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Financial Inclusion
for Rural Development
Volume-I
Rev. Fr. Dr. D. Sunder Reddy

Dr. K. Martina Rani
InSc Publishing House (IPH)

Title of the Book: Financial Inclusion for Rural Development
Edition: First-2021
Copyright © Editors
Chief Editor: Rev. Fr. Dr. D. Sunder Reddy
Principal
St. Joseph’s Degree & PG College
King Koti, Hyderabad, Telangana, India.
Associate Editor: Dr. K. Martina Rani
Associate Professor
& Director - Foreign Relations
St. Joseph's Degree & PG College
Department of Business Management,
King koti, Hyderabad, Telangana, India.
No part of this book may be reproduced or transmitted in any form by any means,
electronic or mechanical, including photocopy, recording, or any information storage
and retrieval system, without permission in writing from the copyright owners.
Disclaimer
The authors are solely responsible for the contents published in this book. The
publishers or editors do not take any responsibility for the same in any manner.
Errors, if any, are purely unintentional and readers are requested to communicate such
errors to the editors or publishers to avoid discrepancies in future.
ISBN: 978-1-954461-79-6
MRP Rs.350/-
PUBLISHER & PRINTER: Selfypage Developers Pvt. Ltd.

Pushpagiri Complex, Beside SBI
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IMPRINT: INSC Publishing House (IPH)
ii
Foreword
The Gandhi an ideology is so appealing to scholars that even today they still refer to it
with a bit of utopian glimmer in their eyes. One aspect of rural development can be
viewed as the principle of “Unto the Last” by Ruskin, and Gandhi has adopted and
called Sarvodya (Development for everybody) and another in Village Swaraj (or self-
rule). The recent Covid pandemic has brought this issue to the fore.
It is common that villages and rural life protect people from the spread of virus
through social distancing. At the same time, the hospitals and medical facilities are
better in urban areas and the chance of recovering is better. But, in reality we would
like to have better hospitals, good medical aid and prone to less infection in Rural
Areas. In other words, if had we been smart enough to usher in economic
development, which includes better education and better hospitals, in rural areas, we
all could have escaped to secondary homes in the countryside and beaten up the virus.
Therefore, if we consider to be smart, then we would think again about rural
development.
There is considerable research which shows the financial system as the lubricant for
economic development eventually, it’s important to develop the financial system in
rural areas too. Aiming for Sarvodya, we need all to contain in the financial system.
This, therefore shows why financial inclusion is important for rural development
which underlines the gravity of this assemblage work edited by Rev. Fr. Dr. D.
SunderReddy and Dr. Martina Rani.
Research for microcredit has been inconclusive about whether it does well or leaves
people in over-indebtedness or consumer lending to the poor is healthy or not.
Nevertheless, entrepreneurial microcredit may do well, provided it is directed to
people focusing on business. There is ample evidence to show that even educated
people’s businesses succeed only half the time and therefore one cannot expect poor,
illiterate micro entrepreneurs to succeed more often, but they do get a chance to rise
from poverty if they have access to finance. An important question that needs to be
investigated is how we can raise the success rate of rural micro-entrepreneurs.
There is some evidence that having banking facilities and being able to make
payments is valuable to poor people. Thanks to mobile technology, the payment
modes have become agile due to the innovations in the banking sector and there is
corroboration from research in India, Bangladesh and African countries, which
strongly relate to improvement in the economic conditions of the poorest in rural
areas and people are able to transfer money at low transaction costs. However, more
research is required to understand how it affects women, older dependents and the
handicapped.
iii
These questions are being investigated by savant researchers and the essays in this
volume shed light on many issues, and provide policy recommendations for
entrepreneurs, financial institutions, and governments.
Arvind Ashta
Professor / Professor Department Finance,
Computability, Droit Accounting,
Finance & Law Department Burgundy School of Business, France.
iv
Preface
Dear Readers
Greetings!
A few words, before you begin to read the research papers of this Editorial Book on
FINANCIAL INCLUSION AND RURAL DEVELOPMENT. It all began when we
felt that rural development is the main focus of all the policies of various
developments, framing to end poverty in all its forms everywhere as per the Sustainable
Development Goals (SDGs) by 2030, to reduce at least by half the population of men,
women and children of all ages living in poverty in all its dimensions and to implement
nationally appropriate social protection systems and measures for all, including floors.
By 2030, the nations should ensure that all men and women, particularly the poor and
the vulnerable, have equal rights to economic resources, as well as access to basic
services, ownership, and control over land and other forms of property, inheritance,
natural resources, appropriate new technology, and financial services including
microfinance. The accessibility of financial services to the poor and under privileged
through Financial inclusion is the way out which helps to attain the sustainable
development of any country by helping to the empowerment of underprivileged, poor
and women of the society with the mission of creating them self-reliant and well
learned to take superior financial decisions. Financial inclusion takes into the
involvement of vulnerable groups such as weaker sections of the general public and low
income groups,based on the extent of their access to financial services such as savings
and payment account, credit insurance, pensions etc. financial inclusion implement to
easy accessibility of financial services which allows utmost investment in business,
education, insurance against risks, save for retirement etc. by the rural people and firms.
Hence, keeping in view the contemporary need of the theme by policy makers and
Government; We, The Editors, I along with Dr.K.Martina Rani, would like to present
this book as a source of research inputs. We thank all the authors of research papers
of the theme and we present this book to the readers who may be academician,
practitioners and policy makers for further research, policy decisions and for
implementation, as the case may be.
WISH YOU ALL THE SUCCESS
Chief Editor
Fr. Dr. D. Sunder Reddy
Principal
St. Joseph’s Degree & PG College,King Koti Road,
Koti, Hyderabad, Telangana, India
Associate Professor
Dr.K.Martina Rani
Associate Professor
& Director- Foreign Relations,
St. Joseph’s Degree & PG College,
Department of Business Management
Hyderabad, Telangana, India
v
Acknowledgment
Message from Chairman
Most. Rev. Poola Anthony

Archbishop of Hyderabad & Chairman – HAES
It gives me immense pleasure to present this Editorial Book on FINANCIAL INCLUSION

AND RURAL DEVELOPMENT as a source of knowledge dissemination in the concerned
area of the developmental initiatives and efforts taken by the Government of India in order to
bring the underprivileged in to the fold of Banking and Financial services through National
Financial Inclusion Policies
I would like to appreciate the Institution which

which has taken up this area of research to
contribute to the academia, industries and the policy makers who are interested to draw
inputs from this editorial book.
I would like to make a mention on the efforts taken by the Editors - Fr. Dr. D. Sunder Reddy,
Principal, St. Joseph’s Degree & PG college, along with Dr. Martina Rani, Associate
Professor, in the Department of Business Management for coming out with this kind of a
research study which is of national importance and I wish them to continue to do more mor
research to release more volumes of books.
I WISH BEST SUCCESS!
GOD BLESS YOU
Most. Rev. Poola Anthony

Archbishop of Hyderabad & Chairman – HAES
vi
Contents
Financial Inclusion through Micro Finance –Insights into Various 1 -16

Micro Finance Companies in India
………………………………………………………………………….
A.Danam Tressa , Fr.Dr.D.Sunder Reddy
Exploring the Role of Behavioral Theories in Financial Inclusion 17 -32
………………………………………………………………………….
Manish Panchasara
Financial Inclusion towards Rural Development in India: Issues and 33-39
Concerns
………………………………………………………………………….
Annemalla Ramesh
Identifying Various Sources Contributing to Improve Financial 40-51

Inclusion
………………………………………………………………………….
Surekha Adiki, P. Sai Rani & Martina Rani
Institutional Assistance to Scheduled Caste Rural Entrepreneurship 52-63

in Tirunelveli District
………………………………………………………………………….
S. Rajeshkanna
Women Entrepreneurship in Micro, Small and Medium Enterprises 64-74

of India – A Gateway to Financial Inclusion
………………………………………………………………………….
Manoj Kumar Joshi
Facets of Rural Development through Financial Inclusion 75-83

………………………………………………………………………….
Mohana Krishna Irrinki
Working of Islamic Banking- A Conceptual Study 84-92

………………………………………………………………………….
Mubeen Sultana & Mohd.Yosuf
Inclusion through Insurance - A Study on Crop and CattleInsurance 93-104

………………………………………………………………………….
K.Srinikhila
Financial Inclusion in India – A Divergent Analysis 105-112
………………………………………………………………………….
P.Srilatha, & Aleti Padma
vii
Financial Inclusion of Rural India: Challenges & Opportunities 113-116
………………………………………………………………………….
Vandana Samba & Venkata Siva Kumar
Government Funding Schemes: An Aid for Rural Entrepreneurs 117-122

………………………………………………………………………….
Smriti Nagaria
Micro Finance for Women Micro-Entrepreneurship 123-126

………………………………………………………………………….
Mamatha & Mahalaxmi K
Financial Inclusion- A Retrospection 127-131
………………………………………………………………………….
Sindhu Varghese
Fintech for Financial Inclusion 132-136
………………………………………………………………………….
S. Swapna
Financial Inclusions – Rural Women Entrepreneurship 137-141
………………………………………………………………………….
Anitha Kumari. B
Agricultural and Artisanal activities in Rural India 142-149
………………………………………………………………………….
Mahanaaz Mukkaram
viii
Financial Inclusion through Micro Finance –Insights into Various

MicroFinance Companies in India
A. Danam Tressa
Associate Professor
Head - Department of Business Management,
St. Joseph‘s Degree & PG College, King koti, Hyderabad.
Fr.Dr.D.Sunder Reddy
Principal,
St. Joseph‘s Degree & PG College,
King koti, Hyderabad
Abstract
The aim of this paper is to look at the role of microfinance in individuals

empowerment and attaining financial inclusion in India. Although there are concerns
about MFIs ability to manage public funds, their development and accomplishments
deserve to be recognized. MFIs now want the government to give them more leverage
in terms of mobilizing savings. However, in view of recent events and the need for
qualitative development, we believe that MFIs should be handled with greater
attention to finance, technology, and social responsibility. It's crucial to remember
this. This is critical in order to transform MFIs from thrift and credit institutions to
people-building and livelihood-sustaining Organizations.
Key words: Empowerment, MFIs, Credit Institutions, Organizations
I. Introduction
Financial Inclusion is described as the method of offering banking and

financial solutions and services to every individual in the society without any form of
discrimination. It primarily aims to include everybody in the society by giving them
basic financial services without looking at a person‘s income or savings. Financial
inclusion chiefly focuses on providing reliable financial solutions to the economically
underprivileged sections of the society without having any unfair treatment. It intends
to provide financial solutions without any signs of inequality. It is also committed to
being transparent while offering financial assistance without any hidden transactions
or costs. Financial inclusion wants everybody in the society to be involved and
participate in financial management judiciously. There are many poor households in
India that do not have any access to financial services in the country. They are not
aware of banks and their functions. Even if they are aware of banks, many of the poor
people do not have the access to get services from banks.
Microfinance is a small-scale financial service offered to the poor by financial

institutions. Savings, credit insurance, lending, money transfers, equity transactions,
and other financial services are examples of financial services offered to consumers to
1
fulfill their usual financial needs during their life cycle, economic opportunity, and
emergency.
Micro Finance Institution (MFI): A micro finance institution (MFI) is an entity that
serves as a link between formal credit providers and credit seekers, with the goal of
assisting poor and disadvantaged people in their socioeconomic growth. Microfinance
institutions (MFIs) are critical for promoting micro business and empowering locals,
especially women. MFIs have a very concentrated geographic range, i.e.
A Self-Help Community (SHG) is an unregistered or registered group of micro

entrepreneurs who come together voluntarily to save small amounts of money on a
regular basis, to collectively agree to contribute to a shared fund, and to meet their
emergency needs on a mutual help basis. It is a self-organized group of people who
have come together to achieve a common goal.
It is a voluntary association of people formed to attain certain collective goals,

both economic and social. Each group has 10-20 people in it. A group could be
exclusively male or female, or even mixed. However majority of SHG‘s are female
groups.
Bill 2007: Micro Financial Sector (Development and Regulation): The Finance
Minister introduced the Bill in the Lok Sabha on March 20, 2007, making the
NationalBank for Agriculture and Rural Development (NABARD) the micro financial
sector's regulator. Microfinance organisations must register with NABARD, and no
entity (including those that already exist) can engage in the business of lending
money.
Registration of micro-finance Organisations with NABARD mandatory and no

institution (including existing) can carry out business of offering thrift services
without obtaining certificate of registration.
The Bill recommends the creation of a contingency fund where a minimum of

15% of the net profit or surplus realized from thrift services will be parked to protect
depositors' interests. The bill also gives NABARD the authority to create a scheme for
appointing one or more Micro Finance Ombudsmen to resolve conflicts between
clients and micro finance institutions.
II. Objectives
The following are the objectives of this paper:
1. To the study significance and role of financial inclusion in the Micro Financial
Institutions (MFIs)
2. To investigate the various Micro Finance Institutions in Indiato promotefinancial
inclusion.
3. To list features and the accomplishments of Micro Finance Institutions.
2
III. Literature Review
Milana, C, Ashta states in their study that the ultimate goal and raison d'être
of microfinance is to lift the poor out of poverty through financial and social
inclusion. Microfinance institutions have done a good job of administering
microcredit, according to recent literature, but their goal of improving the living
standards of their indigent clients has not been reached in most cases. Encouragement
of entrepreneurship is predicted. Microcredit's intended promotion of
entrepreneurship, let alone women's social involvement in work activities, is to be
seen in empirical evidence. The papers in this thematic issue create new analytical
elements to the debate, highlighting a variety of elements of the social divisions and
disparities that threaten developing countries. This overview article summarises the
major unanswered questions as well as the
Jayati Ghoshin the article represents an important assessment of

microfinance's success in developing countries based on a study of recent literature. It
looks at India's history, which has one of the world's largest microfinance industries,
and in particular the microfinance crisis in Andhra Pradesh. It reaches the conclusion
that microfinance cannot be regarded as a panacea for progress.
It must be regulated and subsidized to accomplish even some of its social

objectives, and other strategies for sustainable financial inclusion of the poor and
small producers must be embraced more aggressively.
Ghosh, Dr. Amlan opined in the article that Rural finance has taken a back
seat in India after the economy opened up and banking reforms were implemented. To
maintain the current rate of growth, India must meet the financial needs of the
excluded masses in order to integrate them into the development process. The
problems of formal banking in providing credit (micro) to the poor in rural and urban
areas in the modern era are examined in this article, and it is suggested that the POSB
can be used to meet the financial needs of rural India, where MFIs have a small share
of total demand for finance.
Savita Shankar highlighted the Financial inclusion, or giving access to

financial services to those who do not have them now, is a major goal in many
developing countries. This article examines whether microfinance institutions (MFIs)
in India are effectively breaking down barriers to financial service access. Two lines
of inquiry were pursued: the distribution of microfinance penetration in the country
was examined, and the availability of microfinance in the country was examined.
Although MFIs are effective in breaking down many barriers to financial inclusion,
their scope to those who are excluded is limited. First, MFI penetration in the country
is skewed, except some areas that are underserved by the banking sector, implying
that policy incentives to promote expansion in those areas are needed. Second, due to
their methods of operation, MFIs are unable to offer services to these financially
excluded individuals even in areas where they work. MFIs should consider
implementing more flexible operating models and offering account portability in
3
order to provide greater and longer-term access to more people. There's also a case to
be made for skill-based training to make MFI membership more available.
Raman, A. mentioned in his study that the topic of financial inclusion is

emerging as a new economic growth model. Financial inclusion is a key factor in
eradicating poverty in the country. Financial inclusion applies to the provision of
banking services to the general public, including both privileged and disadvantaged
individuals, on reasonable terms and conditions. It not only improves agriculture's
overall financial intensity, but it also aids in the development of new technologies.
IV. Key Features of Microfinance
Some of the significant features of microfinance are as follows:
 These loans are usually repaid at higher frequencies

 Loans availed under microfinance are usually of small amount, i.e., micro loans
 The loan tenure is short
 The purpose of most microfinance loans is income generation
 Microfinance loans do not require any collateral
 The borrowers are generally from low income backgrounds
Lenders Offering Microfinance Loans to MFIs
Reliance Money – Reliance Money partners with microfinance organisations

to provide microfinance solutions at competitive interest rates (MFIs). The amount of
documentation needed is minimal. MFIs receive wholesale support for on-lending.
The lender also assists MFIs in obtaining loans from alternative sources by providing
guarantees.
ICICI Bank –
 For at least ten years, ICICI Bank has partnered with MFIs to provide
microfinance loans to these Organisations. The bank is currently concentrating
on the following:
 Establishing a successful and sustainable lending market with a select group of
MFIs
 Investing in India's microfinance industry to ensure its long-term viability.
 ICICI Bank's MFI funding is primarily in the form of term loans.
 ICICI Bank's MFI funding is primarily in the form of term loans. Pass Through
Certificates are also available from the bank. For treasury and staff products,
MFIs are provided additional value-added services such as cash management
services, salary/savings accounts, and customized current accounts.
State Bank of India (SBI) – SBI provides loans to microfinance institutions

and non- governmental organisations (NGOs) that serve as intermediaries in funding
the needs of low-income entrepreneurs. These term loans may be repaid monthly,
4
quarterly, or at 6-month intervals. Cash credit loans should be renewed on an annual

basis and havea maximum maturity period of three years.
Axis Bank – Axis Bank provides loans to microfinance institutions that help
low- income earners and micro entrepreneurs become financially self-sufficient.
Several MFIs have partnered with the bank across the country. The bank provides
term loansto MFIs, who then extend them to qualifying borrowers.
DCB Bank – As part of its micro financing programme, DCB Bank

provides twotypes of items. Term loans and loans to MFIs for on-lending purposes
Microfinance Companies in India
The following are some of the microfinance companies in India that provide
loans to the unbanked and under banked:
1. Arohan Financial Services Pvt Ltd:

2. DishaMicrofinPvt Ltd
3. Annapurna Microfinance Pvt Ltd
4. BSS Microfinance Pvt Ltd
5. Cashpor Micro Credit
6. Asirvad Microfinance Pvt Ltd
7. Equitas Microfinance Pvt Ltd
8. ESAF Microfinance and Investments Pvt Ltd
9. Bandhan Financial Services Pvt Ltd
10. Fusion Microfinance Pvt Ltd
1. Arohan Financial Services Pvt Ltd: The largest NBFC MFI in eastern India is
Arohan Financial Services Limited. Customers from the economically
disadvantaged are offered microfinance loans by the organisation. The loan
amount ranges from Rs.1,100 to Rs.50,000, with interest rates ranging from 20.70
to 21.25 percent per annum. The loan term will vary from three to twenty-four
months.
Products offered by Arohan Microfinance
 Saral: These loans are offered to women from low-income families. The
recipients of the funds are usually engaged in trading activities and related
services.
 Bazaar: This product provides loans to shopkeepers who operate their
businesses on a regular basis. The borrowers should run the shops themselves
or with the help of their families. Domestic items such as stationery and
groceries should be handled by the establishments.
 Sanitation Loan: This loan is provided to borrowers who are looking to
construct toilets with the funding. These can be individual or secondary loans.
 Product Loan: This loan can be taken for the purchase of various kinds of
cross-sell utility products. These can be individual or secondary loans.
5
2. Disha MicrofinPvt Ltd: Disha Microfinance Private Limited is based in

Ahmedabad and was established in 1995. It is a subsidiary of Fin care Business
Services Private Limited and was previously known as Banas Finlease Private
Limited.
In Gujarat, Rajasthan, Madhya Pradesh, and Karnataka, Disha Micro fin

Pvt Ltd. specialises in providing microfinance products and services to rural, semi-
urban, and urban women.
Disha Micro fin Pvt Ltd offers the following loans and services:
 Short-term loans
 Microfinance loans
 Emergency loans (In the event of death, sudden illness etc)
 Life insurance and loan cover insurance services
 Retirement solutions
3. Annapurna Microfinance Pvt Ltd: Annapurna Microfinance Pvt. Ltd, also

known as Annapurna Microfinance, is a microfinance company based in India.
AMPL is a microfinance project of People's Forum, a development group that has
been around for over two decades. Although it is a non-banking financial company
controlled by the Reserve Bank of India, it functions as a financial institution. It
was previously known as Gwal and was promoted by Mr. Gobinda Chandra
Pattanaik (Member Secretary and CEO of People's Forum).
Gwalior Finance & Leasing Pvt. Ltd was the previous name of the
company. It was in the business of funding and leasing. Annapurna Microfinance
Pvt. Ltd aims to expand its microfinance operations in areas that do not yet have
access to a structured financial system, and to assist people with livelihood
support, especially the vulnerable, through financial and technical assistance
strengthening entrepreneurial skills for effective and efficient undertaking of
business activities in rural areas
To meet the changing needs of the society, Annapurna Microfinance Pvt.

