinds of mutual funds:

The following are the types of funds:

1. Equity Funds: These funds invest the amassed money from investors in equities i.e.
the stocks of different companies. The associated risks for these funds are
comparatively higher as they invest in the market. However, they also provide higher
returns.
2. Debt Funds: These funds invest in debt instruments like bonds, securities, fixed
income assets, the company’s debentures etc. They provide a safer investment option
for investors who look for small regular returns with low risk.

3. Hybrid Funds: As the name suggests, these are also known as balanced funds.
These funds invests in both equity and debt instruments like stocks, bonds etc. The
ratio of funds in equity and debt instruments may be variable or fixed depending on the
fund. This fund helps to bridge the gap between entirely equity or debt fund, suitable for
investors who look to take higher risk than debt funds in order to gain bigger rewards.

4. Money Market Funds: These funds invest in liquid instruments such as bonds, T-
bills, certificate of deposits etc. The risks associated with these funds are usually low
and suitable for short-term investments, less than one year.

5. Open End Funds: Most of the mutual funds in India are open-end funds. These
funds are not listed on the stock exchanges and are available for subscription through
the fund. Hence, the investors always have the flexibility to buy and sell these funds at
any time at the current asset value price implied by the mutual fund.

6. Closed-End Funds: These funds are listed on the stock exchange. Close-end funds
have a fixed number of outstanding shares operating for a fixed duration of time. The
fund is open for subscription only during a specified period of time. These funds
terminate after a certain period of time. Hence, the investors can redeem their units only
on a specified date.

Conclusion: Investing in mutual funds has many advantages. A person can begin a
SIP with as a small amount of Rs. 500 a month. You don’t have to wait until you save
enough money to make investments. Hence, you can make optimum use of available
cash in order to maximize returns.

The main benefit of investing in a mutual fund is that you get a basket of a variety of
shares or fixed income instruments. For instance, if I wanted to invest Rs. 8000 directly
in stocks, the maximum I would get is a two or three shares. However, on the other
hand, if I invest through a mutual fund, I would get a basket of multiple stocks for the
same amount of money invested.