Ltd. (AMPL) provides both financial and non-financial services to the poor,
unbanked, and marginalised people in rural, semi-urban, and urban areas. They
also assist those engaged in agricultural and small-business operations. It also
offers its customers new personalised insurance options. They are well-known for
their micro-credit products in particular.
The following are the offerings from this financial institution:
 Loan for Paddy Cultivation

 Vegetable Cultivation
 Loan for Dairy
 Loan for Snacks Making
6
 Loan for Bamboo Craft

 Loan for Grocery Shop
 Income generating loans for family members of Leprosy affected Patients
 Income Generating Loans for Widows/ Unmarried women/ Single Mothers
 Loan for physically challenged persons
 Income generating loans for persons belonging to the community of Eunuch/
Third gender
 Income generating loans for specific clusters or large groups doing one activity
 Safe Water and Sanitation To Households (SWASTH)
 Annapurna Higher Education Loan (ASEL)
Loan for Paddy Cultivation: This loan has a 24 percent interest rate and is only
available to women for paddy cultivation. The cumulative loan amount is Rs.
15,000, which must be paid back in 24 monthly installments. The interest rate
decreases with each deposit, and the loan is based on a SHG model.
Loan for Vegetable Cultivation: This loan has a 24 percent interest rate and is
only available to women who want to grow their own vegetables. The loan sum
can be up to Rs. 15,000, payable over 24 months. With each deposit, the interest
rate decreases, and the loan model is based on SHG. Loan for Fishery
Loan for Dairy: This loan has a 24 percent interest rate and is only available to
women for dairy. The loan sum will range from Rs. 15,000 to Rs. 24,000, and it
must be paid back in 24 monthly instalments. The interest rate decreases with each
deposit, and the loan is based on a SHG model.
Loan for Snacks Making: This loan has a 24 percent interest rate and is only
available to women for the purpose of making snacks. The cumulative loan
amount is Rs. 10,000, which must be paid back in 12 monthly instalments. The
interest rate decreases with each deposit, and the loan is based on a SHG model.
Loan for Bamboo Craft: This loan has a 24 percent interest rate and is only
available to women for bamboo and cane craft. The loan sum will range from Rs.
15,000 to Rs. 24,000, and it must be paid back in 24 monthly instalments. The
interest rate decreases with each deposit, and the loan is based on a SHG model.
Loan for Grocery Shop: This loan has a rate of interest of 24%, and can be taken
by women only for running a grocery shop. The loan amount may be a maximum
of Rs. 10,000 payable within 12 monthly installments. The interest rate reduces
with every payment made and also the model for this loan is SHG based.
Income generating loans for family members of Leprosy affected Patients:

This loan has an interest rate of 18 percent and can be used for income-generating
activities by family members and leprosy patients. The loan sum for SHGs is
limited to Rs. 1 to 2 lakhs, and for individuals, it is limit to Rs. 25,000 to Rs. 1
lakh, payable in 36 monthly instalments. With each deposit, the interest rate
decreases.
7
Income Generating Loans for Widows/ Unmarried women/ Single Mothers:

This loan has an 18% interest rate and can be used for income-generating activities
by widows, unmarried women, or single mothers. Individuals may be eligible for
loans ranging from Rs. 25,000 to Rs. 50,000, which are repayable in 36 monthly
instalments. With each deposit, the interest rate decreases.
Loan for physically challenged persons: This loan has an 18% interest rate and
can be used to fund income-generating programmes for physically disabled
people. Individuals may be eligible for loans ranging from Rs. 25,000 to Rs.
50,000, which are repayable in 36 monthly instalments. With each deposit, the
interest ratedecreases.
Income generating loans for persons belonging to the community of Eunuch/

Third gender: This loan has an interest rate of 18% and can be used for income-
generating activities by people of the third gender or the eunuch group. Individuals
may be eligible for loans ranging from Rs. 15,000 to Rs. 30,000, which are
repayable in 36 monthly instalments. With each deposit, the interest rate decreases.
Income generating loans for specific clusters or large groups doing one
activity: This loan has an interest rate of 18 percent and is available to people of
the third gender or women from low-income families for income-generating
activities. Individuals may be eligible for loans ranging from Rs.1.5 lakhs to Rs.3
lakhs, repayable in 36 monthly instalments. With each deposit, the interest rate
decreases. The model for lending is based on SHG group or SHG federations.
Safe Water and Sanitation to Households (SWASTH): This loan supports rural
people in obtaining loans to enhance water and sanitation by purchasing water
connections, hand bore wells, new toilets, or toilet renovations. The interest rate
on this loan is 22%, with a loan sum ranging from Rs. 5,000 to Rs. 15,000. Within
a 12- to 18-month period, the loan will be repaid in monthly instalments.
Annapurna Higher Education Loan (ASEL): Rural people can use this loan to
pay for course fees for current and prospective post-secondary students attending
university, diploma, pre-university college, technical or vocational school. This
loan would be beneficial to students taking career-oriented courses.
4. BSS Microfinance Limited: BSS Microfinance Limited is a microfinance

company that currently acts as a 'Business Correspondent' of Kotak Mahindra
Bank Limited, but which started operation in 1999 as a Trust. The company took
over the Trust's microfinance activities in April 2008, and it has been extending
microloans to women from the economically challenged sections of the society
since then. BSS Microfinance is currently active in four Indian states:
Maharashtra, TamilNadu, Karnataka, and Madhya Pradesh. BSS Microfinance's
goal is to help women overcome poverty by providing microfinance services,
which are then passed on to their families. The organization also wants to help
people make more money, have a better quality of life, and handle their money
better.
8
The following features of micro loans from BSS Microfinance make it an

attractive option for borrowers who wish to use these loans for income
generating activities:
 No collateral/security deposit/margin needs to be provided by borrowers of

micro loans from BSS Finance.
 The loan availed can be used by members only for purposes approved by the
company.
 After the loan is disbursed, the utilisation of all loans will be examined in the
centre meeting.
 Borrowers have the option of making weekly, fortnightly, or monthly
repayments
5. Cashpor Micro Credit: Cashpor Financial & Technical Services has a subsidiary
called Cashpor Micro Credit (CFTS). It is a Varanasi-based poverty-focused
microfinance institution that identifies women living in rural eastern Uttar
Pradesh, Bihar, and Chhattisgarh and provides them with microcredit services to
help them generate income. Cashpor Micro Credit is not required to register with
the ReserveBank of India.
Cashpor Micro Credit provides the following loan options:

 Bada Loans
 Income Generating Loans
 Emergency Loans
 Cashpor Micro Credit Income Generating Loans have three cycles:
 a newly entered member receives Rs 2,000 - Rs 8,000 in the first cycle;
 a member receives Rs 2,000 - Rs 12,000 in the second cycle; and
 a member receives Rs 2,000 - Rs 14,000 in the third cycle.
Features of Cashpor Micro Credit Income Generating Loans for different

tenures
Loan Tenure - 52 Weeks

 Weekly repayment frequency
 Loan amount - minimum Rs.2,000 and maximum Rs.15,000
 Grace Period - two weeks at the beginning
 Number of payments to be paid by the borrower - 50
 1 percent of the loan sum in processing fees (inclusive of service tax)
 Insurance premium and coverage - A life insurance policy with a coverage
of Rs.1,000 is available for a premium of Rs.5 (inclusive of service tax)
Features of Cashpor Micro Credit Emergency Loans
 The loan amount is limited to Rs. 1,000 only

 Weekly repayment frequency
9
 Emergency loans are granted to members in the event of emergency situations

such as floods, fire, critical diseases or illness, major accidents etc
 The loan tenure is 25 weeks
 Emergency loans are granted to members in the case of emergency
circumstances such as floods, fires, critical diseases or illnesses, major
accidents, and so on.
 Processing fees of 2% of the loan amount (inclusive of service tax) • Insurance
charge of 1% of the loan amount
Features of Cashpor Micro Bada Loans: The loan amount ranges from a
minimum of Rs. 15,000 to a maximum of Rs. 25,000 only.
 The repayment period is 52 weeks, much like an Income Generating Loan.

 This form of loan is only available to members who have taken loans in at least
four cycles, have been with the organisation for at least three years, and have a
clear track record
6. Asirvad Microfinance Pvt Ltd: Asirvad Microfinance was established in 2007

with the aim of providing financial assistance to the poorest members of society
and assisting them in achieving financial independence. The main goal of Asirvad
was to empower members of these groups, resulting in economic inclusion and
thus assisting the country's growth.
Asirvad, which was established in 1956 and is now worth over Rs 100
crore, is a company registered under the Companies Act of 1956. Malappuram
Finance Limited, which now owns an 85 percent stake in Asirvad, recently
acquired the firm. When it comes to providing microfinance solutions to its
customers, it follows the Reserve Bank of India's guidelines.
Asirvad Microfinance offers a variety of services: Asirvad Microfinance

provides micro loans to qualifying borrowers in accordance with RBI guidelines.
Borrowers may use these micro loans to increase their income by using them for
industry, trade, or service. Depending on the needs of individual customers, the
company provides loans ranging from Rs 10,000 to Rs 25,000.
The requirements for obtaining a micro loan are as follows:
Individuals from the economically disadvantaged parts of society who wish

to improve their situation by starting a company, providing a service, or engaging
in a trade can apply for these micro loans. To get this money, you'll need a clear
idea and a plan of action. Self-help organisations and groups may also apply for
micro loans to help them develop their businesses.
Asirvad Microfinance's interest rate: Asirvad Microfinance charges a low

annual interest rate of 26% on all loans, making it competitive in the microfinance
world. Asirvad's tenure loans range from 12 to 24 months in duration, depending
on the amount borrowed and the borrowers repayment ability.
10
7. Equitas Microfinance Pvt Ltd: Singhvi Investment and Finance Pvt. Ltd was the
previous name of Equitas Micro Finance Pvt Ltd. They are a microfinance
company that specialises in commercial vehicle loans, property loans, and loans
for small businesses. The company was established in 1994 and is a wholly owned
subsidiary of Equitas Holdings Pvt. Ltd. It is headquartered in Chennai, Tamil
Nadu.
Equitas Micro Finance Pvt Ltd was established with the aim of providing
microcredit to people who are unable to obtain credit from mainstream or well-
known banks or financial institutions. The company's objective is to make
financing available to such consumers at a reasonable cost and to generate
reasonable returns on investment in order to attract mainstream capital on a
consistent basis.
Equitas Micro Finance Pvt Ltd provides Income Generating Loans and
Emergency Loans to borrowers at various phases of life. At various stages of the
borrower's life cycle, higher loan amounts are offered based on the client's
demands and business needs.
Features and benefits of Equitas Microfinance Pvt. Ltd Income Generating

Loans: Income Generating Loans issued by Equitas Micro Finance Pvt
Ltd showcase the following features and benefits:
For loan amounts disbursed in cash
 The loan amount disbursed during cycle 1 of the borrower's life cycle can range
from Rs 13,000 to Rs 20,000.
 The loan amount disbursed during cycle 2 can range from Rs.13,000 to
Rs.25,000
Rs.30,000
Rs.35,000
 The loan is for a period of two years.
8. ESAF Microfinance and Investments Pvt Ltd: ESAF Microfinance is a non-

banking financial institution (NBFC) established in 1992 with the aim of
accelerating marginalised communities' economic growth. They have a wide
variety of loan products to meet the changing needs of Indian citizens. They had
over 2,500 staff and a 1.2 million-strong client base as of 2016.
The Reserve Bank of India has given ESAF Microfinance a ‗in principle' approval,
making it one of the top NBFCs in India.
Products and Services Offered by ESAF Microfinance: This NBFC has an

array of loans, which are designed to meet various purposes. Below you will find
an overview of th e loans available at ESAF Microfinance:
11
1. Income Generation Loan

2. General Loan
3. Nirmal Loan
4. Jeevandhara Loan
5. Agriculture Loan
6. Vidhyajyothi Loan
7. Suryajyothi Loan
8. Grihajyothi Loan
9. Mobile Loan
10. Micro Enterprise Loan – Dairy (MELD)
11. Ultra Poor Loan
12. Income Generation Loan (Dairy)
13. Income Generation Loan (Special)
14. Home Improvement Loan
Income Generation Loan: The purpose of this loan is to provide working capital
to the borrower so that he or she can generate income or create assets. This loan
has weekly, fortnightly, and monthly repayment options. The moratorium duration
may be one week, two weeks, or a month, depending on the repayment frequency.
General Loan: The money borrowed from this loan can be used for personal
expenses. Weekly, fortnightly, and monthly repayments are available. The length
of your moratorium duration will be determined by your repayment frequency. It
could be one week, two weeks, or even a month.
Nirmal Loan: This loan is available to those who need financial assistance to
build latrines. You have the choice of paying weekly, fortnightly, or monthly. The
duration of the moratorium varies depending on how much you repay. It could be
amonth, 2 weeks, or even 1 week.
Jeevandhara Loan: This loan can be borrowed to pay for a water connection You
can also choose from a variety of repayment periods, including weekly,
fortnightly, or monthly. Depending on the repayment frequency, a moratorium
period of one week, 2 weeks, or 1 month will be imposed.
Agriculture Loan: This loan's funds will be used to assist farmers who want to
plant crops. At the end of the loan term, there is a bullet repayment mode.
Vidhyajyothi Loan: This credit is granted to Sangam members to help them meet
their children's educational needs. Both tuition and non-tuition fees are eligible for
the funding. This loan has a weekly, fortnightly, or monthly repayment period.
Depending on the repayment frequency, the moratorium period varies from 1
weekto 2 weeks to a month.
Suryajyothi Loan: This loan's proceeds can be used to promote items such as
solar lamps. You will pay back your loan in three different ways: weekly,
12
fortnightly, or monthly. A moratorium duration of 1 week, 2 weeks, or 1 month is

available, and it varies depending on your repayment frequency.
Grihajyothi Loan: The amount of the loan that has been approved will be used to
promote energy-saving cooking stoves. This loan comes with three repayment
options: annual, fortnightly, and weekly. The length of the moratorium depends on
the repayment frequency you choose. It could be a month, 2 weeks, or even 1
week.
Mobile Loan: This loan is available to ESF clients who choose to buy a phone
with the loan sum they have been approved for. You can choose from three
different repayment cycles: monthly, fortnightly, or weekly. A month, 2 weeks, or
1 week of moratorium is available, depending on your repayment frequency.
Micro Enterprise Loan – Dairy (MELD): This loan will help milk vendors and
farmers handle their working capital needs more effectively. This loan has a
weekly repayment schedule and a one-week moratorium duration.
Ultra Poor Loan: This loan can be used to improve one's wellbeing. There are
three different repayment periods to choose from: monthly, fortnightly, and
weekly. Depending on the repayment frequency, a moratorium period of 1 week, 2
weeks, or one month will be imposed.
Income Generation Loan (Dairy): This loan is available to dairy farmers who
want to expand their business. You have three repayment options: weekly,
fortnightly, or monthly. The length of a month, 2 weeks, or 1 week of moratorium
varies depending on your repayment frequency.
Income Generation Loan (Special): This loan may be used to provide working
capital for income-generating operations or to purchase properties. There are
options for weekly, fortnightly, and monthly repayments. Based on the repayment
cycle, a moratorium duration of one week, 2 weeks, or 1 month will be set.
Home Improvement Loan: With the funds from this loan, you will renovate your
current home or finance repairs. The repayment schedule is on a monthly basis,
with a one-month grace period.
9. Bandhan Financial Services Pvt Ltd: Bandhan Financial Services Private

Limited was established in 2001 with the aim of empowering women and reducing
poverty across India. It is now one of the most awarded microfinance institutions
in the world. Bandhan began in a village near Kolkata and now provides financial
assistance to citizens in 22 Indian states and union territories, assisting the
country's development and prosperity.
Bandhan's primary focus is on health, education, and unemployment, with
goods aimed to help people in their search for a better life. Bandhan Financial
Services was established under the Companies Act of 1956 and is a Reserve Bank
of India-registered Non-Banking Financial Company (RBI).
13
Products offered by Bandhan Financial Services Private Limited
1. Bandhan Microfinance Suchana Loan

2. Bandhan Microfinance Srishti Loan
3. Bandhan Microfinance Samriddhi Loan
4. Bandhan Microfinance Suraksha Loan
5. Bandhan Microfinance Susikhsha Loan
6. Bandhan Microfinance Fisheries Loan
Bandhan Microfinance Suchana Loan: This is a micro loan which is designed to

aid the finances of borrowers, enabling them to take part in income generating
activities.
Bandhan Microfinance Srishti Loan: This is a microfinance loan which can

beavailed by self-help groups or communities to enhance their source of income.
Bandhan Microfinance Samriddhi Loan: This is a micro loan for small and
medium enterprises, designed keeping in mind the unique requirements of micro,
small, and medium enterprises (MSMEs), providing them with sufficient financial
aid to grow and generate further employment.
Bandhan Microfinance Suraksha Loan: The health of a nation depends on the

health of its people, and Suraksha is a micro health finance loan which aims to
keep people healthy and active.
Bandhan Microfinance Susikhsha Loan: Education is perhaps the biggest need

of the hour today and BandhanSusikhsha is a micro education loan designed to
help educate people from marginalised communities.
Bandhan Microfinance Fisheries Loan: This fisheries loan can be used to

improve the condition of people involved in the fisheries industry.
10. Fusion Microfinance: In India, RFusion Microfinance is a licenced non-banking

financial institution (NBFC). This organisation focuses on providing financial
services to semi-urban and rural women entrepreneurs. Currently, 100% of the
clientele consists of socially disadvantaged women who are involved in business
ventures.
Products and services offered by Fusion Microfinance: Fusion Microfinance
offers two types of financial products—the JLG and Emergency loan.
1. JLG: Fusion Microfinance's JLG is an unsecured loan product. This loan does not
require the borrower to submit up any assets as collateral.
2. Emergency: Fusion Microfinance also offers an emergency loan that is

unsecured. It does not necessitate the applicant pledging any assets as protection.
14
Fusion Microfinance focuses on women who are unbanked who reside in semi-
urban and rural areas. Women from underserved communities are required to apply
for this loan. In rural areas, annual income must be less than Rs.1 lakh. In addition
and Rs.1.6 lakh in semi-urban areas.
Applicants have to engaged in any one of the following businesses to be

eligible for this loan:
 Sale of vegetables
 Transportation
 Carpentry
 Livestock
 Small shops
The purpose of these loans is to provide women with finances to either setup
new businesses or expand their existing enterprises.
A GST rate of 18% will be applicable on banking services and products

from 01July, 2017.
V. Conclusion
Microfinance Organisations, according to the study, have done a good job

managing microcredit, but their objective of improving the living standards of their
indigent clients has not even been reached in the majority of cases. It is expected that
entrepreneurship will be promoted. Financial inclusion refers to the availability of
banking services to the general public on reasonable terms and conditions, for both
successful and marginalized persons. The study looks at kinds of loans for the
unbanked and underbanked, as well as financial and non-financial programmes for the
poor and marginalized in rural, semi-urban, and urban areas. The aim of microfinance
is to assist women in overcoming poverty by offering microfinance services that are
then passed on to their families.
References
[1] Milana, C, Ashta, A. Microfinance and financial inclusion: Challenges and

opportunities. Strategic Change. 2020; 29: 257– 266. https://doi.org/10.1002/jsc.2339
[2] Jayati Ghosh, Microfinance and the challenge of financial inclusion for development,
Cambridge Journal of Economics, Volume 37, Issue 6, November 2013, Pages 1203–
1219, https://doi.org/10.1093/cje/bet042
[3] Ghosh, Dr. Amlan, Financial Inclusion Through Micro Finance in India and Emerging
Role of POSB: An Analysis (August 9, 2007). Available at
SSRN: https://ssrn.com/abstract=1655737 or http://dx.doi.org/10.2139/ssrn.1655737
[4] Savita Shankar, ACRN Journal of Entrepreneurship Perspectives Vol. 2, Issue 1, p. 60-
74, Feb. 2013 ISSN 2224-9729 60 Financial Inclusion in India: Do Microfinance
[5] Institutions Address Access Barriers?, Asian Institute of Management, Makati City,
Philippines.
15
[6] Raman, A. (2012). Financial Inclusion and Growth of Indian Banking System. IOSR
Journal of Business and Management, 1, 25-29.
[7] Sethy, S.K (2016), Developing a Financial Inclusion Index and Inclusive Growth in
India, Theoretical and Applied Economics, Volume XXIII, No. 2(607), pg. 187-206.
[8] Anindita Banerji (2018), ICT as a tool of Financial Inclusions, IJCRT- International
Journal of Creative Research Thoughts, Vol. 6, Issue 2.
[9] Jayasree, T.O (2016), Current initiatives and Challenges of Financial Inclusion
Programmes in India, IJERME
[10] ParijetDhar& Dr. Nissar A. Barua (2020), Financial Inclusion in India – A state wise
Analysis, International Journal of Management (IJM), Vol. 11 , Issue 10, Pg. 816-827.
[11] Bagli, Supravat&DUtta, Paptia (2012), A Study of Financial Inclusion in India, Radix
International Journal of Economics & Business Management, Volume 1, Issue 8, Pg. 1-
18.
16
Exploring the Role of Behavioral Theories in Financial Inclusion
Dr. Manish Panchasara,

Ex-Banker, Research Scholar
Institute of Management Studies
DAVV, Khandwa Road, Indore
Madhya Pradesh
Abstract
Several theories including the Theory of Planned Behaviour, Theory of

Reasoned Action, the Tran theoretical Model, the Model of Goal-Directed Behaviour
and Prospect Theory are evaluated for their applicability in FI. Further, the discussion
of the strength and weaknesses associated with these theories suggests unanimity in
studying financial behavior, which is essential to this study. Additionally, common
thematic discourses across the theories, which may support future research, are also
discussed. Finally, the paper identifies the constructs across different theories which
contribute to the understanding of FI by promoting the better understanding of
psychological and social determinants of financial behavior.
Key Words: Financial Inclusion; Financial Behavior; Behavior change; Theory of

Planned Behavior; Prospect Theory
I. Introduction
Financial Inclusion (FI) involves various relevant financial services that can be
provided to adults effectively. Fundamentally, FI begins by opening a deposit and a
transaction account with authorized financial institutions (like banks, microfinance
institutions or more recently, mobile money service providers) which not only protect
the money, but also act as intermediaries for making and receiving money.
Consequently, additional services such as loans and insurance, despite being linked to
a bank account, can provide a better avenue for investments and business
opportunities as well as manage financial risk effectively.
In the context of overall development, no single definition for FI exists.

However, a consensus is developed among the advocates that FI usually ends the
involuntary lack of access to FI. With respect to this the definition given by the Centre
for Financial Inclusion, a non-government organization (NGO) founded by ACCION
International, is worth noting:
―Full financial inclusion is a state in which all people who can use them have
access to a full suite of quality financial services, provided at affordable prices,
in a convenient manner, and with dignity for the clients. Financial services are
delivered by a range of providers, most of them private, and reach everyone
who can use them, including disabled, poor, rural, and other excluded
populations.‖
17
This definition covers two important aspects of FI: accessibility, and the cost
that is a pre-requisite for providing effective financial services. Furthermore, a similar
approach is visible in the definitions given by Sarma and Pais (2011), Ledger wood
and Gibson (2013), Thingalaya, Moodithaya, & Shetty(2010), Claessens (2006),
Rangarajan (2008) and by the Indian Planning Commission (2009) wherein the
significance of ―accessibility‖ served as a common agenda for researchers and
implementing authorities across developing countries.
Figures on FI published by the Global Findex Report of World Bank (2018),

are not encouraging. Even after 79 per cent of adult Indians (+15 years) reportedly
having a bank account, 38.50 per cent of these accounts are inactive. Despite the
digital revolution that has been happening in the country, only 2 per cent of mobile
money transfers have been reported. Against the strict mandate of routing ―all‖
government payments through bank accounts, only 8.10 per cent of accounts were
reported to have received such payments. In the case of payments by the private
sector, this is even worse, where only 5.40% of payments are routed through
accounts. Further, while a large percentage of accounts should have resulted in excess
savings and borrowings, only 19.60 per cent reportedly made savings in financial
institutions against the total savings of 33.60 per cent. Similarly, out of the total
borrowing reported of 42.40 per cent, 8.10 per cent borrowed from financial
institutions. Over the past decade, the penetration of banking services with respect to
Banking outlets and Business Correspondences (BCs) has grown manifold. While
banking outlets in villages have grown from 33,378 (2010) to 50,805 (2018), the
growth of BCs in villages has been monumental too, growing from 34,174 (2010) to
515,317 (2018).
Further, the World Bank (2016) estimates the poverty profiles of the Indian
population as not being encouraging, given that270 million Indians were poor in the
year of publication of the report. Amongst them, while 80 per cent of the poor live in
villages and the total poverty rate was 25 per cent, 27 per cent of the poor lived in
villages with a population of less than 5000. Moreover, the various assets held by the
poor include 61% mobile, 29% TV, and 27% stove. These figures largely represent
the failure of the efforts aimed at implementing FI. In areas where BCs are present in
large numbers, the poverty rate is largely the maximum that is 27 per cent.
Additionally, credit disbursements of only 8.10% in such areas depict that banks do
not meet their social responsibilities. A very low proportion of mobile money
transfers (2 per cent) show that the implementing authorities have failed to establish it
as an economical medium of remittance.
Apparently higher investments made in creating suitable ―access-points‖ and

also creating (and modifying) schemes such as direct benefit transfers and social
insurance were not successful in producing a desired impact in enduring financial
behavior. Similarly, the major contribution of FI is seen in terms of poverty reduction
and maintaining social balance. Moreover, the figures of poverty are also not
encouraging thereby falsely endorsing the success of FI. Thus, there is the urgency of
shifting the onus of responsibility from the policy makers to beneficiary by targeting
18
the behavioral aspects that lead to voluntary approach. This transition of liability will
serve to solve two purposes: (a) it shall ensure the sustainability in account operation,
and (b) more significantly, it will educate the beneficiaries in inculcating financial
behavior that shall improve overall quality of their life.
This assessment is also significant given its impact on financial behavior,

which is the part of human behavior that not only is confined to money management,
but also leads to more informed financial decision making. Therefore, targeting the
financial behavior of an individual solves the two important concerns of FI other than
the primary concern of opening a bank account. First, it encourages a person to
become more financially conscious and second, it helps them to make decisions
which are more financially informed. As per Ajzen & Fishbein (1980), such behavior
comprises four elements: action, target, context and time savings. This paper assesses
the importance of the ‗action‗element that directly affects financial behavior.
The theoretical framework is essential in the field of financial participation

because it comprises a complex behavior based on a range of factors. However, no
theoretical framework exists to outline universally-acceptable research activities
related to FIbehavior. Katzell and Thompson (1990) stated in connection with
organizational psychology that multiple theoretical alternatives could lead to the same
behavioral consequences being explained in terms of different theories. For those who
attempt to build theory in the context of subject (in the present case it is FI
participation) it will be essential to re-examine previous findings or combine what has
been empirically supported (Conee & Feldman, 2004).Thus it becomes crucial for
researchers to better understand the ‗how and why‗of FIso as to promote its voluntary
adoption amongst individuals. For this to occur, an analysis of existing behavioral
theories that are present in the literature of psychology can be perused for evaluation.
Thus, the paper broadlyaims to describe the theories/models that can help predict and
explain financial behavior pertaining to FI by evaluating the best-suited theories.
The Prospect Theory (PT): In 1981, Tversky and Kahenman argued about the wider
acceptance of the theory of expected utility as a descriptive model of risk in rational
decision-making and proposed an alternative model, called the PT, which accounted
for the significance of choice under risk. Choices between risky prospects show
several overarching effects which do not agree with the basic principles of the utility
theory. In particular, people have underweighted those results which are only likely to
be compared with those obtained with certainty (Barberis, 2013).Resulting in the
―certainty effect‖, this trend contributes to risk aversion occurring in choices
involving certain gains and losses. Theoretically, PT is based on four pillars:(1) the
―reference dependence‖ which forms the basis for deciding upon gains and losses
and is measured in relative terms; (2) higher sensitivity towards loss which is
explained by ―loss aversion‖; (3) risk averseness towards higher incremental gains
(or losses) for smaller principal amounts and lower incremental gains (or losses) for
substantially higher principal amounts which is explained by ―diminishing
sensitivity‖; and,(4) ―probability weighting‖ which explains the superiority of
transformed probabilities (weights assigned to decisions) over objective probability
(see Tversky and Kahneman, 1992).
19
The power of ―loss aversion‖ is applied to motivate people for adopting more
positive financial behaviors. This can be exemplified through the case of Fryer Jr,
Levitt, List & Sadoff, (2012) who improved the performance of teachers by revoking
incentives from them in case the students did not perform well, which in turn resulted
in improved math scores of the students. Similarly in their experiment, Levitt, List,
Neckermann, & Sadoff, (2016), applied ―reference dependence‖ to enhance the
educational performance of primary and secondary students. Furthermore, Hossain, &
List, (2012) proved that incentives marked as ―gains‖ or ―losses‖ can increase the
worker‗s productivity on an individual and team level.
Further, the applications of PT based on the aforementioned principles are used

to explain the savings and consumption behavior. Kőszegi and Rabin (2009)utilize the
idea of PT for explaining consumption, comparing both the existing and expected
current levels with the future consumption level. This attribute also contributes to the
saving habits of an individual during a period of income shocks. Furthermore,
individuals incentivizing themselves with extra consumption are better explained by
sensitivity towards ―news‖ targeted at future and current consumption(Barberis,
2013). Mowen & Baker, (2009) found that those messages which are worded more
strongly and positively have a greater impact on the consumer than those exhibiting a
perception of loss. Alternatively, it can be inferred from this that consumers will
participate in or respond to marketing campaigns aimed at advantages as opposed to
costs.
Broader acceptance of the PT thus provides a strong basis for its applicability
in FI. This can be attributed to its potential advantage in evaluating the benefits
obtained from participating in FI-related activities. Moreover, the PT requires
theoretical and comprehensive frameworks that help analyze the cognitive processes
involved in FI.
The Schema Theory: The notion of schema can be largely attributed to the work of
Plato and Aristotle (Marshall, 1995). However, Kant (1929) has been regarded as the
first to speak about schemas as organizational constructs that mediate how we observe
and decipher the world around us (Johnson, 2013). ―Cognitive biases‖ (Campbell,
1989), patterns of behavior (DiMaggio, 1997), response based on pre-conceived ideas,
and the system of organizing new information (Reynold et al., 1981), are some forms
of schema. Furthermore, schemas help absorb new knowledge, and thus aid in a more
meaningful understanding of the world(Nadkarni& Narayanan, 2007). More
prominently, in rapidly changing scenarios, the schema provides a medium for
organizing information for proactive decision- making (Georgeon& Ritter, 2012).Its
indirect linkage is also found in the development of knowledge through formation of
cognitive structures, which in turn are a result of accumulation and assimilation of
information (Piaget, 1952).
The role of schema is also observed in the context of financial behavior

(Beaton & Funk, 2008). Kendzierski (1994) suggests that such behavior originates
from a chain of self-schematic decisions, which forms the basis for prospective
20
behavioral decisions. Self-schematic decisions include cognitive representations

derived from individual-specific incidences (Markus, 1977). Sheeran and Orbell
(2000) proved that the schemas are objectively connected to behavior. Finally,
different modes of behavior for an individual including retaining, reducing, increasing
or abandoning are decided on the basis of schemas.
Although effective, the impact of schema is confined to reading processes

(McVee, Dunsmore, &Gavelek, 2005) and its applicability is restricted chiefly owing
to its rigid nature (Schank& Abelson, 1977). Similarly, research related to schemas is
based on ―bizarre texts‖ (Sadoski,Paivio, & Goetz, 1991) which are ―ambiguous‖ in
nature (Carver, 1992) and activates default schemas which restrict the flow of new
information (Nassaji, 2002).
The Transtheoretical Model (TTM): The TTM utilizes stages of change to

assimilate mechanisms into interventional theories. The model has been derived
from a comparative analysis of several significant psychotherapy theories, primarily
aimed at integrating a field which was segmented into more than three hundred
psychotherapy theories (Prochaska, 1979). Remarkably, those theories had a lot more
to say about ―why we change rather than how we change‖. They were primarily
behavioral theories, such as personality theories and psychopathology, rather than
behavioral change theories. Prochaska and DiClemente (1983) identified five change
processes (or stages) explaining the key ways in which people have changed their
behavior. The five stages that are involved in the TTM are pre-contemplation (no
intension to take action within the period of six months); contemplation (intends to
take action in six months); action (change in behavior expected in six months);
maintenance (continuance of the behavior beyond the behavior of six months); and,
termination (cessation of behavior).Furthermore, the constructs that constituted
change processes were identified as ―consciousness raising‖, ―contingency
management‖, and ―forming helping relationships‖ (Prochaska, DiClemente, &
Norcross, 1992).
Furthermore, the experiments conducted on smokers and non-smokers reveal

that the change processes happening to an individual can be attributed to internal
(voluntary efforts) and external (need for professional assistance) factors. The purpose
of the experiment was to evaluate the basic behavior of and motivation behind the
changing needs of individuals. This experiment resulted in participants passing
through different stages of change (DiClemente & Prochaska, 1982). This revealed
that behavioral changes occur at different stages with changed processes (Prochaska
&DiClemente, 1983), thereby leading to the creation of the TTM.
Application of the TTM in financial behavior is found in the work of Bristow

(1997). Later on Kerkman (1998) extended the concept by applying the TTM in
financial counseling. Subsequently, several incidences were observed where
researchers successfully applied concepts of the TTM in the relevant areas of finance
such as the application byXiao, Newman, Prochaska, Leon, & Bassett, (2004 ) in
counseling for eliminating the debts of credit card, by Shockey and Seiling (2004) in
21
the financial literacy program for low income individuals and also in developing
programs specific to education, and finally, by Loibl and Hira, (2007) to educate
women in making informed investments.
Compared to other behavioral theories, the TTM is more sophisticated

(Armitage and Conner, 2000), although researchers have also raised noteworthy and
vital issues such as (a) evaluating the psychological behavior at every stage is quite
difficult (b) assessing chronological change in behavior is not possible (c) and
differentiating between the roles that each stage plays in bringing about behavioral
change is difficult to assess. From the aforementioned issues raised, it can be duly
inferred that assessing psychological processes at every stage of financial behavior is
difficult as it involves data collection at every such stage (Cardinal, 1997).
Additionally, the TTM model discusses the termination of the behavior, but not its
espousal. Therefore, the stages of change, self-efficacy, decisional balance and the
process of change, are the main constructs of the TTM (Xiao, 2008).
The Theory of Reasoned Action (TRA): Overdependence on behavioral predictive
attitudes led Ajzen and Fishbein (1973) to speculate that it was necessary to integrate
other determinants such as attitudes, intentions and behaviors into a conceptual
framework leading to the TRA. Moreover, the TRA precisely differentiates the role of
attitude towards behavior and that towards the object. For instance, in trying to predict
behavior (screening for mammography), most theorists measured attitudes towards an
object (attitude towards disease). Fishbein showed that the attitude towards behavior
serves as a better determinant than that towards the targeted object (Fishbein and
Ajzen, 1975).
The TRA claims that the ―intention‖ of an individual is the key determinant of
―behavior‖ (Ajzen, 1991). Under the TRA, behavioral intent is expected to predict
performance till action, target, circumstances, time frame and/or specificity
correspond to actual behavior (Sheppard, Hartwick and Warshaw, 1988). Further, the
constructs that has direct influence on ―intention‖ are ―attitude‖ and ―subjective
norms‖. While the subjective norm summarizes the social impact on the perceptions
of an individual such as beliefs that significant influencers wish them to engage in a
target behavior (Hagger et al., 2007). The attitude construct reflects the extent to
which a person assesses the existence of positivity or negativity in the concerned
behavior (Ajzen, 1991). Sheppard et al. (1988) pointed out that the significance of
modeling behavior in the development of TRA (e.g., physical activity), is more
significant than the results themselves (e.g., weight reduction by 5 pounds).
However, the basic limitation of the TRA is its sole concentration on the pre-
existence of ―rationality‖ among individuals, which often contributes to its
misrepresentation (St. Lawrence & Fortenberry, 2007). A fundamental premise on
which the TRA rests is that individuals are rational actors and the main drivers of
their behavior are their ability to process information. In reality though, that is not
always the case.
The Model of Goal-Directed Behaviour (MGB): Perugini and Bagozzi (2001)

developed an advanced model of ―purposive behavior‖ wherein the ―intent‖ is to
22
achieve the outcome of behavior through ―desire‖, which in turn is influenced by the
classical constructs of the Theory of Planned Behaviour (TPB). This approach is
described as ―theory deepening‖ by the authors. Alternatively, the MGB suggests
that ―desire‖ provides an explicit incentive to intention as well as transforms
motivation engraved into constructs of TPB together with the new addition of
―anticipated emotions‖. These anticipated emotions are treated as prior factual
assessments wherein an individual imagines the consequences of goal achievement
and objective failure before deciding to act (Gleicher, Faith, Boninger, Strathman,
Hetts, and Ahn, 1995). Similarly, the existence of ―past behavior‖ is also assumed
to be a prominent indicator of behavior in the MGB model.
The MGB has introduced three classes of individual aspects in explaining the
purposive behavior. Bagozzi and Dholakia (2006) have suggested that desire
encourages motivation for the intention to act and on similar lines, the antecedents of
the TPB support decision-making via desires leading to intentions (Bagozzi, 1992).
Some philosophers also argue that desires have a particular type of relationship with
intentions, in that if individuals are aware and accept their will to act, it motivates
them to form an intention. Therefore, there are two types of desires as per
Perugini and Bagozzi (2001), depending on the situation and the individual. First,
voluntary desires serve as the backdrop for action to form a self-commitment to
behave (Davis, 1984). Here, the individual‗s self-commitment for a particular
behavior depends upon attitude, subjective norm and perceived behavioral control
(Perugini and Bagozzi, 2001). Second, ―desire‖ motivates action that unleashes a
vague desire pertaining to the basic needs of an individual such as food and safety
(Bagozzi, 1992).
However, in the MGB, the target behavior is essential for achieving the goal,
thereby making desire, related to the performance of a given behavior, as conducive
to the achievement of a goal. In philosophical literature, motivation is often referred
to as the functioning of an ―extrinsic desire‖, that is ―a desire for something for its
believed conduciveness to something else that one desires‖ (Mele, 1995, p. 391).
Desire thus represents the motivating state of mind, in which assessments and reasons
for acting are transformed into the motivation for doing so. This motivation or desire
is assumed to be the closest determinant of intentions.
Precursor for past behavior for the MGB has restricted its applicability in the
areas where adoption of behavior is the prime concern. This weakness is relieved by
the TPB especially in measuring the variables that may result in adoption of a new
behavior. Alternatively, the compulsion of ―past behavior‖ in the MGB model can
also be deduced, unlike that of the TPB. Azjen (1991) also criticizes the usefulness of
previous behavior in the model, against the background that it provides no
explanatory content. Although the TPB contains considerable amount of information
in measuring intention, but the impact of desire as an independent construct on
intention, needs to be further explored.
23
The Theory of Planned Behaviour (TPB): The TPB as an updated model of the
TRA focuses on social cognition and on the determinants of behavioral choices of an
individual (Ajzen, 1991). Accordingly, as per the contributing factors of TPB which
lead to intention asbehavioral attitudes, the subjective norms and the perceived
behavioral control (Ajzen, 1991). Likewise, Ajzen and Fishbein (1980) suggested the
significance of behavioral intentions in influencing the patterns of behavior. Under the
TRA, the attitude reflects the extent to which a person makes an assessment about the
existence of positivity or negativity in the concerned behavior. Similarly, the
subjective norm is referred to role of social norms that effects an individual‗s
perception about an activity.
The most important difference between both the theories exists in their
respective approaches, wherein TPB includes ―perceived behavioral control‖
(Fishbein&Ajzen, 1975), which describes anticipated obstacles reflecting the level of
difficulty faced by an individual in performing the behavior. Generally, a strong
positive attitude, wide social recognition and exhibiting adequate control in
performing behavior, can contribute to stronger intentions towards the performing
behavior. Additionally, the TPB also assumes the direct impact of perceived
behavioral control on behavior (Ajzen, 1991). Further, application of the TPB has a
wide area coverage i.e. taking physical activity, alcohol cessation, consumer behavior,
adopting technology, consumer complaints, hunting etc. (Ajzen and Fishbein, 1980;
Hrubes, Ajzen, and Daigle, 2001).
In the domain of financial sector utility, the TPB is utilized in areas such as
financial counseling, investors‗education and in retail (mortgage) loans (Xiao, 2008).
Other than the above, the TPB was also applied to British consumers for investigating
investment-based decisions (East, 1993). For instance, Bansal and Taylor (2002)
applied it to investigate the switching behavior on the sample of mortgage loan
customers, and Xiao and Wu (2006) examined consumer behavioral factors towards
completion of a debt management plan, concluding that attitude and perceived
behavioral control play a significant role in influencing behavior. Further, Lim and
Dubinsky (2005) applied the theory to consumer behavior in e-commerce to evaluate
the behavioral pattern of online shopping. Similarly, a group of the researchers,
applied the theory in assessing the intentions of online shoppers (Shim, Easlick, Lotz
and Warrington, 2001). Having analyzed the sample of internet users, researchers
inferred that the intention to use the internet for collection of information, acted as a
mediating variable between the TPB constructs and the endogenous variable for
intention towards online purchase. Fortin (2000) also applied the concept of the TPB
in explaining consumer behavior towards e-coupons. Behavioral intentions for e-
coupons have also been explained by Kang, Hahn, Fortin, Hyun, &Eom, (2006)
wherein the author compared both TRA and TPB and concluded that intention was
better explained by TPB. Additionally, financial behavior among the colleges students
like credit and loans, savings and debt management were explained by researchers
(Shim, Xiao, Barber, & Lyons, 2007). Their findings suggested that the constructs of
TPB contributed well in explaining these intentions.
24
The capacity of the TPB model in explaining the individual‗s behavior can be
inferred from the functionality of the model(Azjen, 1991). Alternatively, it implies
that its capability in processing information acts as a mediator between ecological and
psychological factors. Moreover, Ajzen (1985) suggested that people would probably
be able to provide themselves with the alternative recourses as well as have the
behavioral intention to perform it. The aforementioned points evidently display that
TPB has been applied to cover broad aspects of financial behavior. However, no
evidence is visible wherein TPB was targeted in knowing the intentions of excluded
that will lead them to open a bank account. Having a bank account is treated as a very
basic and preliminary step in inculcating any type of financial behavior and thus a
fundamental for implementation of FI.
The Social Cognitive Theory (SCT): The SCT resides on two behavioral
determinants: self-efficacy and outcome expectancies (both situational and actionable)
(Bandura, 1986).Self-efficacy beliefs have played an increasingly important role in
the SCT because they directly effect adaptation and change of behavior (Schwarzer
1992). The SCT has shown to be an effective method for tackling complex problems,
and in deciding upon challenges. Furthermore, efficacy beliefs influence the choice
behavior of an individual which impacts personal development (Bandura, 2001).On
the other hand, situational outcome expectancy is based on factors that are external
and have no bearing on personal factors. Similarly, action outcome expectancy is
determined by an individual‗s own actions (Armitage & Conner, 2000). Therefore, the
SCT predicts behavior expressing perceived control and exhibiting confidence in self-
abilities of individuals.
In terms of predicting health-related behavior (Ellickson& Bell, 1990) and

behavioral intentions (Armitage & Conner, 2000), the SCT‗s applicability is more
apparent although self - efficacy explains greater variance in behavioral prediction
than the entire model, and its significant behavioral determinant (Bandura, 1997).Self-
efficacy has been shown to be critical in evaluating the early stages of financial
knowledge (Danes & Haberman, 2007), measuring the likelihood of entrepreneurial
activities being undertaken among individuals (Chen, Greene & Crick, 1998), making
and maintaining career-related choices for students (Sandler, 2000), and avoiding
financial distress (Kuhnen&Melzer, 2018).
II. The Rubicon Model

Heckhausen and Gollwitzer (1987) postulated the Rubicon Model of action by
distinguishing between motivation and volition. The model provides a meaningful
framework for volition research, depicting how the various functions of volitional
processes take place sequentially in a behavior. The basis for this distinction was
characterized by specific cognition to the phases of motivation and volition. The goal
formation process from emergence of numerous wants and needs to clear the intention
for their achievement is divided into various phases: (a) deliberating, (b) planning, (c)
acting, and (d) evaluation. Furthermore, deliberation and evaluation are part of the
motivational phases as they pertain to the feasibility and desirability of goals, whereas
planning and acting are part of the volitional phase as the achievement of goal is
25
realized by self-regulation. The Rubicon Model is based on the assumption that each
phase involves a particular cognitive mindset fulfilling its particular need.
Research based on the Rubicon Action Phase model has produced an array of
empirical evidence to support the pursuit of mental and behavioral resources. The
aforementioned model is adeptly used for demarcating distinct phases between stages
and providing descriptions of the social cognitive variables pertaining to each stage. It
also highlights the differences between initialization and chasing of goals without
confounding the two. Thus, the existence of commonality between the two concepts
percolated for decades in the literature of motivation psychology isolated ―volition‖
(Gollwitzer, 2012). The model addresses this problem by tracing the evolution of a
motivational trend over time – from the formation of wishes and its selection, to its
engagement and ultimately, deactivating its objectives (goals).
Applications of the Rubicon Model applications are found in the foreign

placement of managers (Spiess&Wittmann, 1999) and in assessing the driver‗s
intention in evading collusion (Diederichs, Brouwer, Klöden, Zahn, & Schmitz,
2018), but there are, in general, very few empirical evidences (like above) that assess
the effectiveness of this model.
III. The Action Control Theory
One of the fundamental theories on volition in modern times is explained by

Kuhl (1984) in the form of the Action Control Theory which focuses on self-control
observed during the transformation process of motivation into action. Furthermore, it
supports sustainable action until goal achievement, barring any resistance until then.
Resorting to pleasant and interesting activities is a form of resistance to behaviors that
can tempt individuals to undertake meaningless tasks. For example, an athlete can be
tempted to sacrifice important practice sessions in lieu of spending leisure time with
friends. To tackle this problem, Kuhl has suggested two forms of action control: self-
control and self-regulation. While, self-control refers to disassociation of oneself from
distracting thoughts and giving up the competition of behavioral tendencies, self-
regulation is related to the synchronized efforts of subsystems including motivation,
affection and cognition for strengthening intended behavior. Therefore, this theory
clearly differentiates issues related to motivation and volition. In the long run, self-
regulation is considered to be much more effective and useful, given it seeks to
influence the motivational foundations of current behavior to reduce temptations of
behavioral change (Kuhl& Beckmann, 1994). Thus, intrinsic motivation is impaired
due to loss of freedom of self-determination (Deci& Ryan, 1985).
Kuhlfurther asserts that seven mediation control strategies allow the person to
overcome obstacles including the control related to emotion, motivation and coping
failure, and two modes that moderate their effects, namely action and state orientation
(Gollwitzer, 1993).The orientation of action urges to transform an intention into
action, whereas state orientation addresses past, present, and future cognitions. To
measure action and control, Kuhl has developed a scale based on sub-scales related to
26
decision, performance and failures. Although, Kuhl‗s research provides an insight into
processes that are relevant for volition, but wider acceptability of these constructs is a
persisting issue (Armitage & Conner, 2000).
IV. Conclusions and Future Directions
The framework for the current research paper can be justified after reviewing
and assessing several theoretical frameworks on the basis of their appropriateness to
examine FI participation through the conduit of individual behavior. The efficacy of
this research paper is mainly derived from the theories within the domain of
behavioral economics and motivation, and which are multi-stage as well asgoal
oriented. Thus, in terms of utilizing FI for identifying individual intentions,
motivational and multi-stage models provide a complete ground for financial
behavior. Furthermore, the failure of other models may be due to the presence of
preliminary requirements and assumptions which limit their usage for initiating
behavior.
Despite motivational theories like the TPB (updated TRA) having proven to be
empirically suitable for financial behaviors, the prominence of SCT is required to be
demonstrated. Furthermore, direct linkage of self-efficacy with perceived control can
have an indirect influence on intention and behavior. Once people have formed a
suitable intention, this theory can outline the implementation of these intentions.
Similarly, efficiency of multi-stage models in evaluating financial behaviors has been
demonstrated by the TTM, although models such as Rubicon and Action Theory,
which are prominent in distinguishing volition and motivation, should be explored in
the evaluation of key variables. Therefore, the paucity of multi-stage models due to
their longitudinal nature should be conceptualized on the basis of discrete stages.
Further, a number of research ideas can be drawn from the current research.
First, there are no incidences where psycho-social theories evaluate behavioral
characteristics of FI. Since FI does not require any pre-requisite of existing behaviors,
measuring intentions will suffice the efforts in establishing behaviors. Meanwhile,
relatively few researchers utilized these theories in assessing financial behaviors.
With the application of theories such as SCT and Schema, the aim should be to create
knowledge by deducing behavioral factors. Moreover, psycho-social variables can be
explored by establishing the causal relationships by conducting experimental studies
on such variables. Also various types of interventions can be designed for evaluating
the transitions of peoples for multi-stage models.
Given distinct nature of these theories, the present study has identified several
variables that can be applied in the context of FI. First, the TPB as a whole is suited
for the current project as it provides conceptual and theoretical framework for
evaluating intentions of individuals in FI participation. Other than the constructs of
TPB, variables such as desire, self-efficacy, and self-regulation can be explored as
exogenous variables. Finally, overlapping of constructs (including self-efficacy and
perceived behavioral control) can be assessed by integrating the model within the
study.
27
This review sets out the criteria for the development of an overall FI behavior
model, which not only covers intention and behavioral action, but also combines it
with the appreciation that successful financial behavior can require a range of skills
and practice levels. The basic requirement for the suitable testing of such models,
however, is the use of a future design. Although difficult, it is interesting to follow
people through intervention at several stages and monitor how different psycho-social
variables transform when individuals advance. Therefore, incorporating the suitable
psycho-social variables will correspond to reconceptualization of the model, which
will not only predict FI behavior, but will also encourage its transformation.
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32
Financial Inclusion towards Rural Development in India: Issues and

Concerns
Annemalla Ramesh
Research Scholar,
Centre for Economic and Social Studies
Hyderabad.
Abstract
In India Financial inclusion (FI) has been increasing from 1960s onwards, but
the increase in levels of financial inclusion doesn‟t matching with the levels of human
development, economic growth and social development. All over India, there large
segment of population from socio-economic disadvantaged populations were still out
of formal banking network, even after many schemes and programs launched by
government as well as Reserve Bank of India(RBI). With the JAM (JanDhanAdhar
Mobile), Government of India is trying to include all the excluded sections into the
formal system of banking through DBT (Direct Benefit Transfers). Even though many
of were using informal sources of finance for their productive and consumption
purposes with a high rate of interest and a larger proportion of collateral security. This
paper tries to give a detailed description of financial inclusion and its effect on growth
and development, which special reference to rural development.
Keywords: Financial Inclusion, Development, and Rural Development
I. Introduction
Inclusive growth helps to development of the economy. Inclusive growth has

various components such as social development, reduction of poverty, control of
inequality and unemployment, agricultural development, green economy and financial
inclusion, and others. Financial inclusion is one of the important components of
inclusive growth of the economy. Basically India is dominated by the rural economy;
Hence it is rural development that can enable over all development of the Indian
economy. So it is necessary to know about the financial inclusion, exclusion and rural
development of India. Financial Exclusion means not having or restriction to access to
credit from formal financial institution; Financial exclusion is high for small and
marginal farmers. Apart from the formal banking channels, the role of MFIs,
NABARD, Self Help Group (SHG) movement is vital to improve Financial Inclusion.
Banks should take bold decisions and reach out to rural India with strategies and
Business models which are beyond the realm of conventional thinking. They have to
define the emerging possibilities in rural India and innovate with low cost platform
and subsidiaries, lean branch models, cost effective technologies, leverage on Aadhar,
shared Infrastructure and construct collaborative business models to serve in Rural
India.
33
II. Conceptualizing Financial Inclusion and Rural Development
It is important to define and conceptualize the FI. We can discuss with the help
of following definitions. Financial inclusion could also be defined because the process
of enhancing access to financial services timely and adequate credit needed by
vulnerable groups such as weaker sections of society at a reasonable cost.
(Dr. C.Rangarajan 2008)
Financial Inclusion is broadly defined as universal access to a wide range of

monetary services at a reasonable cost. These include banking products and other
financial services like insurance and equity products.(Dr.Raghuram G.Rajan 2009)
The actual meaning of financial inclusion is availability of financial services

which include bank accounts for savings and transactional purposes with less required
documentation, less-cost credit for individual and business purposes, financial
advisory services, and insurance facilities (life and nonlife) etc. Financial inclusion
facilitates the habit of savings among the rural populations and plays its own role in
the course of economic development. Further, by bringing low income groups within
the edge of formal banking sector; Financial inclusion not only protects financial
wealth also mitigates the exploitation of vulnerable sections by the various money
lenders by facilitating easy access to formal credit. Development is the condition of
progress, and when efforts are laid towards the employ of Growth potentials in rural
economy and Society, it is known as rural development. As a concept, it can say that
overall development of rural areas with a vision to improve the quality of life of rural
people. In this view it's a inclusive and multidimensional concept and encompass the
event of agriculture and allied activities village and cottage industries and crafts,
socioeconomic infrastructure, community services and facilities, and in particular, the
human resources in rural areas. As a strategy, it is intended to improve the economic
and social wellbeing of a specific group of people the rural poor. In the words of
Robert Chambers, ―Rural Development is an approach to enable a selected group of
individuals like poor, rural women and men to develop for themselves and their future
children more of what they need and wish. The group includes small-scale farmers,
tenants and therefore the landless. Professor V.K.R.V.Rao looked upon the process of
economic development fundamentally a way to the development of human beings
enabling them to comprehend their full potential. Since rural development is nothing
but a way to reduce poverty, it must clearly be designed to extend production and lift
productivity. It is assumed that improved food supplies and nutrition, together with
basic services such as health, education and cultural activities would directly develop
the physical wellbeing and quality of life of the rural poor, but also indirectly develop
their productivity and capability to contribute to the national economy.
III. Theoretical Literature and Empirical Literature
V. Leeladhar (2006) suggested that the financial inclusion expansion can be

done by two ways like statutory enactments and voluntary efforts by banks to reach
the bottom of the pyramid with the help for redesigning the Strategies of the banks. K
34
C Chakrabarty (2011) assumed that financial inclusion is a way to attract the global
investments that lead to inclusive growth like economic and social process. It will
create the global opportunity to inclusive growth. Radhika Dixitand Munmun Ghosh
(2013) find that since the nationalization of banks Indian banking sector has taken
many steps to forward to achieve the inclusive growth that is there were only 8000
plus bank branches in 60s but now it is 99000 plus, it clearly shows that there is a
penetration in banking sectors. Kerala, Maharashtra and Karnataka are achieved high
rate of financial growth and the poor in financial inclusion are Gujarat, Assam,
Manipur, Bihar, Uttar Pradesh and Madhya Pradesh etc. Ashish Gupta (2011)In India
there are 203 million households out of them 147 million are in rural areas only.
Compared to other developing countries 48 percent of Indian population having
access to financial services whereas 59 percent in Sri Lanka, 60 percent in Malaysia
and 63 percent in Korea. Investment level is very low in rural areas in India because
of they are Risk Averse. In 2006 RBI initiated to establish 50 percent of bank
branches in Unbanked Areas. RBI made an agreement with private banks and
organization to provide wide range of services in all way as mutual funds and relaxed
restrictions on issue of Kisan Credit Card and KYC.
IV. Objective of the Study
The purpose of the study is to guage the necessity of monetary Inclusion in

India. In order to achieve this objective the following issues have been examined:
1. To examine the extent of financial exclusion in rural India.

2. To examine the present status of financial inclusion in India.
V. Research Methodology
The present study is predicated on the secondary data. The necessary

secondary data resources has been collected from the various sources like as Annual
Reports Ministry of Rural Development Government of India, RBI Annual Reports,
RBI Report on Trend and Progress of Banking and all other publications of the RBI.
The period of study is from 2015 to 2020 taking into account the data availability as
wellas the latest and update data possible.
VI. Extent of Financial Exclusion in Rural India
According to NSSO 59thRound Survey Results 51.4 percent of farmer households

are financially excluded from both formal and informal sources. Out Of the total
farmer households, only 27percent access formal sources of credit; And One third of
this group has borrowed from nonformula sources. The Overall, 73 percent of farmer
households not having access to formal sources of credit. Among the regions,
financial exclusion is more in Central, Eastern and North Eastern regions. All three
regions coming across accounted for 64 percent of all financially excluded farmer
households in the country. And overall indebtedness to formal sources of finance of
the three regions accounted for less than 19.66 percent.
35
As per Census 2011 Government of India, only 58.7 percent of households are
utilizing banking services in the India. However, as compared to earlier census 2001,
availing of banking services increased drastically largely on account of increase in
banking services in rural India.
CRISIL Financial Inclusion Index (FII) (Inclusix) states that, June 2013, for
constructing the index, CRISIL identified three significant parameters of basic
banking services that are branch penetration, deposit penetration and credit
penetration. The CRISIL Inclusix found out that there is an overall development in the
financial inclusion in India. CRISIL –Inclusix (on a scale of 100) increased from
35.4in March 2009 to 37.6 in March 2010 and to 40.1 in March 2011.
Financial Inclusion: RBI policy Initiatives: RBI has implemented a bank led model
to achieve financial inclusion with removing the all other regulatory restrictions in
achieving better financial inclusion in the country. RBI has also initiated regulatory
environment and provided institutional support for banks in accelerating the financial
inclusion efforts contains Basic Saving deposit, Relaxed Simplified KYC Norms,
simplify Branch Authorization Policy, Compulsory Requirement of Opening
Branches in Unbanked Villages, Opening of intermediate brick and mortar structure,
Three Year Financial Inclusion Plan.FIP disaggregated and percolated at down up to
branch level, Financial Literacy Centers.
Present status of Financial Inclusion in Rural India:
Figure 1: Bank Branches opened by SCBs.
2,500
2,000
1,500
1,000
500 2016-17
0 2017-18
2018-19
2019-20
Source: RBI Report 2019-20
The picture shows that decline in the number of latest bank branches during
2019-20 was mainly because of SFBs, RRBs and PBs. PVBs and SFBs maintained
36
the lead in opening new branches as part of their business expansion Strategy. During
the year, more than half of new branches were opened in TierI centers, although fewer
branches were opened in other higher tier centers.
Table 1: Area Wise ATMs of Various Banks.
Number of ATMs of SCBs at Various Centres ( At End-March) 2019-20

Semi -
Bank Group Rural Urban Urban Metropolitan Total
Public Sector
Banks 27,451 39,551 38,522 29,339 1,34,863
Private Sector
Banks 6,046 17,708 19,138 30,160 73,052
Foreign Banks 23 18 167 695 903
Small Finance
Banks* 213 579 617 517 1,926
Total 33,733 57,856 58,444 60,711 2,10,744
(Source: RBI Report 2019-20)
The geographical distribution of ATMs across rural land urban areas remained
broadly similar in 201920 to that in the previous year. The concentration of ATMs
remains skewed towards urban customers.
Figure 2: Credit flow to Agriculture Sector from Various banks.
Share in Credit flow to Agriculture

(percent)
120
100
80
60 71.5 70.2 75 74.9 76 76.8
40
20 12.1 13
11.6 12.1 11.9 11.9
16.4 16.7 13.4 12.9 12.1 11.3
0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-
20(P)
Co-operative Banks RRB Commercial
s Banks
Note: (P) Data are provisional
Source: NABARD, RBI Report 2019-20
In spite of the crucial role played by the sector, its asset size was only around
10percent compared to that of SCBs at end March2020. Although the focus of rural
37
co-operative lending is on agriculture, its share in total agricultural lending has

diminished considerably over the years, from ashig has 64percent in1992-93to11.3
percent in 201920.
Table 2: Financial inclusion Progress

Financial Inclusion Progress
Sr End- End- End- Growth

Particulars March March March
No 2019-20
2010 2019 2020
1 Banking Outlets in Villages-
Branches 33,378 52,489 54,561 3.9
2 Banking Outlets in Villages>2000-
BCs 8,390 1,30,687 1,49,106 14.1
3 Banking Outlets in Villages<2000-
BCs 25,784 4,10,442 3,92,069 -4.5
4 Total Banking Outlets in Villages -
BCs 34,174 5,41,129 5,41,175 0
5 Banking Outlets in Villages - Other
Modes 142 3,537 3,481 -1.6
6 Banking Outlets in Villages -Total 67,694 5,97,155 5,99,217 0.3
7 Urban Locations Covered Through
BCs 447 4,47,170 6,35,046 42
8 BSBDA - Through Branches (No. in
Lakh) 600 2,547 2,616 2.7
9 BSBDA - Through Branches (Amt.
in Crore) 4,400 87,765 95,831 9.2
10 BSBDA - Through BCs (No. in
Lakh) 130 3,195 3,388 6
11 BSBDA - Through BCs (Amt. in
Crore) 1,100 53,195 72,581 36.4
12 BSBDA - Total (No. in Lakh) 735 5,742 6,004 4.6
13 BSBDA - Total (Amt. in Crore) 5,500 1,40,960 1,68,412 19.5
14 OD Facility Availed in BSBDAs
(No. in Lakh) 2 59 64 8.5
15 OD Facility Availed in BSBDAs
(Amt. in Crore) 10 443 529 19.4
16 KCC - Total (No. in Lakh) 240 491 475 -3.3
17 KCC - Total (Amt. in Crore) 1,24,000 6,68,044 6,39,069 -4.3
18 GCC - Total (No. in Lakh) 10 120 202 68.3
19 GCC - Total (Amt. in Crore) 3,500 1,74,514 1,94,048 11.2
20 ICT-A/Cs-BC-Total Transactions
(No. in Lakh) 270 21,019 32,318 53.8
21 ICT-A/Cs-BC-Total Transactions
(Amt in Crore) 700 5,91,347 8,70,643 47.2
Source: FIP returns submitted by banks
38
By looking the above table we can say that the growth in branches of banks in
rural India was insignificant. But the growth in branchless mode that is Business
Correspondents was higher and significant. The rural –urban comparisons reveals that
the growth in the banking facilities was significantly superior in urban areas than rural
areas. The KCCs as well as GCCs are expected to play a very essential role in the
financial inclusion in the rural India, but the numbers indicates it is just inadequate,
but growth is no doubt significant.
Conclusions: The above analysis adequately reveals that, rural development which
can be facilitating that overall and inclusive growth of India. Financial inclusion in
rural economy of India has a special weight. But it is clearly showing that, even
though the efforts are being made by the RBI and government of India for financial
inclusion in the rural India, it did not succeed to that level. There is a need to take
sincere measure for the financial inclusion in rural area of India which is necessary for
rural development. There is need to provide awareness of financial literature and
ATMs with local languages, more promoting packages according to customer needs
like daughter marriage and education, Regulatory bodies should take measurements to
penetrate to rural areas. Formers are relying on rain fed agriculture so there is a
chance of uncertainty so banks should make a proper tailor made risk mitigate
instruments.
References
[1] C, R. (2008). Report of the Committee on Financial Inclusion.

[2] Chattopadhyay, S. K. (2011, August ). SaFinancial Inclusion in India: A Casestudy of
West Bengal‖. RBI Working Paper Series .
[3] Ghosh, R. D. (2013). Financial Inclusion For Inclusive Growth of India – A Study.
International Journal of Business Management & Research , Radhika Dixit and M.
Ghosh (2013) ―Financial Inclusion For Inclusive Growth of India – A Vol.3, Issue 1,
pp. 147-156.
[4] Gupta, A. (2011). Towards Financial inclusion in india.
[5] K.C, C. (November, 2011). Financial Inclusion and Banks: Issues and Perspectives. RBI
Bulletin.
[6] K.C, C. (November,2011). Financial Inclusion: A Road India Needs to Travel. RBI
Bulletin.
[7] Rajan, R. G. (2009). A Hundred Small Steps - Report of the Committee on Financial
Sector Reforms.
[8] Reserve Bank of India - ―Annual Reports and „Report on Trend and Progress of
Banking in India‖, various issues. . (n.d.).
[9] Reserve Bank of India - ―Annual Reports‖, various issues, Mumbai. (n.d.).
[10] Status of Microfinance in India: NABARD . (2010-11).
[11] V, L. (2005). Taking Banking Services to the Common Man – Financial
Inclusion‖, Commemorative Lecture at the FedbankHormis Memorial Foundation at
Ernakulam.
39
Identifying Various Sources Contributing to Improve Financial Inclusion
Surekha Adiki Dr. K. Martina Rani

Assistant Professor Associate Professor & Director
ICBM-SBE and Research Scholar Foreign Relations, Department of
Osmania University Business Management, St.Joseph‘s
Hyderabad Degree & PG College King koti,
Hyderabad. Telangana
Dr. P. Sai Rani

Head- Finance Department,
ICBM-SBE, Hyderabad
Abstract
India is one amongst the fastest-growing economies in the world. However,

this monetary development is slanted as every one of the segments of the general
public have not profited by this development interaction and to achieve the inclusive
growth there is a necessity for mobilizing financial inclusion. Financial inclusion is an
essential advance towards the overall economic development of the general public. In
India, an effective financial inclusion is required which reinforces the accessibility of
financial assets and assembles the idea of reserve funds among poor. This paper
centers around the different estimates taken by the Government of India,
administrative bodies and financial institutions towards improving the degree of
monetary consideration and their endeavors embraced for something similar.
Keywords: Financial Inclusion, Financial Institutions, Administrative bodies,

Economic development etc.
I. Introduction
Monetary framework is the foundation of the economic development and they

act as a multiplier and mediator for economic stability. The process of economic
growth must include the participation of all sections of the general public. In India
major portion of the group is lack of access to formal financial services due to this
many are turning towards informal financial services which bears huge cost. It is
recognized as a serious threat to economic progress, especially in developing
countries. To conquer such deterrents, the financial areas came out for certain
mechanical advancements, for example, ATMs, Credit and charge cards, Internet and
versatile banking, UPI exchanges and so on. Although presentation of these sorts of
developments got numerous progressions in metropolitan culture, lion's share of the
country populace is still absence of mindfulness on these progressions and are barred
from formal financial administrations.
Financial inclusion is a technique for offering banking and monetary services

to people which tries to include every general public by offering them essential
40
monetary elements and services required by vulnerable groups at a moderate expense

in a straightforward way by monetary foundations. The targets of financial inclusion
are to offer a basic no-frills account for making and accepting payments; saving
products; simple credit products and overdrafts connected with no-frills account;
settlement, or cash transfer facilities; micro and non-micro insurance (life and non-
life) and micro benefits.
II. Literature Review
Financial inclusion can be understood as the keystone of the economic

development. A study made on financial inclusion indicated that it is in a progressive
stage in India in terms of branch penetration, but certain efforts towards inclusive
growth are still in nascent stage (Paramjit Sujlana et.al 2014). Sherline T.I (2017) in
her research concluded that undoubtedly financial inclusion is acting as a catalytic
role for the economic and social development of society but still there is road ahead to
achieve the desired outcomes. „Despite the fact that endeavors are being made by all
partners viz, Regulators, Government, monetary foundations and others, the
endeavorsare not yielding the sort of result anticipated. The regulators have to create a
suitable monitoring environment that would protect the interest of all the
stakeholders‟ (Agarwal, 2014).(Sethy, 2016)In his study, he has proposed a financial
inclusion index to determine the extent of financial inclusion across economies. Both
supply side dimensions like across to savings, insurance, bank risk and demand side
dimensions. It was observed that India is categorized on high financial inclusion on
demand and low financial inclusion of supply side. It was recommended that GOI and
RBI adopt adequate policy measures to improve supply side dimension of financial
inclusion. For the analysis of financial inclusion ten indicators have been considered.
However, the degrees of financial inclusion of the states in India have a low mean and
high disparity. It is disclosed from the study that the human advancement and the
financial inclusion of the states in India have positive association(Bagli, 2012).
(Banerji, 2018) In continuation with the previous studies, the author has studied the
tools of ICT used for enabling financial inclusion in India. Though various efforts
taken by the stakeholders to ensure access of financial products and services to feebler
and under privileged segments of the society but financial illiteracy, lack of
convenience, technological issues and viability has emerged as significant
impediments the path of achieving inclusive growth.(Dhar & A. Barua, 2020)
Although various initiatives have been embark on to improve outreach in banking
sectors, achievement is not a significant one. Assam has a constant poor performance
in all three dimensions of financial inclusion position.
III. Research Methodology
The methodology undertaken for the present study is explanatory in nature.

Data and information collection for this study is done through secondary sources i.e.,
with the help of books, newspapers, magazines, research articles, journal publications,
e-journals, RBI annual reports, NABARD report etc.
41
Objectives
1. To understand the financial inclusion and its vital role in economicdevelopment.

2. To trace out the various approaches adopted by financial institutions and various
initiatives taken by Government and regulatory bodies to improve financial
inclusion.
Need of the Financial Inclusion: Financial exclusion is the absence of access by

certain consumers to appropriate, low cost, fair and safe financial products and
services from conventional providers. There is a large overlie between poverty and
permanent financial exclusion. Deprivation and financial exclusion both result in
decline of choices which affects social interaction and leads to reduced participation
in society. Financial Exclusion leads to Financial Discrimination, Financial
Exploitation and Financial Illiteracy. It is seen that 1.7 billion individuals are
unbanked as per the World Bank Findex report. Due to difficulties in accessing
official sources of credit, poor individuals and small and macro enterprises usually
rely on their personal savings or internal sources to invest in education, health,
housing, and entrepreneurial actions to make use of development opportunities. As
the breach between the metropolitan and rustic areas increase as an outcome of such
exclusions, inclusive growth becomes more complex to achieve, adversely disturbing
the growth rate of the country.
IV. Financial Inclusion
Concept and Definition of Financial Inclusion: Financial inclusion is one of the

significant perspectives in the current situation for inclusive improvement and
development of economies. The committee in Financial Inclusion (C Rangarajan,
2008) defines financial inclusion as the ―process of ensuring access to financial
services and timely and adequate credit where needed by vulnerable groups such as
weaker sections and low-income group at an affordable cost.‖ It does not mean the
delivery of financial services for everyone at all cost. But it indicates that the delivery
of financial products and services at reasonable costs of excluded sections of
population and low-income groups. It portraysa significant role to wash out the
poverty from the country, which offers a path for inclusive growth.
Financial inclusion comprises various other services such as insurance,

savings, payment and remittance facilities by the conventional financial system to
those who have been barred as banking. Services are in the nature of public good, it is
crucial that accessibility of banking and payment services to the entire population
without prejudice is the main objective of the public policy.
42
Figure 1: Essential contents of Financial Inclusion
Credit Cards
Bank A/c’s -
Savings Empowerment of
SHG’s
Financial
Payments + Insurance
Inclusion
Remittances
Financial Advice
Affordable Lack of Assets
credit
With a view of providing approach to banking facilities to all the people in an

identified manner at affordable cost, Reserve Bank of India (RBI) has been
advocating the adoption of financial inclusion which would make the basic banking
services available to the people in low-income groups, in other words, it is financially
empowering the needy.
The below figure can explains Financial Inclusion in a much broader term
aimed at empowering the rural masses with low cost of transaction and providing easy
access to fundamental banking services. By including the vast section of rural
population under the umbrella of financial inclusion there is every lively hood of
changing the basic socio-economic structure by bringing about changes in micro
environment.
Figure 2: Model of Financial Inclusion
Source: Prepared by author from NABARD
43
V. Various Move towards Achieving Financial Inclusion
Several measures were taken by GOI, RBI and financial organizations to uplift
financial inclusion plan in India. Figure 3 highlights the approaches adopted for
financial inclusion.
Figure 4: Financial Inclusion: Various approaches
Governmen Knowledge
tInitiative Based
Approach
Bank led Technology

Approac based
h Approach
Product Achievin Regulator

Based g ledApproach
Approach Financia
l
Inclusio
n
Product Based Approach: Reserve Bank of India has arrived with various initiatives
under product-based approach through financial institutions to enable the ordinary
man to get benefited under financial inclusion plan.
a. No-frills Account: RBI has introduced „no-frills account‟ in 2005 to provide

fundamental banking services to poor and promote financial facilities. The account
can be continued without or with very low minimum balance. Later in 2012, banks
under RBI originated with a better version of the no-frills account where they
would open Bank Savings Bank Deposit Accounts(BSBDAs)for all persons with
the facility of a free debit card, cheque book, mobile and internet banking and
access to ATMS, overdraft limits at nominal charges. However, number of
transactions/withdrawals could be monitored so as to counteract misuse of such
accounts. As a part of financial inclusion, Prime Minister has come up with a
programnamed Pradhan Mantri Jan Dhan Yojana (PMJDY) targeting at expanding
and making affordable services to financial services to the last man in the row.
Since its inception on August 15, 2014 till June 18 2018, over 31 crore bank
accounts were opened and over Rs. 7,92,00 crore were deposited under the
scheme.
b. Kissan Credit Cards (KCC): It is the plan wherein banks issue smart cards to the
ranchers for giving convenient and sufficient credit support from single window
banking framework for the monetary necessities. During 2019-20, public and
private segment banks have given 245.1 lakh smart cards as KCCs. As a part of
Prime Minister's package for ranchers, Hon'ble Financial minister announced to
44
cover 2.5 crore ranchers under the KCC scheme in a mission made to encourage
credit to the ranchsector.
c. General Purpose Credit Cards (GCC): RBI launched this scheme in 2005 and
gaverules and regulations to the banks to launch and offer general credit card
services with a measure of upto Rs. 25000 at their branches situated in semi-urban
and rural regions. Later in Dec 2013 according to revised rules, banks additionally
needs to satisfy Non-farm entrepreneurial credit requirement of individuals and
under this credit there will be no upper limit on loan amount. Security standards
will be pertinent according to RBI regulations on guarantee free lending for micro
and small units issued from time to time.(Agarwal, 2014)
d. Savings account with overdraft facility: Banks have been encouraged to give
overdraft facility saving account and furthermore small overdraft in No-frills
account. The setting up of threshold for the equivalent would be finished by banks
thinking about the exchanges in the account. This would assist clients with getting
simple admittance to the credit at lower rates. (Jayasree, 2016)
Bank Led Approach
a. According to various research studies and an action research project carried out by
NABARD, the model of SHG-BLP‟ has evolved as accost-effective mechanism
for providing financial services to the unreached poor households. What started
around 500 SHGs of poor to the formal financial institutions during the year 1992-
93 has now became the largest microfinance programme in the world, in terms of
the client base and outreach.
While the nuts and bolts of SHGs being saving driven credit product stay genuine
today, recent improvements have brought about relook in the methodology and
plan of this genuinely fruitful model prompting SHG-2.
The basic features of SHGs are:
 Voluntary savings apart from compulsory savings.

 Allowing the approval of a cash credit/overdraft system of lending for
SHGs for a longer tenure, and
 Graduating chose individuals from the gathering that have business
potential into a joint accountability groups for acquiring bigger sums.
b. ICT-Based accounts Via BCs/BFs: It is a simulation based on Information and

Communication Technology (ICT)-it helps financial institutions to reach out to the
unbanked people with the help of business reporters /Business facilitators. This
account allows users to make withdrawals of cash, create deposits and apply loans
and other forms of credit through electronic platform. This type of account in
banking is inexpensive and simple. Nevertheless, number of issues for both
partnerbanks and also for the regulators have sprang since its inception.
45
Regulatory Approach
Simplified KYC Norms: KYC is an interaction by which banks acquire data about
the identity and address of the client, to guarantee that the bank services are not
misused. While opening accounts KYC methodology is to be finished by the banks
and furthermost update them occasionally. Under KYC standards, a client needs to
deliver number of documents for opening account as per RBI rules. However, this has
become an issue to the people in rural areas and to tap this issue RBI has loosened up
various standards for accounts opened by individuals who intend to keep balances not
surpassing Rs.50,000 and whose absolute credit in all the accounts taken together is
not expected to surpass Rs. 100,000 in a year. Small accounts can now opened on this
premise of a presentation from another account holder who has fulfilled all KYC
standards. Further, RBI has permitted ―Aadhaar‖ by UIDAI, GOI to be utilized as one
of the qualified report for meeting the KYC necessity for opening a ledger.
Technology Based Approach
a. Mobile Banking: The most wonderful improvement regarding development to

usethe full force of innovation, the banks have tied up with versatile administrators
to offer monetary types of assistance like service bills and installments, ticket
booking, store move, shopping and so forth a few models are Google pay,
Phonepe, Paytm, Payzap by HDFC,YONO by SBI and so on
Table 5.4.1: Access and utilization of monetary administrations through

Mobile Banking
Particulars 2015 2016 2017 2018 2019

Number of registered mobile
money accounts per 1,000 73.29 221.94 443.52 541.94 1,264.79
adults
Value of mobile money
transactions (during the 0.06 0.13 0.31 0.57 0.90
reference year) (% of GDP)
Source: IMF „Financial Access Survey‟ November 2020
b. Increase in ATMs: RBI also reported that many rural parts of the nation do not
have enough automated teller machines (ATMs) and this is hampering many
purchasing and selling tasks of individuals dwelling in those territories. To expand
the accessibility of actual money for these individuals, the number of ATMs
expanded enormously. Additionally banks have utilized the innovation to
empowertheir ATMs to basically act like a 24x7 branches.
46
Table 5.4.1: Access and utilization of monetary administrations through ATMs
Particulars 2015 2016 2017 2018 2019

Number of ATMs per 0.92 1.06 1.21 1.61 1.64
100,000 adults
Source: IMF„ Financial Access Survey‟ November 2020
c. Branchless Banking: A portion of main banks have come up with this idea where
there would be an online framework with chat facility helping the individuals to
utilize different electronic machines for saving and pulling out money and
cheques. Anyway this activity is in a very initial stage and has a limit regarding
starting cost for banks and literacy / knowledge for the rural population and
henceforth this idea is presently limited to urban and semi-urban territories.
d. Aadhaar Enabled payment services: The new presentation of direct benefit

transfer for validating the character of the recipient through Aadhaar will help
enable providing of social welfare benefits by direct credit to the ledgers of
recipients. The public authority, in future, has plans of directing all social security
payments through the financial organization utilizing the Aadhaar based stage as a
unique financial address of recipients. This will not just diminish the delay in the
advantages being obtained by the end user, yet additionally lessens the odds of
corruption in the distribution of the benefits under the schemes. Additionally, the
one-of-a-kind biometric ID information put away in the Aadhaar data set is relied
upon to engage a bank client to utilize Aadhaar as his/her personality to get to
different monetary administrations.
Knowledge Based Approaches
Financial Education
Financial Inclusion Financial Stability
Figure 5: Financial Tripod
i. Financial inclusion, financial education and financial stability are the three
significant things of a crucial technique, as demonstrated in the figure above.
While monetary incorporation works from supply side by giving admittance to
different monetary administrations, monetary schooling takes care of the
demand side by advancing mindfulness among individuals in regards to the
requirements and advantages of monetary administrations offered by banks and
different organizations. Moving ahead, the above two techniques advance more
prominent monetary stability.
ii. Financial Stability Development Council (FSDC) has express command to

focus on monetary consideration and monetary proficiency at the same time.
47
iii. RBI has announced improved guidelines on the Financial Literacy Centers
(FLC) on June 2012, for establishing FLCs. It was proposed that the rural
branches of scheduled commercial banks should intensify the efforts through
conduct of outdoor Financial Literacy camps in any event once in a month and
it is seen during April 2012 to March 2013 a sum of 2,2 million individuals
have been trained through awareness camps, workshops and talks.(Agarwal,
2014)
Government Initiatives: Government has taken different activities indirectly through

the controllers, government promoted programs through its different agencies. Some
of them are recorded underneath:
i. Pradhan Mantri Jan Dhan Yojana (PMJDY): About 192.1 million accounts
have been opened under this plan. These no-frills bank accounts have been
supplemented by 165.1million debit cards, an accidental and life insurance
cover of Rs 1 lakh and Rs 30,000 respectively. There are few different schemes
in India – Jeevan Suraksha Bandhan Yojana (JSBY), Pradhan Mantri Vaya
Vandana Yojana (PMVVY), Venture CaptialFUnf for Scheduled Castes Under
the Social-sector initiatives, Atal Pension Yojana, Varishtha Pension Bima
Yojana (VBPY), Sukanya SamriddhiYojana(SSY), Credit Enhancement
Guarantee Scheme (CEGS) for the scheduled castes. ―Policy measures such as
the Pradhan Mantri Jan Dhan Yojana, persistent focus on the unbanked regions
have driven India‟s financial inclusion agenda over past 3 years‖(Suyash,
2018)
ii. Swarnjayanti Gram Swarozgar Yojana (SGSY), launched by Ministry of Rural

Development to help the helpless families living underneath poverty line and
rural areas for taking up self-employment. This scheme is subsidized by
Central Government.
iii. Aajeevika – National Rural Livelihoods Mission (NRLM) was initiated by the
Ministry of Rural Development of India in 2011 June. The mission targets
making productive and powerful institutional foundation of the rural poor,
empowering them to expand household income through sustainable livelihood
enhancements and improved access to monetary administrations.
iv. Aadhaar – UIDAI: Introduced by GOI to give an individual ID number to each

resident of India in 2009; it set up the UIDAI to give these cards on behalf of
GOI. This number will likewise empower individuals to approach
administrations like banking, cell phone network and other government & non-
government services. Besides this, UIDAI has introduced a framework in
which the unbanked population will be able to open an account during
enrolment with Aadhaar without going to a bank.
v. Mahatma Gandhi National Rural Employment Guarantee Scheme

(MGNREGA): ―The Centre has allocated 73 thousand crore rupees to the
48
country work ensure program MGNREGA for the following monetary 2021-
22‖, where this plan targets to improve the livelihood of rural individual by
ensuring at least 100 days of wage employment in a monetary year to a rural
household whose adult members volunteer to accomplish untalented manual
work.
As on 31 March 2020 a cumulative amount of ₹4,252 crore was sanctioned,

and an amount of ₹2,276 crore is disbursed towards various schemes implemented
under FIF (Financial Inclusion Fund) by generating demand for banking services and
building payment/acceptance infrastructure at the ground level. To link the disparity
between the demand and supply side of FI, a discriminated policy approach
was adopted to address the regional disparities and to get about inclusive and
equitable financial inclusion across the country (NABARD-Achievements, 2020).
VI. Financial Inclusion and Indian Banking network
RBI has urged monetary organizations to carry out an arranged and organized
Financial Inclusion Plans (FIPs) for the improvement and development of the country.
The FIPs have been used by RBI for accessing the performance of financial
institutions under their Financial Inclusion initiatives. The table underneath shows the
number of bank accounts have been opened during this period and formed a major
financial organization the country over.
A snapshot of performance of banks under Financial Inclusion Plans up to

March 31, 2020 is:
Table I: Financial Inclusion Plan: A Progress Report (End-March)

Change
Particulars 2010 2019 2020* (2019-
2020)
1 2 3 4 5
Banking Outlets in Villages-Branches 33378 52489 54561 2072
Banking Outlets in Villages>2000-BCs 8390 1,30,687 1,49,106 18419
Banking Outlets in Villages<2000-BCs 25784 4,10,442 3,92,069 (18373)
Total Banking Outlets in Villages – 34174 5,41,129 5,41,175 46
BCs
Banking Outlets in Villages – Other 142 3537 3481 (56)
Modes
Banking Outlets in Villages –Total 67694 5,97,155 5,99,217 2062
Urban Locations Covered Through BCs 447 4,47,170 6,35,046 1,87,876
BSBDA - Through Branches (No. in 600 2547 2616 69
Lakh)
BSBDA - Through Branches (Amt. in 4400 87765 95831 8066
Crore)
BSBDA - Through BCs (No. in Lakh) 130 3195 3388 193
BSBDA - Through BCs (Amt. in Crore) 1100 53195 72581 19,386
49
BSBDA - Total (No. in Lakh) 735 5742 6004 262

BSBDA - Total (Amt. in Crore) 5500 1,40,960 1,68,412 27,452
OD Facility Availed in BSBDAs (No. 2 59 64 5
in Lakh)
OD Facility Availed in BSBDAs (Amt. 10 443 529 86
in Crore)
KCC - Total (No. in Lakh) 240 491 475 (16)
KCC - Total (Amt. in Crore) 1,24,000 6,68,044 6,39,069 (28,975)
GCC - Total (No. in Lakh) 10 120 202 82
GCC - Total (Amt. in Crore) 3500 1,74,514 1,94,048 19,534
ICT-A/Cs-BC-Total Transactions (No. 270 21019 32318 11,299
in Lakh) #
ICT-A/Cs-BC-Total Transactions (Amt. 700 5,91,347 8,70,643 2,79,296
in Crore) #
* Provisional. #: Transactions during
the year.
Source: FIP returns submitted by banks.
Conclusion: Despite of the fact that enough endeavors are being made by all partners
viz Government, Financial institutions, controllers and others, these endeavors are not
yielding the sort of results expected. The controllers need to establish a reasonable
administrative climate that would keep the interest of all stakeholders. One of the
ways in which FIP can be accomplished in a cost-effective mode is through
establishing linkages with MFIs, NGO‟s and neighborhood networks. Banks should
give wide exposure to the facility of no-frills account. Technology can be an entirely
important apparatus in giving admittance to banking items in far off regions. ATM
cash arrangement can be customized reasonably to make them easy to use for
individuals who are clueless / uneducated.
For ccomplishing Financial Inclusion Planning, it needs to enable MSMEs

through giving ideal and adequate money in the light of the fact that MSMEs are the
best mode for accomplishing comprehensive development which produces local
demand and consumption, giving work to many newcomers.
References
[1] Agarwal, S.G. (2014), Financial Inclusion in India – A Review of initiative and
achievement, IOSR Journal of Business Management, PG. 52-61
[2] Anindita Banerji (2018), ICT as a tool of Financial Inclusions, IJCRT- International
Journal of Creative Research Thoughts, Vol. 6, Issue 2.
[3] B.A. Iqbal &S.Sami (2017), Role of Banks in Financial Inclusion in India,
ContaduriaAdministracion 62, 644-656. Available Online at www.sciencedirect.com
[4] Bagli, Supravat&DUtta, Paptia (2012), A Study of Financial Inclusion in India, Radix
International Journal of Economics & Business Management, Volume 1, Issue 8, Pg. 1-
18.
[5] Government Initiated Schemes at Department of Financial Services [Available from:
50
https://financialservices.gov.in/new-initiatives/schemes]
[6] Jayasree, T.O (2016), Current initiatives and Challenges of Financial Inclusion
Programmes in India, IJERME
[7] NABARD (2020) „Micro Credit Innovation‟ available from: www.nabard.org
[Accessed on 24 Feb 2021]
[8] NABARD (2020) „ Achievements- Financial Inclusion‖ Available from:
https://www.nabard.org/contentsearch.aspx?AID=1355&Key=aquaculture [Accessed
on 2nd March 2021]
[9] Parijet Dhar & Dr. Nissar A. Barua (2020), Financial Inclusion in India – A state wise
Analysis, International Journal of Management (IJM), Vol. 11 , Issue 10, Pg. 816-827.
[10] Pooja R & Dr Manish T (2018) Role of Banks in Bringing Financial Inclusion in
Rural India , Global Journal of Commerce & Management Perspective, Vol.7(2), pg
10-13.
[11] RBI Annual Reports [Available from:
https://www.rbi.org.in/Scripts/AnnualReportMainDisplay.aspx]
[12] RBI Annual Report at www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1288
[13] Sethy, S.K (2016), Developing a Financial Inclusion Index and Inclusive Growth in
India, Theoretical and Applied Economics, Volume XXIII, No. 2(607), pg. 187-206.
[14] Suyash, A (2018), India‟s Financial Inclusion Improves Significantly, Mumbai:
CRISIL. [Available from:https://www.crisil.com/en/home/newsroom/press-
releases/2018/02/indias-financial-inclusion- improves-significantly.html]
51
Institutional Assistance to Scheduled Caste Rural Entrepreneurship in

Tirunelveli District
Dr. S. Rajeshkanna, Ph.D.,

Assistant Professor in Commerce
M. S. University Constituent College,
Kadayanallur- 51Tenkasi D.t,
Tamil Nadu
Abstract
Scheduled caste entrepreneurs are most vulnerable group of India, they are
facing the problem of socially, economically and politically. In particular Tamil Nadu
most communal sensitivity place, apart from that some of the scheduled caste people
were doing business activities. In that places people not recognise these type of
people‘s organisation apart from that the scheduled caste entrepreneur facing very
struggling to run the business activities. In Tirunelveli district most industrial
backward area, in this area moderate development of industries to running the
business activities, apart from that so many of the people to struggling to running and
establishing the business concern because lack of finance. In this paper will show the
institutional assistance to scheduled caste rural entrepreneurship in Tirunelveli
district.
Key Words: Schedule caste, Scheduled caste entrepreneur, Institutional Finance,

MSME, Rural entrepreneurship.
I. Introduction
Scheduled castes owning a business are called scheduled caste entrepreneurs.

Today every scheduled caste entrepreneur remains as marginalized section of the
society. In absolute as well as relative terms, the untouchables find themselves at the
bottom of most human development indices. A predominant majority of them live in
villages, and they tend to be mostly poor and illiterate. Coupled with their economic
dispossession, the perception in the society of their inferior status reduces them to
second class citizens. Thus, exclusion, discrimination, exploitation and violence
become the order of the day. The asset-less population among scheduled castes is far
more than those among the other sections of society. This section is uneducated and
lives at the mercy of dominant castes for employment and sustenance. It is irrelevant
whether they are literate as that status is unlikely to help them socially or
economically.
Entrepreneurship is one of the emerging concepts, which decide not only the
economic development, but also the social sustainability of the country.
Encouragement of entrepreneurship is the only substitute to provide employment
opportunities, taking away the regional imbalances and promoting the life style of the
educated youth particularly to the downtrodden society.
52
II. Scope of Research Study
Scheduled caste entrepreneurship is a growing concept which is emerging

owing to the improvements in socio-economic and educational status of scheduled
castes in the country. But a scheduled caste in business is not at a significant level
while compared to the other communities, in the light of this, the present research
would be useful to explore the socio economic status, entrepreneurial profile, various
problems, violation and discrimination encounter by scheduled caste entrepreneurs in
the study area. The present research study is restricted to TIIC and TAHDCO
financial assistance for scheduled caste entrepreneurs. Those, who are entitled to the
investment limits up to Rupees 10 Lakh in Tirunelveli District,.
III. Scheduled Caste
Scheduled caste is the most backward caste group of Tamil Nadu. They are
socially, economically and politically backward. Scheduled caste are a mixed
population, consisting of numerous social groups from all over India. They are called
by different names in different parts of the country. They include; Dasa, Dasysa,
Raksasa, Asura, Avarna, Nishadu, Panchama, Chandala, Harijan and the Untouchable.
They were speake a variety of languages and practice a multitude of religions.
IV. Institutional Assistance
The commercial banks have extended good help in developing SSI sector in
the country. The Banking Commission in its report considered existence of
institutions who offered services like promotion of industrial and service projects,
investment management and financial advisory services within the country and for
exports. The commission pointed out that there is necessity of institutions that offer
services to small entrepreneurs in project formulation, preparation of project reports,
techno economic studies and giving advice on technology, management, quality and
finance issues.
V. Objective
The present research study consists of the following major objectives.
1. To study the institutional assistance available to scheduled caste entrepreneurs

in general.
2. To measure the performance of financial institutions in Tirunelveli district.
3. To find out the socio-enterprise status of scheduled caste entrepreneurs in
Tirunelveli district.
VI. Rural Entrepreneurship
Rural entrepreneurship is one of the emerging concept, it is based upon the

rural people to uplift the standard of living as well as economic empowerment
53
between the people. It is one of the economic empowering aspects, rural

entrepreneurship to utilise the local resources and agricultural aspects of raw
materials. It is most demandable one for the finance, the rural people to lack of
awareness of financial aid and lending activities. The government to take initiate
create awareness and proper guidance for rural entrepreneurship people.
VII. Methodology
The present research study is descriptive in nature using both primary and
secondary data. The primary data are collected using interview schedule. The data are
collected from sample respondents. The secondary data are collected from various
books, journals, magazines, census report of ministry of micro, small and medium
enterprises, publication of Reserve Bank of India, report of District Industries Centre,
annual credit plan report of Tirunelveli District, research publications, and un-
published thesis.
VIII. Sampling Technique
Study area is restricted to Tirunelveli and only micro scheduled caste

entrepreneurs are considered as sample respondents. Stratified random sampling
methods were applied to select the sample respondents.
IX. Sample Size
There are 13 taluks in Tirunelveli district .From each taluk 15 micro scheduled
caste entrepreneurs were taken as respondents; hence the sample size is 195.
X. Data Collection
Primary data were collected with the help of structured interview schedule and
secondary data were collected from various published and unpublished sources.
Table 1: Tirunelveli District Statistics Details
State District
Number Percentage Number Percentage
Literates Total 5,18,37,507 80.09 22,73,457 82.50
Males 2,80,40,491 86.77 12,10,710 89.24
Females 2,37,97,016 73.44 10,62,747 75.98
Scheduled Caste Total 1,44,38,445 20.01 5,69,714 18.51
Males 72,04,687 19.94 2,79,570 18.38
Females 72,33,758 20.09 2,90,144 18.64
Scheduled Tribes Persons 7,94,697 1.1 10,270 0.33
Males 4,01,068 1.11 5,109 0.34
Females 3,93,629 1.09 5,161 0.33
Total 3,28,84,681 45.58 14,36,454 46.68
Workers and Non- Males 2,14,34,978 59.31 8,76,175 57.61
54
Workers (Total Females 1,14,49,703 31.8 5,60,279 36.00

workers main and
marginal)
i. Main workers Total 2,79,42,181 38.73 12,71,407 41.32
Males 1,89,61,194 52.47 7,91,067 52.01
Females 89,80,987 24.94 4,80,340 30.86
ii. Marginal workers Total 49,42,500 6.85 1,65,047 5.36
Males 24,73,784 6.85 85,108 5.60
Females 24,68,716 6.86 79,939 5.14
Non-workers Total 3,92,62,349 54.42 16,40,779 53.32
Males 1,47,02,997 40.69 6,44,737 42.39
Females 2,45,59,352 68.2 9,96,042 64.00
Category of workers (Main & Marginal)
i. Cultivators Total 42,48,457 12.92 1,15,715 8.06
Males 27,32,479 12.75 87,142 9.95
Females 15,15,978 13.24 28,573 5.10
ii. Agricultural Total 96,06,547 29.21 3,79,763 26.44
Labourers Males 48,42,707 22.59 2,24,616 25.64
Females 47,63,840 41.61 1,55,147 27.69
iii. Workers in Total 13,64,893 4.15 2,39,664 16.68
householdIndustry Males 5,91,132 2.76 29,532 3.37
Females 7,73,761 6.76 2,10,132 37.50
iv. Other workers Total 1,76,64,784 53.72 7,01,312 48.82
Males 1,32,68,660 61.9 5,34,885 61.05
Females 43,96,124 38.4 1,66,427 29.70
Source: Census Report as per 2011 Census
The above 5.2 table shows Tirunelveli districts‘ statistical details. Total
literates are 22,73,457 members (82.50%) of whom male literates are 12,10,710
(89.24%), and female literates are 10,62,747 (75.98%).
 Total Scheduled Caste members are in 5,69,714 (18.51%) of whom 2,79,570

are men (18.38%), and 2,90,144 are women (18.64%).
 Total Scheduled Tribes members are 10,270 (0.33%) of whom 5,109 members
are men (0.34%), 5,161 members are women (0.33%).
 Total workers and Non-workers are 14,36,454 members (46.68%) of whom
Male workers and Non-workers are 8,76,175 members(57.61%), and female
workers and Non-workers are 5,60,279 members(36.00%).
 Total main workers are12,71,407 members (41.32%) of which Male main
workers in 7,91,067 members(52.01%), and female main workers in 4,80,340
members(30.86%).
 Total marginal workers are 1,65,047 (5.36%) of whom 85,108 members are
men (5.60%), and 79,939 members are women (5.14%).
 Total Non workers are 16,40,779 (53.32%) of whom 6,44,737 members are
men (42.39%), and 9,96,042 members are women (64.00%).
 Total Cultivators are 1,15,715 members (8.06%) of whom 87,142 members are
men (9.95%), and 28,573 members are women (5.10%).
55
 Total Agricultural Labourers are 3,79,763 members (26.44%) of whom

2,24,616 members are women (25.64%), and 1,55,147 members are women
(27.69%).
 Total workers in household Industry are 2,39,664 members (16.68%) of 29,532
members are men (3.37%), and 2,10,132 members are women (37.50%).
 Other workers are 7,01,312 members (48.82%) of 34,885 members are men
(61.05%), and female 1,66,427 members are women (29.70%).
Table 2: Revenue Administrative Divisions in Tirunelveli District
S. Co-operatives In
No Numbers
1. District Central Cooperative Banks 1
2. District Co-operative Union 1
3. Co-operative Training Institute 1
4. Co-operative Printing Press 1
5. P.A.C.B 158
6. Primary Agricultural and Rural Development Bank 8
7. Cooperative Urban Bank 6
8. Whole sale Cooperative Store 1
9. Primary Cooperative store 32
10. Cooperative Employees Thrift and Credit Society 69
Source: District Statistical Hand Book – 2015
The above table 5.3 shows the Revenue Administrative Divisions in

Tirunelveli District.
There are one District Central Co-operative Bank one District Cooperative
Union, one Co-operative Training Institute one Cooperative Printing Press, and 156
P.A.C.B, 8 Primary Agricultural and Rural Development Banks, 6 Cooperative Urban
Banks one Wholesale cooperative Store, 32 Primary Cooperative Stores, and 69
Cooperative employees Thrift and Credit Societies.
Table 3: No. of Commercial Banks in Tirunelveli District
Items No. of Amount in 000’s

Branches Deposit Advance Credit Ratio
Commercial Banks 304 108444518 103267207 95.22
DCCB Etc 46 7740472 8339012 107.73
Regional Rural Banks 56 9779000 8689400 88.56
Lead Banks 406 125963990 120295619 95.50
The above table 3 explains the number of commercial banks in Tirunelveli District.
56
There are 304 Commercial Banks which have Rs.108444518 thousand as

Deposit and Rs.103267207 thousand as advance, and Rs.95.22 thousand as Credit
Ratio. With regard to DCCB there are 46 etc which have Rs.7740472 thousand as
Deposit and Rs.8339012 thousand as advance and Rs.107.73 thousand as Credit
Ratio. There are 56 Regional Rural Banks which have Rs.9779000 thousand as are
deposit and Rs.8689400 thousand as advance and Rs.88.56 thousand as Credit Ratio.
There are 406 Lead Banks in Tirunelveli District with Rs.125963990 thousand as
Deposit and Rs.120295619 thousand as advance and Rs.95.50 thousand as Credit
Ratio.
Table 4: Registered and working factories in Tirunelveli District
S.No Items Numbers

1. Factories on the Register at the beginning of the year 710
2. Factories added during the year 44
3. Factories removed during the year -
4. Factories on the register at the end of the year 754
5. Number of working factories 621
6. No. of workers 26,720
The above table 4 reveals the registered and working factories in Tirunelveli District.
There were 710 factories on register at the beginning of the year, and 44
factories were added during the year, and there are 754 factories on the register at the
end of the year. There are 621 working factories, and 26,720 workers are employed in
Tirunelveli District as per 2011 census.
Table 5: Taluk wise Units Registered MSME in Tirunelveli District
S.No Total No. of MSME Units Total No. of MSMEunits

Registered Registered
1. Tirunelveli 1,554
2. Palayamkottai 1,560
3. Nanguneri 475
4. Radhapuram 573
5. Ambasamudram 363
6. Alangulam 311
7. Tenkasi 986
8. Shenkottai 1,160
9. Sivakiri 943
10. Sankarankovil 1,207
11. Veerakeralamputhur 848
12. Kadayanallur 541
13. Manur 2,080
Total 12,601
Source: MSME Annual Report 2013-14
57
The above table 5 explains the taluk wise registered micro, small and medium
enterprises in Tirunelveli District.
As regards Tirunelveli taluk, there are 1554 enterprises registered, followed

by, palayamkottai taluk where there are 1560 enterprises registered., At Nanguneri
taluk there are 475 enterprises registered, Radhapuram taluk has there are 573 units
registered, At Ambasamudram taluk there are 363 enterprises registered, At
Alangulam taluk there are 311 enterprises registered, Tenkasi taluk has 986
enterprises registered, and At Shenkottai Taluk there are 1160 enterprises registered,
sivakiri taluk has 943 units registered, At sankarankovil taluk there are 1207
enterprises registered, Veerakeralampudhur taluk there are 848 enterprises registered,
At Kadayanallur taluk has 541 enterprises registered, and finally At Manur taluk 2080
enterprises are registered. On the whole in Tirunelveli district 12601 enterprises have
have registered in the year 2013-14.
Figure No.1: Taluk wise Units Registered MSME in Tirunelveli District
Table 6: Enterprises in Tirunelveli District as per 2011 censes
S. No Enterprises In Numbers
1. No. of Enterprises 3,17,542
2. With Premises 3,03,006
3. Without Premises 14,536
4. Total enterprises in Rural area 1,72,855
5. Total number in Urban area 1,44,687
6. Number of working factories (Regd) 621
7. Number of workers 26,720
8. Number of Trade unions 15
9. Large Scale Industries 9
10. Medium Scale Industries 16
58
The above table 6 explains the enterprises in Tirunelveli District as per 2011
census.
There are 317542 enterprises in Tirunelveli District, with premises there are
303006 units, and without premises there are 14536 units, 172855 enterprises are in
rural area, and 144687 enterprises are in urban area. 621 working factories
(registered) and 26720 workers are in Tirunelveli District, and there are 15 Trade
unions and 9 large scale industries and 16 medium scale industries in Tirunelveli
District.
Table 7: Entrepreneurs Registered at District Industries Centre at Tirunelveli
Total No. of Total No. of SC

S. No Year Regd. Entrepreneurs Total
Entrepreneurs
Manufacturing Sectors
1. 2009-10 350 11
2. 2010-11 371 28
3. 2011-12 407 19
4. 2012-13 572 38 4,427
5. 2013-14 662 28
6. 2014-15 1169 57
7. 2015-16 679 36
Sub Total 4210 217
Service Sectors
1. 2009-10 63 28
2. 2010-11 165 53
3. 2011-12 165 28
4. 2012-13 619 46 5,099
5. 2013-14 836 112
6. 2014-15 1448 98
7. 2015-16 1370 68
Sub Total 4,666 433
Grand Total 9,526
Source: District Industries Centre in 2016
The above table 7 reveals the entrepreneurs registered at District Industries

Centre at Tirunelveli. There are 9,526 industrial units in Tirunelveli district, of which
4,427 are of manufacturing sectors and 5,099 units are of service sectors.
As regards 2009-10, 350 entrepreneurs were registered in general category of

which 11 are scheduled caste entrepreneurs. During 2010-11 371 entrepreneurs were
registered in general category and among them 28 are scheduled caste entrepreneurs.
In 2011-12, 407 entrepreneurs were registered in general category and 19 of them are
scheduled caste entrepreneurs. During 2012-13, 572 entrepreneurs were registered in
59
general category and 38 of them are scheduled caste entrepreneurs. In 2013-14, 662
entrepreneurs were registered in general category and 28 of them are scheduled caste
entrepreneurs. During 2014-15, 1169 entrepreneurs were registered in general
category and 57 scheduled caste entrepreneurs, 2015-16, 679 entrepreneurs registered
in general category of which 36 of them are scheduled caste entrepreneurs.
As regards service sector, in the year 2009-10, 63 entrepreneurs were

registered in general category and 28 of them are SC entrepreneurs. During 2010-11,
165 entrepreneurs were registered general category and 53 of them are SC
entrepreneurs. In 2011-12, 165 entrepreneurs were registered in general category and,
28 of them are SC entrepreneurs. In 2012-13, 619 entrepreneurs were registered in
general category and 46 of them are SC entrepreneurs. During 2013-14, 836
entrepreneurs were registered in general category and 112 of them are SC
entrepreneurs. In 2014-15, 1448 entrepreneurs were registered in general category and
98 of them are SC entrepreneurs. During 2015-16, 1370 entrepreneurs were registered
in general category and 68 of them are SC entrepreneurs.
Table 8: Entrepreneurs Registered in District

IndustriesCentre in Tirunelveli
S. No Year Micro Small Medium Total

Enterprises Enterprises Enterprises
General SC General SC General SC
Manufacturing Sectors
1. 2009-10 307 11 42 0 1 0
2. 2010-11 335 28 35 0 1 0
3. 2011-12 336 18 70 1 1 0
4. 2012-13 493 37 77 1 2 0
4,427
5. 2013-14 547 26 107 2 8 0
6. 2014-15 1033 56 133 1 3 0
7. 2015-16 553 34 122 2 4 0
Sub Total 3604 210 586 7 20 0
Service Sectors
1. 2009-10 42 28 18 0 3 0
2. 2010-11 132 50 30 3 3 0
3. 2011-12 126 26 32 2 7 0
4. 2012-13 656 44 44 2 10 0 5,099
5. 2013-14 709 107 113 3 14 2
6. 2014-15 1225 88 209 8 14 2
7. 2015-16 936 48 410 18 24 2
Sub Total 3735 391 856 36 75 6
Grand 9,526
Total
Source: District Industries Centre in 2016
60
The above 8 table shows the entrepreneurs registered at District industries

centre in Tirunelveli district. There are 9,526 industrial units in Tirunelveli district, of
which 4,427 are of manufacturing sectors and 5,099 units are of service sectors.
With regard to the year 2009-10, 307 micro enterprises were in registered
general category of which 11 had SC entrepreneurs, and 42 small enterprises were in
general category in which there was no SC entrepreneur, and there was one medium
enterprise in Tirunelveli district.
As regards the year 2010-11, 335 enterprises were in registered general

category of which 28 were SC enterprises, and 42 Small enterprises were in general
category in which there was no SC enterprise, and one medium enterprise was in
general category.
With regard to the year 2011-12, 336 enterprises were in registered general
category of which 18 were SC enterprises, and 70 small enterprises were registered in
general category in which there was one SC enterprise, and one medium enterprises
was in general category.
As for the year 2012-13, 493 enterprises were in registered general category
of which 37 were SC enterprises, and 77 small enterprises were registered in general
category in which there was one SC enterprise, and 2 medium enterprises were in
general category.
category of which 26 were SC enterprises, and 107 small enterprises were registered
in general category in which there were 2 SC enterprise, and 8 medium enterprises
were in general category.
category of which 56 were SC enterprises, and 133 small enterprises were registered
in general category of which one was SC enterprise, and 3 medium enterprises were
in general category.
category of which 34 are SC enterprises, and 122 small enterprises were registered in
general category of which 2 are SC enterprises, and 4 medium enterprises are in
general category.
As regards service sectors in Tirunelveli district, 3735 micro units are in the
general category of which 391 are in the SC category. 856 Small units are in the
general category of which 36 are in the SC category. 75 Medium units are in general
category of which 6 are in the SC category in Tirunelveli district.
61
XI. Suggestions
 Scheduled caste entrepreneurship is one of the emerging issues in the modern

day which involves socio-economic development that facilitates employment
opportunities, utilization of local resources and eradication of poverty among
scheduled castes in the country. Since independence, both state and central
governments have taken various efforts to promote the status of scheduled
castes socio-economically, but still their position is miserable.
 Though there are national and state level financial institutions to provide
financial assistance, exclusively for scheduled caste entrepreneurs, it has not
reached them in a significant manner. It shows that the attitude of the officials
is not in favour of scheduled caste entrepreneurs with the result that caste
remains dominant in all walks of life for human beings even in the 21st
century.
 In India, there are 3,356 lakh entrepreneurs as per the record of MSME and
only 7.3% of enterprises are owned by Scheduled castes in the country. More
Scheduled caste entrepreneurs focus on Service Sectors (30.50) and very few
scheduled caste entrepreneurs are found in manufacturing Industry (7.04%).
 As regards Tamil Nadu, there are 2910 scheduled caste enterprises as against
the total enterprises numbering 70,639. Tirunelveli is one of the industrially
backward districts in Tamil Nadu with 16,672 industries, of which 934 are
owned by scheduled castes.
 The study brings out a bird‘s eye view of the profile of scheduled caste
enterprises in Tirunelveli district. Majority of the respondents are men in the
age group of 30-40 years. Among the scheduled caste entrepreneurs, Pallan
community dominate in business and their income level is Rs.2-3 Lakh per
annum.
 As regards the enterprise profile of the respondents, majority of the
enterprises are located in semi urban area and their nature of unit belongs to
micro level. This study also covers the existence of units, registration
business premises status, ownership status, and years of previous experience,
nature of business, nature of entrepreneurs, initial investments and nature of
financial assistance received from various financial institutions.
XII. Conclusion
Sustainable development can be achieved only with the help of sufficient

industrial growth in the country. Entrepreneurship is one of the major inputs to create
more production outputs, employment utilization of local resources, flow of capital
and status of life of the people concerned. Entrepreneurship is also responsible for the
social development of the country; therefore more focus is needed on
entrepreneurship by the government particularly on those who are socially excluded.
Scheduled castes are treated only as the labour force and they may not come with the
entrepreneurial empowerment. Since, the financial institutions had given assistance to
Scheduled caste entrepreneurship it might not reach them in a proper manner. The
present system of financing to Scheduled caste entrepreneurship should be
62
strengthened and it should be properly executed to promote the Scheduled

casteentrepreneurship in the study area.
Reference
[1] Gupta L.C. (1969). The Changing Structure of Industrial Finance in India, Oxford:
Clarendon Press 11th
[2] March.
[3] Sethuraman T.V. (1970). Institutional Finance of Economic Development in India,
New Delhi, vikas Publications.
[4] Sharma M.L. (1973). Role of Institutional Finance in the Industrial Development of
Bihar, unpublished Ph.D. Thesis, Bhagalpur University.
[5] Sharma M.L. (1973). Role of Institutional Finance in the Industrial Development of
Bihar, unpublished Ph.D. Thesis, Bhagalpur University.
[6] Shoney U.V. (1975). Institutional Finance for Small Scale Industries, Industrial India,
Vol. XXVI, No. 12, p. 95.
[7] Pareek H. S. (1978) ―Financing of small scale industries in a developing economy‖ New
Delhi, National Publishing House (Pro.K.L.Mali & Sons Pvt. Ltd.) 23.
[8] Sandesara, J.C. (1982). Efficacy of Incentives for small Industry, IDBI Mumbai, pp-121
[9] Neelamegam R. (1981). Unpublished Doctoral Dissertation on ―Institutional Finance
to Small Scale Industries – A Study with special Reference to Tamilnadu, Madurai
Kamaraj University, Madurai.
[10] Erraiah G. Vasudeva Rao. P (1982). ―Role of Commercial Banks in Financing Small
Scale Industry, the Journal of Southern Economist, July 15, pp-17.
[11] Hill M Wadia (1994). ―A study on Role of All India Backward Areas; made a critical
assessment of the role of financial institutions‖, Ph.D Unpublished Thesis Punjab
University, Chandigarh, pp-15-23.
[12] Varshneya Y. K. A. (1985). Ph.D. Thesis on ―A comparative study of cooperative and
nationalized financing Institutions of Aligarh‖ Department of commerce AMU,
Aligarh, p.211.
63
Women Entrepreneurship in Micro, Small and Medium Enterprises of

India – A Gateway to Financial Inclusion
Dr. Manoj Kumar Joshi

Assistant Professor
School of Management Studies (SMS),
Sreenidhi Institute of Science and Technology (Autonomous),
Affiliated to JawaharlalNehru Technological University
Hyderabad
Abstract
In a geographically and socio-culturally diverse country like India, government

has been taking a number of steps to promote women empowerment. In this regard
women entrepreneurship has a significant role in ensuring financial independence for
women and economic development of the country. The Micro, Small and Medium
Enterprises (MSMEs) can act as an effective catalyst for women to make a foray into
the male dominated entrepreneurship domain. This is because MSMEs require less
amount of input capital but contribute significantly to the India‟s GDP and its exports.
Registered MSMEs can obtain credit facility from the formal financial institutions
thereby promoting financial inclusion even in the rural areas.
This article presents the status of women‟s participation in the MSME sector
and the barriers faced by them for sustaining their enterprises. The study presents that
women owned MSMEs are just 20 percent of the total MSMEs operating in India.
Moreover, most of these MSMEs are in the micro category. In the north-eastern
states, women owned MSMEs are less than one percent. A major barrier faced by
women owned MSMEs is that formal financial sources constitute just 3.1% of all the
financial sources. Another barrier is the lack of technological access. Women need to
be provided business oriented training, awareness about government launched
financial schemes, loans against intangible and moveable assets and access to
subsidized electricity for the success of their MSMEs.
I. Introduction
Micro, Small and Medium Enterprises (MSMEs) are contributing significantly

to the development of Indian economy. Their contribution was about 48% towards
India‟s total exports in 2018-2019(Press Information Bureau, 2019). The
Government of India (GoI) intends to enhance the contribution of MSME to Gross
Domestic Product (GDP) from 30% to 50% and the contribution towards exports from
49% to 60% (Press Information Bureau, 2020).
Definitions: According to Government of India (1984), women entrepreneur is

defined as ―an enterprise owned and controlled by a women having a minimum
financial interest of 51 per cent of the capital and giving at least 51 per cent of the
employment generated in the enterprise to women.‖
64
According to Joseph Schumpeter, ―Women who innovate, initiate or adopt

business actively are called women entrepreneurs.‖
Based on the MSME Development (MSME) Act, 2006, Indian MSMEs are
divided into two classes: Manufacturing enterprises (defined in terms of investment in
plant and machinery) and Services enterprises (defined in terms of investment in
equipment). Table 1 defines the investment limits used in the classification of
MSMEsin the above mentioned classes.
Table 1: Investment Limits of Micro, Small, and Medium Enterprises
Type Manufacturing (Investment in Plant Service (Investment

and Machinery) in Equipment)
Micro Upto Rs.25,00,000.00 UptoRs. 1,00,000.00
Small Rs.25,00,000.00 to Rs. 50,00,000.00 Rs. 1,00,000.00 to
Rs. 20,00,000.00
Medium Rs. 50,00,000.00 to Rs. 100,00,000.00 Rs. 20,00,000.00 to
Rs. 50,00,000.00
Source: ―Micro, Small, and Medium Enterprise Finance, Improving Access to
Finance for Women-owned Businesses in India‖ International Finance Corporation;
Accessed from https://openknowledge.worldbank.org/bitstream/handle/10986/26058/
113596-WP-IN-Womenownedbusiness-PUBLIC.pdf?sequence=5&isAllowed=y
Even though SMEs are contributing towards half of India‟s total exports, they
continue to face plethora of problems such as inadequate organizational skills,
difficulty in satisfying regulatory compliances and delayed adoption of cutting-edge
technologies. These problems affect women entrepreneurs to a higher degree. Hence
they need certain amount of hand holding for launching their startups.
In India, from ancient times, women have enjoyed equal status with men.
There are many instances where women such as Rani LaxmiBai and Rani Abbakkan
Chowta were trained in the art of warfare and took active part in protecting the
country‟s independence. In addition, there were reputed women scholars from the
Vedic age. After independence, the Constitution of India provided equal opportunity
to women. Even Oxford Dictionary (2018) accepted „Nari Shakti‟ as Hindi word of
the year. Thus, the influence of women in the socio-economic space has been
acknowledged,the world over. According to The United Nations Organization (UNO),
about 10% of the population in the world is living in extreme poverty. In addition,
122 women in the age group of 25 to 34 are living in poverty, compared to100 men
(The United Nations Organization[UNO], n.d.). Thus, more women and girls suffer
from poverty, compared to men.
To minimize the poverty levels among women, economic empowerment of

women through income generating entrepreneurial activities is the need of the hour
particularly in the developing countries like India. In addition, research studies
suggest that the improvement in the economic status of women has a positive bearing
65
on the household, the society and of course the country as a whole. UNOhas set up
eight Millennium Development Goals (MDGs) that need to be achieved by all the
countries of the world by the year 2015 (UNO, n.d.). One of the MDGs is „Promote
Gender Equality and Empower Women‟. Thus, women entrepreneurship would have a
major role in achieving this MDG.
In present times, women have been making a markin the entrepreneurial

domain based on the strengths of their education, strategic interests and hard work.
The encouragement from their families, supporting government schemes and the
desire for economic independence are also playing a significant part in this
transformation. In the SME sector, women are very well making use of the traditional
female oriented skills to turn them into home based business activities. These
businesses are related to catering, textiles, boutiques, art & handicraft items, home-
made pickles and papad, embroideries and paintings and so on. The businesses in
India which are owned by women are about 80 lakh. However, they constitute just
13.76% of the total businesses operating in India(Ministry of Statistics and
Programme Implementation, Government of India, n.d.).
Ilahi (2018)studied the condition of women entrepreneurs and the hindrances

faced by them in India. The study was based on the findings of National Sample
Survey 73rd Round conducted by the National Sample Survey Organization. The
author examined the initiatives taken by the government for the progress of women
entrepreneurship. He opines that large scale awareness programs would help in
making women realize their role in the development of the economy. The author
suggests that the government encourage the private organizations and industry
associations in assisting women entrepreneurs.
Gautam and Mishra (2016) have discussed the status and issues related to
women entrepreneurs in rural India. The authors found that women entrepreneurs face
problems related to balancing family and career obligations, lower levels of financial
freedom, lack of entrepreneurial skills (in poor as well as financially sound women),
lack of confidence and negligence by financial institutions. The authors suggest
training, awareness programs and educational services from the government to the
women entrepreneurs. The psychological barriers faced by the women entrepreneurs
can be overcome with the assistance of psychiatrists and NGOs.
Hque (2017) examined the association between SMEs and women

entrepreneurs in SAARC countries. The study was conducted on the premise that
different problems of the society can be mitigated through women empowerment.
The author opines that policy makers should promote partnerships and networking
between the associationsfor the development of women centric SMEs.
66
III. Objectives of the Study
1. To examine the present status of women entrepreneurship in the MSME sector.

2. To describe the role of Government of India and its financial schemes for
promoting women entrepreneurship
3. To analyze the barriers faced by the women owned MSMEs.
IV. Status of Women Entrepreneurship in Micro.

Small and Medium Enterprises
Figure 1 presents the percentage of MSMEs owned by Indian women. It can be

observed that while women own just about 20% of the enterprises across all
categories, the remaining 80% are owned by men. Further, majority of the MSMEs
owned by women are micro enterprises. Thus, there is a long way to go for women to
make a foothold in the entrepreneurial domain of MSMEs.
Figure 1: Share of Micro, Small and Medium MSMEs Owned by Indian Women
(2019)
25.00%
Share of Women Owned MSMEs
20.00%
15.00%
10.00%
5.00%
0.00%
MICRO SMALL MEDIUM TOTAL
Series 1 20.44% 5.26% 2.67% 20.37%
Source:https://www.statista.com/statistics/1118549/india-share-of-women-owned-
msmes/
The National Sample Survey (NSS) 73rd round of NSSO has reported the
following aspects with regard to women owned MSMEs in the country(Ministry of
Micro, Small and Medium Enterprises, 2020):
 The number of women owned enterprises in India are estimated to be

1,23,90,523 out of a total of 6,08,41,245 MSMEs. Thus, only about 20% of the
total MSMEs are owned by women.
 West Bengal, Tamil Nadu, Telangana, Karnataka and Uttar Pradesh are the top
five states (in that order) with largest share of women owned enterprises
amongall the MSMEs in the country.
 West Bengal has 23.42 % share of MSMEs (among all the MSMEs of the
67
country) owned by women which is the highest among all the states.
 In the North-Eastern states (Assam, Tripura, Meghalaya, Nagaland, Mizoram,
Arunachal Pradesh and Sikkim), the percentage of women owned MSMEs
(among all the MSMEs in the country) is less than 1%.
GoI has taken many initiatives towards empowerment and safety of women.
These include Stand Up India, BetiBachao, BetiPadhao, Mudra Yogna Loan Scheme,
TREAD (Trade Related Entrepreneurship Assistance and Development) scheme,
MahilaUdyamNidhi Scheme ect. Table 2 presents the classification of women owned
registered and unregistered MSMEs. It can be observed that the number of women
owned MSMEs is just about 30 lakh, representing just 10% of the total MSMEs in the
country.
Table 2: Classification of Women Owned MSMEs
Category Registered Unregistered Total Percentage of Percentage

Total MSMEs Of Women-
Owned
MSMEs
Micro 274,059 2,655,318 2,929,377 97.62 9.40
Small 40,722 30, 414 71,136 2.37 0.23
Medium 276 --- 276 0.01 0.01
Total 315,057 2,685,732 3,000,789 100.00 10.25
Finance for Women-owned Businesses in India‖ International Finance Corporation.
Accessed from
https://openknowledge.worldbank.org/bitstream/handle/10986/26058/113596-WP-IN-
Womenownedbusiness-PUBLIC.pdf?sequence=5&isAllowed=y
V. Promotion of Women-Owned MSMEs –Role of Government of India
The Ministry of MSME, GoI has put in place different schemes to encourage
women towards entrepreneurship. One such scheme is the Prime Minister‟s
Employment Generation Programme (PMEGP). Since its inception, women
entrepreneurs have set up 1.38 lakh projects upto 23 rd January, 2019. These projects
constitute about one-third of the total projects under PMEGP. Women entrepreneurs
are awarded special category under PMEGP and they receive 35% and 25% project
subsidies in rural and urban areas respectively. Women beneficiaries need to
contribute just 5% of the project cost while others need to contribute 10% of the
project cost.
Table 3presents the number of women entrepreneurs who have benefitted

under PMEGP since its inception in 2008-09. It can be observed that the number of
women beneficiaries has increased from 4,930 (2008-09) to 12,529 (2019-2020)
showing an increase of 154% in the twelve year period. Cumulatively 1,62,383
women have benefitted during this period.
68
Table 3: Number Women Beneficiaries of PMEGP (i.e. 2008-09 – 31.12.2019)
Year Women Entrepreneurs (Beneficiaries)

Under PMEGP (Micro Enterprises /
Projects : in Numbers)
2008-09 4,930
2009-10 10,845
2010-11 12,134
2011-12 14,299
2012-13 13,612
2013-14 13,448
2014-15 13,394
2015-16 11,356
2016-17 14,768
2017-18 15,669
2018-19 25,399
2019-20 12,529
(Upto 31-12-2019)
Total Since Inception 1,62,383
(Up to 31-12-2019)
Source: Annual Report (2019-2020). Ministry of Micro, Small and Medium
Enterprises, Government of India
Under other schemes such as Khadi Programme sponsored by Khadi and

Village Industries Commission (KVIC), margin money of Rs. 85.00 lakhs has been
disbursed for women entrepreneurs. They have set up more than thirty thousand
projects during 2016-2017 and 2017-2018. Under the guidance of KVIC, about
4,96,000 people are involved in the production and sale of Khadiwith 80% of them
being women artisans.
Similarly in the Coir industry (under the guidance of the Coir Board), out of a
total 7,34,000 people involved in fiber extraction and spinning activities, 80% of
them are women. Coir Board has implemented a scheme called Mahila Coir Yojana to
promote self-employment among women artisans through training and stipend. Also
financial assistance (uptoRs. 25 lakhs as project cost) is provided to them for buying
machinery/equipment and set up their own coir units under the Prime Minister‟s
Employment Generation Programme (PMEGP). Many illiterate and semi-literate
women from both urban and rural areas have benefited from these schemes and have
set up their startups. For instance, tribal women inhabitants from Pali hills in
Kodikanal district of Tamil Nadu have started honey harvesting startups, selling
organic honey at the doorstep of the masses.
The Ministry of MSMEs has mandated that the Central

Ministries/Departments/ Public Sector Enterprises (CPSEs), should procure 25% of
their annual procurement from MSMEs(Ministry of Micro, Small and Medium
Enterprises, 2018). This includes 4% and 3% procurement from MSEs owned by
69
SC/STs and women entrepreneurs respectively. To enable this procurement, the

Ministry of MSME has started a portal called ―MSME-SAMBANDH‖ in 2017 for the
benefit of CPSEs and the MSMEs. For the year 2019-2020, the procurement
percentage of 115 CPSEs from MSMEs was about 29% of their total procurement. In
value terms, the purchases from women owned MSMEs was about Rs.228.37 crore,
benefitting about 2,258 MSEs.A platform for women entrepreneurs called Women
Entrepreneurship Platform (WEP) has been launched by NITI Aayog with partnership
from Small Industries Development Bank of India (SIDBI). This platform would
assist women entrepreneurs based on three pillars:
 Iccha Shakti that would motivate women desirous of starting their venture.
 Gyaan Shakti that would provide necessary knowledge and ecosystem to
women entrepreneurs to advance their entrepreneurial venture.
 Karma Shakti that would provide hands-on assistance to women in scaling
theirventures.
VI. Government of India Schemes to Promote Women Entrepreneurs
GoI has started a number of schemes for the progress of MSMEs in general
and to support the women owned MSMEs in particular. Some of the prominent
schemes are:
 Mudra Yojana Scheme: This scheme provides loan facility to women
entrepreneurs who would like to start small enterprises either individually or in
a group such as beauty parlor, coaching center etc. The loan amount would
range from fifty thousand to fifty lakh rupees. The need for security and
guarantors arises only when the loan amount solicited is higher than ten lakh
rupees.
 BhartiyaMahila Business Bank Loan: Under this scheme, loan upto twenty
crore rupees is sanctioned to women entrepreneurs intending to set up
manufacturing enterprises. The loan is sanctioned for a period of seven years.
The loan was administered by BhartiyaMahila Bank which was subsequently
merged with State Bank of India in 2017.
 Trade Related Entrepreneurship Assistance and Development Scheme
(TREAD): Under this scheme, government would provide allowance upto
30% of the project cost while the remaining 70% project cost would be
funded bythe financial institution.
 Mahila Udyam Nidhi Scheme: This scheme started by SIDBI aims to provide
financial assistance upto Rs.10 lakh for establishing small scale units. In
addition, assistance is also extended for modernization and upgradation of
existing projects. The loan tenure is ten years with a five year cessation period.
The interest is charged based on the market rates.
 Annapurna Scheme: As the name suggests, this scheme extends credit to
women entrepreneurs who would like to start food catering business. Loan
upto Rs. 50,000.00 would be given for buying kitchen equipment, appliances
and water filters. The loan tenure is 36 installments. It requires a sponsor to
avail the loan facility based on the on the guarantee of the assets.
70
 Udyogini Scheme: It is applicable to women borrowers in the age group of 18

to 45 years. They can avail loan uptoRs.1.00 lakh for starting businesses in the
retail, agriculture or other such small businesses. The loan is extended only to
those women whose annual family income is less than Rs.45,000.00. There is
no income limit for women who are widows, injured or very poor.
VII. Barriers to Women Entrepreneurs
There exist a number of hindrances in the path of women empowerment and

entrepreneurship.
A major barrier faced by the Indian women entrepreneurs is the inadequate

financing available to their ventures. They face a financing gap of nearly Rs. 6.37
trillion which is approximately 73% of the total financial requirement (International
Finance Corporation [IFC], n.d). In the developing countries, it is estimated that
70% of women-run SMEs in the formal sector are not being adequately served by the
financial institutions. Due to this, there exists a financing gap of nearly $260 billion to
$320 billion per year (IFC, n.d.).
Table 4 presents a comparison of percentage share of various sources of

finance for MSMEs in general and women owned MSMEs in particular. It can be
observed that the share of informal sources of finance is 75% in case of MSME while
it is 92% in case of women owned MSME. In case of women owned MSMEs, the
share of formal financial sources is very low at 3.1%. Thus, in the absence of formal
financial sources, women may find it difficult to sustain their business operations in
the long run.
Table 4: Sources of Finance for MSMEs and Women Owned MSMEs

Funding Source MSMEs Funding Source Women Owned
(In General) MSMEs
Formal financial 21.50% Formal financial 3.1%
sources sources
Self-equity 3.30% Semi-formal financial 4.8%
sources
Informal sources 75% Self, family, friends 92.1%
or informalsources
Finance for Women-owned Businesses in India‖ International Finance Corporation.
Accessed from https://openknowledge.worldbank.org/bitstream/handle/10986/26058/
113596-WP-IN-Womenownedbusiness-PUBLIC.pdf?sequence=5&isAllowed=y
India has made rapid strides in the fields of science and Information and
Communication Technologies (ICT). It has achieved a rare distinction of
accomplishing its space mission to planet Mars in its first attempt at the lowest cost in
the world. However, it is ranked 112thamong a group of 153 countries in the gender
71
gap index. (World Economic Forum, 2019).Another irony is that India has the
distinction of being ranked second in the world with regard to number of people
employed in the Artificial Intelligence (AI) domain. However, only 22% of them are
women (Ministry of Micro, Small and Medium Enterprises, Government of
India, n.d.).
International Finance Corporation (IFC) mentions the following barriers

pertaining to women entrepreneurs (IFC, n.d.).
1. In comparison to men, women entrepreneurs have less business management

skills resulting in women being confined to operating household enterprises.
2. All over the world, women have been found to be less confident compared to men
in their entrepreneurial pursuits.
3. Women entrepreneurs have been found to have narrow networks and their
usage of social networks to expand their businesses is less, compared to men.
4. The distribution of loans to women centric SMEs is less than 5%. In addition,
government and large corporations procure less than 1% from women owned SME
vendors.
5. The success of modern enterprises is largely dependent upon the usage of
technology. However, women have less access to technology which hinders the
growth of their enterprises. For instance, 25% fewer women as compared to men
have access to the Internet and a mobile phone.
VIII. Conclusion and Suggestions
Research studies have concluded that the economic opportunities provided to

women also benefit the society at large. Other complementary benefits include higher
level of investment in future generations, reduction in poverty levels and more
importantly a path of prosperity for the coming generation of female population. The
following interventional aspects can go a long way in women empowerment and
entrepreneurship:
 Just providing loans is not enough. It is essential to provide training and

technical guidance for the success of women‟s income generating activities.
For women entrepreneurs with large-sized enterprises, it may be enough to
provide only capital.
 Financial institutions can consider providing loans against intangible assets
along with moveable assets such as inventory and receivables. This is because
research has shown that 85% of the total assets of MSMEs are moveable while
14% are immovable assets such as buildings and land (IFC, n.d).
 Financial institutions should weed out unscrupulous enterprises which are
owned in the name of women but in reality run by men. They should make
informed decisions by making use of authentic data such as government
census.
 Mobile phones are a cost-effective means to deliver financial services
compared to other delivery methods.
72
 It has been found that business training enhances business practices and this
training can be improved by combining it with technical interventions and
expert advice for women-owned firms.
 Women tend to invest personal savings in their businesses. Hence, providing
savings products helps improve their business earnings.
 For women entrepreneurs in rural areas, access to electricity and mobile
phones helps in increasing their productivity and earnings. Subsidized
electricity connection helps the cause of women.
 Mobile phones can be used by farmers and women entrepreneurs from rural
areas to get market related information.
 Autonomy enjoyed by the women has an important bearing not only on the
earnings of rural women but also on the interventions designed for women
farmers and rural entrepreneurs.
In a nutshell, the government should promote entrepreneurial literacy (along

with financial literacy) extensively even in the remote and rural areas. This exercise
can be undertaken by roping in NGOs and industry associations. It would give women
the requisite knowledge and confidence to start their own income generating
activities. Moreover skill based vocational training and internships right from the
school level would help in producing entrepreneurs having hands-on expertise in
starting their business ventures.
References
[1] Gautam, R. K., & Mishra, K. (2016). Study on rural women entrepreneurship in India:
issues and challenges. Int. J. Appl. Res, 2, 33-36.
[2] Hque, U. (2017). Contribution of Women Entrepreneurs in SMEs Among SAARC
Countries. International Journal of Humanities and Social Sciences (IJHSS), 6(6).
[3] Ilahi, S. (2018).An overview of female entrepreneurs in Indian MSME Sector. Saudi
Journal of Business and Management Studies (SJBMS), 3(11), 1269-1273.
[4] International Finance Corporation [IFC]. (n.d.).Micro, Small, and Medium Enterprise
Finance Improving Access to Finance for Women-owned Businesses in India.Retrieved
from https://openknowledge.worldbank.org/handle/10986/26058.
[5] IFC.(n.d.).Women Entrepreneurs Are Essential for Private Sector Development in
Emerging Markets. Retrieved from https://www.ifc.org/wps/wcm/connect/d7623440-
8bb4-4827-9ce5-470dcb6f86b1/
Entrepreneurship+Offering+Brochure+July2017.pdf?MOD=AJPERES&CVID=lQps6K
M
[6] IFC.(n.d.).Financial Inclusionfor Woman-OwnedMicro, Small & Medium Enterprises
(MSMEs) in India. Retrieved from
https://www.ifc.org/wps/wcm/connect/ca5c0868-e89d-4b43-ace5-
8a702ed29b25/Financial+Inclusion+for+Women-
owned+MSMEs.July+31.pdf?MOD=AJPERES&CVID=mOK28X8#:~:text=Financial%
20Services,-
%E2%80%A2&text=PSBs%20account%20for%20the%20bulk%20of%20formal%20cre
dit%20supply%20t
o%20MSMEs.&text=Women%20entrepreneurs%20got%20only%205.2,all%20PSBs%2
0provided%20to%
73
20MSMEs.&text=Small%20banks%20are%20best%20positioned,their%20women%2D
dominant%20MFI
%20clientele.
[7] Ministry of Micro, Small and Medium Enterprises, Government of India.(n.d.).#IWD-
Women Entrepreneurs: The New Age Entrepreneurs Women Entrepreneurs: Champions
for Change. Retrieved from https://msme.gov.in/women-entrepreneurs.
[8] Ministry of Micro, Small and Medium Enterprises.(2018). Ministry of Micro, Small and
Medium Enterprises Gazette notification No.S.O.5670(E) New Delhi, The 9th November,
2018. Retrieved from http://www.dcmsme.gov.in/Gazette%20Notification.pdf
[9] Ministry of Micro, Small and Medium Enterprises, Government of India. (2020).
Annual Report 2019-20. New Delhi, India : Author
[10] Ministry of Statistics and Programme Implementation, Government of
India.(n.d.).Highlights Of The Sixth Economic Census. Retrieved from
http://mospi.nic.in/sites/default/files/economic-
census/sixth_economic_census/all_india/5_Highlights_6ecRep.pdf
[11] Press Information Bureau. (2019). MSME Sector Contributes Significantly to Indian
Economy. Retrieved from https://pib.gov.in/Pressreleaseshare.aspx?PRID=1579757
[12] Press Information Bureau. (2020). Aiming to enhance MSME contribution to GDP from
about 30 % to 50%; and in exports from 49% to 60% : ShriGadkari. Retrieved from
https://www.pib.gov.in/PressReleasePage.aspx?PRID=1652664
[13] The United Nations Organization.(n.d.).Ending Poverty. Retrieved from
https://www.un.org/en/sections/issues-
depth/poverty/#:~:text=In%202015%2C%20more%20than%20736,sanitation%2C%20t
o%20name%20a%2 0few
[14] UNO.(n.d.).We Can End Poverty, Millennium Development Goals and Beyond 2015.
Retrieved from https://www.un.org/millenniumgoals/
[15] World Economic Forum.(2019).Global GenderGap Report 2020. Retrieved
from http://www3.weforum.org/docs/WEF_GGGR_2020.pdf
74
Facets of Rural Development through Financial Inclusion
Dr Mohana Krishna Irrinki,

Business School,
Koneru Lakshmaiah Education Foundation,
Vaddeswaram, AP, India.
Abstract
There are several initiatives undertaken by the economies across the world to
eradicate poverty so that there is economical development of the country. Several
steps were initiated to make the various sections of the society especially the rural part
of the formal financial institutions so that there is free and affordable access to the
financial services and products. The present study highlighted the need of having
inclusive growth and its impact on the rural development. The various strategies that
are adopted as part of financial inclusion by the various stakeholders are highlighted
along with the few bottlenecks that are arising during the execution of these strategies.
The paper enlightened on the various steps that are undertaken as part of financial
inclusion and how it is helping to improve the standard of living of the rural poor
which inturn helps to have sustained rural development. The financial inclusion plans
are executed by the financial institutions which intend to provide diversified financial
services to the rural poor that are aimed to bring them out of the clutches of the
informal sources of finance.
Keywords: Banking Sector, Reserve Bank of India, Financial Inclusion, Financial

Inclusion Initiatives, Rural Development, Financial Literacy.
I. Introduction
Development of any country is possible when there is social, ecological,

political and economical development. Every country has different level of
development in these areas depending on their internal aspects. The major contributes
of any country‘s development is in terms of social and economical developments and
even in these factors the economic development is more vital. In the past few decades,
several countries have understood that significant level of economic development is
possible when majority of their population are made part of the main stream financial
system. Financial Inclusion is implemented as a policy by many countries across the
globe with the motive of playing down the financial exclusion thereby leading to the
eradication of poverty. People have diversified opinions on the concept,
implementation on the idea of financial inclusion. Some of the views expressed by the
people on the financial inclusion are accessing of the financial instruments & services,
insurance services, inculcating the savings habit etc. With the proper and effective
implementation of financial inclusion through adequate availability of diversified
financial services and products especially to the rural people by the formal financial
institutions will pave the path for the purging of the prevailing exclusion in terms of
social and financial from the rural society. Inequalities are prevailing in the society
75
among its members interms of the wealth and income levels which is mainly
attributed due to lower level of literacy rates, inaccessible & unaffordable financial
services, lower levels of financial literacy, derisory usage of technology etc especially
in the rural areas.
Indian Government and Reserve Bank of India had identified that financial
exclusion is the cause of paucity which forced them to undertake several reforms to
ease the access of financial services and products thereby eliminate poverty. Post
independence, there has been drastic encroachment of the financial services in India
especially the Indian Banking System by entry of the finance to the rural sections
where majority of them are below the poverty line contributed by financial illiteracy
and lack of access to finance. There are continuous efforts by the regulatory bodies to
make use of this prevailing banking system as a tool for elimination of this financial
exclusion. Strategies were formulated to inflate financial services especially to those
related to credit so as to reach broader sections of the society resulting in democratic
mode of economic escalation. The Indian financial system was well structured
comprising of the Commercial Banks including the public, private & foreign banks
along with the Regional Rural Banks, Post Offices, Urban Cooperative Banks, Small
Finance Banks, Payments Banks, Primary Agricultural Credit Societies etc which play
their role in transforming the financial excluded being part of the financial sector.
With these measures the activities in the rural areas can pick up and generate income
for the people paving the path of rural development.
II. Objectives
 Understand the significance of Financial Inclusion.

 Understand the strategies and bottlenecks in implementing financial inclusion.
 Understand the need of Rural Development.
 Facets of Rural Development through Financial Inclusion.
III. Literature Review
It is being sighted, despite the proper implementation of any tangible

conceptual framework, that there exists link between financial inclusion and financial
stability (Santiagi Carbo 2005). The implementation of financial inclusion type of
activities was in existence in the Indian financial system where credit policies were
designed for uplifting the weaker sections of the society (RA Vimal 2012). Financial
system evolved strategies where linkages of the micro finance institutions with the
local communities through provision of zero balance accounts called as no-frill
accounts (B Savitha 2013). This need urged the financial system especially the banks
to reframe their strategies so as to implement the financial inclusion plans which
provided them with a business opportunity to expand their customer base and at the
same time cater to their corporate social responsibilities (K Divya 2014). It forced the
banks to change their perception about the financially excluded segments as possible
entrepreneurs and valued consumers (Mohana Krishna 2016). Enabling the
entry towards financial services do enable the low income groups to inculcate the
76
savings habit and at the same time make them ready to face any financial shocks
which otherwise may ruin their lives (H Vasmani 2015). The span of financial
inclusion is measured as the percentage of population having access to the bank
savings account where they can perform minimum banking operations in their
accounts (N Sandhu 2016). Several strategies were implemented by the Indian
government to uplift the financially lower sections of the society by introducing
BSBD accounts, minimum KYC norms in opening and operating the accounts,
insurance schemes, flexible and affordable credit facilities (Shrut Malik 2019). In
addition to these JAM acronymic as Jan Dhan Yojana (Bank Account), Aadhaar
(Identification) and Mobile connectivity for the low income groups of the society
where the government subsidies are transferred directly into the beneficiaries
accounts so that these residents are forced to operate the banks accounts and few
benefits are bundled with certain minimum number of transactions in the account
(Mohana Krishna 2020). Digital initiatives were also started where dedicated money
transfers, issue of electronic cards, online transfer of amounts, digital locker facilities
where documents can be stored in electronic format (Sebastian Schuetz 2020). There
are various analytical points which demonstrated how the financial inclusion can
impact the economic growth of a country (A Singh 2012). Access to financial
services and products from the formal financial institutions will inculcate the savings
habit which will have a positive economic growth in long term (M Andrianaivo
2012). Subsequently it improves the credit penetration leading to comprehensive
economic activities (PS Koku 2015). It is depicted that enhanced levels of financial
inclusion will pave the path for adopting the interest rates as one of the key policy
tools (T Lal 2018). Several strategies are designed with special emphasis on women
and small scale industries which will uplift the financial position of the low income
sections thereby paving the path for the overall economic development spread across
all the corners of the country (VK Tripathi 2014). With the effective implementation
of the financial inclusion plans there will be sustainable rural development where
majority of the sections would be operating from the formal financial institutions
thereby moving away from the clutches of the informal sources of finance (E
Apparao 2016). There will always be a positive relationship between the financial
inclusion, rural development and economic development (Levine 1997).
IV. Financial Inclusion
World Bank report says that over two and half billion are not having access to
financial services and products from the formal financial institutions who are majorly
from rural areas and low income groups. These sections are using the informal
financial sources, which are exploitative, to meet their financial requirements
depriving themselves in benefiting their growth opportunities, if obtained from formal
financial institutions like banks, micro finance institutions, postal department,
insurance companies, specialised financial institutions.
Financial Inclusion is the process of ensuring affordable access to financial

services and products required by the various sections of the society in general and
low income groups, vulnerable groups, weaker sections in particular, by the formal
77
financial institutions at reasonable cost, in a flaxen and apparent manner. Access to

formal financial institutions along with proper financial literacy and awareness will
complete financial inclusion program. Obstacles to process of financial inclusion are
both on supply and demand side along with the social, cultural, economic fronts.
Illiteracy, poor branch penetration in rural areas, high transactional costs, inadequate
micro finance & insurance schemes, programs relating to agriculture and its allied
sectors, financial & legal structure have their roles in hindering inclusive growth
ambition.
Financial inclusion assists in progress of the nation and especially the rural
development through admittance of financial services with special emphasis on credit
to vulnerable sections at affordable cost thereby amplifying the resource base and also
inculcates savings habit, protects in exigent situations, encourages investments,
moderates to move away from the clutches of money lenders. Emphasis is laid on
financing the SMEs, procurement and proper utilization of the working capitals,
enhances the comfort of rustic heaps, improving the capital pattern will reassure the
entrepreneur spirit among the rural youth which will enhance the economic activities
in the rural areas. Several studies reiterated that financial inclusion is connected to the
societal, economic growth thereby plummeting poverty among the low income groups
in the rural areas. There is need to have augment growth in a broader sense which is
possible if the benefits pervade all sections of the society, especially the rural areas
which prompt for sustained development model.
V. Various Strategies and Initiatives of Financial Inclusion
India being an agriculture dominated country has majority of populates

residingin rural areas. It is also evident that majority of the rural sections are deprived
of formal financial services arising out of multiple reasons and it is also observed
these rural low income groups to meet their financial requirements are dependent on
informal sources of finance. Indian Government, Reserve Bank of India along with
other versatile Financial Institutions framed and implemented diversified initiatives
and strategies with the anticipation in making these financially excluded segments
partof the formal banking stream. Some of the significant initiatives undertaken by the
regulatory bodies are below mentioned:
 The first step of providing basic financial services and products to the people
of the country, especially the rural, was initiated with the nationalization of
Imperial Bank in 1955 which was renamed as State Bank of India. The move
was aimed at improving the bank penetration especially in the villages.
 Subsequently 20 other private banks operating in the country which is largely
focusing on the urban areas and neglecting the rural areas were nationalised in
1969 and in 1980. The banks were nationalised with the intent to provide
affordable banking services to the people residing in rural areas.
 Establishment of National Bank for Agriculture and Rural Development
(NABARD) for sustainable agricultural growth through innovative credit
support along with special subsidy schemes for agriculture and its allied
sectors.
78
 In order to cater to the financial needs of the rural areas, Regional Rural
Banks (RRBs) were established with Central, State Governments and a
scheduled commercial bank as the prominent stakeholders. Over the years the
RRBs were permitted to do their operations in semi-urban areas also along
withthe rural areas to serve the low income groups.
 National Rural Employment Guarantee Scheme (MNREGY) is started to
have sufficient work days for the unskilled labour who are part of the rural low
income groups with special emphasis on women so as to enhanced levels of
women and social empowerment. Through the names for the schemes were
changed over the years, the soul of the scheme remains to be the same of
uplifting the rural poor financially.
 Swarnjayanti Gram Swarozgar Yojana (SGSY) was aimed to facilitate
training programs to the rural low income groups to enable them to have self
employment opportunities along with financial assistance along with the
motive of rural development.
 Basic Savings Bank Deposit (BSBD) Accounts which are zero balance
accounts are initiated by the banks to make the financially excluded segments
part of the formal banking system. In addition to the basic banking services
some other advantages are provided to the accountholders on satisfactory
operations of the bank account such as Overdraft facility, Pension schemes,
Insurance facilities etc.
 Relaxation of Know Your Customer (KYC) Norms were aimed at easing
the norms followed while opening the bank accounts. There are instances
where the rural poor are not in receipt of valid documentary proofs for opening
the accounts which were eased to enable these sections of the society to open
accounts and do operations with few restrictions on the transactions done in
these accounts.
 Financial Education was aimed to provide the necessary information to the
customers about the various financial services and products that are available
to serve the rural low income groups. Several financial institutions are
conducting awareness programs, seminars etc to promote awareness among the
senior citizens, students, women of rural areas and low income groups.
 Regulatory bodies emphasized the need for the expansion of Branch & ATM
Network in rural unbanked areas which was aimed at plummeting of regional
gap. ATM Networks are aimed at replacing the basic banking operations along
with acceptance and fund transfers through electronic cards.
 Business Correspondents (BCs) are deployed by banks where brick and
mortar branches are non-viable and act on behalf of banks to perform financial
transactions. BC with pre-determined limits perform account opening
activities, fund transfer, deposits etc. BCs helps during loan repayment process
as customers are known personally.
 Financial Inclusion Plans are rolled out by the regulatory body where targets
are set for the banks in terms of the branches started in rural areas,
BSBD accounts opened, coverage of unbanked villages through BCs, issue of
GCC & KCC to eligible customers etc.
79
 Electronic Cards are given to accountholders such as Rupay Debit Card

developed in India to provide affordable card payments mechanism. Kisan
Credit Card is given for farmers with a sanctioned revolving cash credit
facility with multiple receipts and payments. General Credit Card is given for
rural entrepreneurial activities for working capital and term loans.
 Mobile and Internet Banking facilities are provided to the rural
accountholders to enable them use the advanced technology for effective
utilisation of the banking services.
 Government is taking necessary initiatives where the social benefits are
transferred to the beneficiaries‘ bank accounts which are Aadhaar mapped.
Social benefits such as MGNREGA, social security benefits, subsidies on
fertilizers, LPG etc are remitted in bank accounts so as to reduce transaction
costs as well as dependence on cash.
Some of the other financial inclusion initiatives include Micro Finance and
Insurance, Linkage of Self Help Groups, Aadhaar Enabled Payment System, usage of
Information and Communication Technology, Insurance Facilities, Pension Schemes.
VI. Hindrances in Implementing Financial Inclusion
It is evident that several initiatives were undertaken by the regulatory bodies to

promote financial inclusion thereby uplift the low income groups from the clutches of
informal sources of finance. Despite these initiatives and continuous efforts there
existed few bottlenecks in the implementation process. Few identified bottlenecks are:
Socio-Economic Factors, Geographical Factors, Poor Infrastructure Facilities,
Financial Illiteracy, Dependence on Informal Sources of Finance, Distance of the
Bank Location, Inadequate Financial Product Range, Timing of the Financial
Institutions, Attitude of the Staff towards their Customers, Lack of Proper
Identity Proof, Bankers insist to avail other Financial Products when customers
want to obtain the credit facility which is against the will of the customer, High
Transaction Costs, Technology Issues, Security Concerns, Infrastructural
Concerns, Business Correspondent Model has shortfalls in the areas of, improper
and inadequate technological usage, lack of proper infrastructure, the absence of reach
and coverage etc. there are issues pertaining to the financial stability of the BCs, Self
Help Groups face issues in procuring loans from banks.
VII. Progress of Rural Development through Financial Inclusion
Framing the strategies to eradicate poverty and stride towards rural

development is pivotal for sustained economical growth of the country. Regional
factors such as the social, economical, environmental are to be properly evaluated to
achieve sustainable rural development. India being an agriculture dominated country
along with its allied sectors plays a major part in the rural development and to have
sustained rural development needs to develop markets for rural production in the
nearby urban places. This helps in eradicating regional disparities and also provides
opportunities for the rural youth along with the chance to upgrade their skills,
80
investments in developing and maintaining rural education, health, water

management, infrastructural development etc which increases the productivity and
income levels of the rural people. Programs are to be framed at all levels so that the
basic needs of the rural poor are meet through social protection for the aged,
unemployed, women etc so that more are engaged in productive activities. With the
advent of new technologies, various economic opportunities are available for the rural
poor through microfinance institutions, commercial banks which offer diversified
services which helped to improve their standard of living thereby moving out their
prevailing impecunious situation. Tailor made credit schemes with small loans such as
consumer loans, agricultural loans, housing loans etc to empower entrepreneurship
which harness the rural economic cycle along with other financial services like
remittances, funds transfers through digital mode are active leading to reduction in the
transaction time and cost involved in performing these transactions. Higher level of
commitment and expertise are posing positive social impact through the usage of
diversified financial services like insurance services, investment funds, leasing,
insurance for agriculture products, factoring etc enabling the rural poor to be
prosperous and resilient. In addition to traditional indigenous knowledge, promotion
of equitable access to farming land, farm credit facilities, agricultural insurance
market along with the participation of rural poor in planning, execution, development
of rural leadership, enabling to endure natural calamities, strengthening the social
capital, promote capital intensive programs through effective financial inclusion
plans. Promotion of new employment and income generation prospects through
financial advisory services, credit guarantee schemes, micro insurance, financial
literacy, micro credit, market literacy, venture capital etc at affordable price
especially for womenand vulnerable sections is vital. Extensive awareness campaigns
are needed to enlighten about women rights, women empowerment, and gender
equality along with detailed analysis so that steps to improve income generation
thereby poverty reduction. There is need to develop health care facilities,
infrastructural development, storage facilities, transport facilities, communication
facilities, housing & electrification facilities, educational programs so level of access
to information, learning resources so proper decision making is done to uplift the lives
of rural poor.
VIII. Conclusion
Several initiatives are started by government at different levels along with

other statutory bodies towards the rural development. Despite steps of the government
and financial institutions, banks are losing on the opportunity to prospective business
opportunity by tapping the unbanked rural people who are deprived of formal
financial institution services. Positive sides are there through the efforts over the years
where there is substantial increase in the earnings of these rural low income groups.
Government is also striving to fund schemes aimed at increasing public spending and
public consumption by motivating the rural poor to be part of the formal financial
institutions to enhance inclusive growth. Steps are initiated to reduce the transactional
costs, capital costs by providing services at affordable costs to rural poor
thereby paving the path for rural development. Steps should be in the direction of
81
improving education, health, communication among the rural people so that the steps
taken alongwith the schemes available to them are aware to them and reap the benefits
for their wellbeing thereby promoting rural development.
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[20] Santiagi, Carbo., Edward, PM., Gardener., & Philip, Molyneux. (2005). ―Financial
Exclusion‖, Palgrave MacMillan.
[21] R Burgess. & R Pande. (2005). ―Do Rural Banks Matter? Evidence from the Indian
Social Banking Experiment‖, American Economic Review, 95, 780-795.
[22] R Levine. (1997). ―Financial Development and Economic Growth: Views and
Agenda‖, Journal of Economic Literature, 35(2), 688-726.
83
Working of Islamic Banking- A Conceptual Study
Mrs. Mubeen Sultana

Assistant professor,
St. Joseph‘s Degree and PG College
King Koti, Hyderabad, Telangana.
Mohd.Yosuf
BBA III Year student
I. Introduction
Scale of modest community of Egypt. The achievement of this experiment

opened the entryways for a different market for Islamic banking and financing and
therefore, in the year 1970s Islamic banking appeared at a moderate scale and various
full- fledge Islamic banks was presented in Arabic and Asian nations later, Islamic
banks and non- banking monetary foundations are currently even on greater scale.
Today, Islamic banks are working more than 80 nations with the business size of $2.5
trillion. In the year 1963, Islamic banking and Money (Finance) appeared on an
exploratory premise on little.
Like traditional bank, Islamic bank acts as a delegate and trustee of cash of
others however the thing that matters is that it imparts benefit and misfortune to
contributors. Islamic banking is an arrangement of banking predictable with guideline
of Islamic law and guided by Islamic financial matters. Islamic financial matters are
referred to that collection of information which assists with acknowledging human
prosperity through a designation and dispersion of alarm assets that is in congruity
with Islamic lessons.
As in Islamic financial framework the more accentuation is given to Riba

which implies interest free loaning and getting. Notwithstanding, this doesn‘t imply
that Islam denies any addition on guideline aggregates. In Islam, benefit is the
perceived award for capital. At the point when capital utilized in passable business
returns benefit that benefit (abundance over capital) turns into the rightful and simply
guarantee of the proprietor of the capital. In any case, the danger of misfortune
likewise ought to be there. Another significant component of Islamic finance is that
benefit, or prize must be asserted in the occasion where either danger of misfortune
has been expected. Benefit is thusly gotten by the supplier of capital and
wages/compensation by works/supervisor.
Ali (2009) studied on the measures of the efficiency of Islamic banking system
in Middle Eastern and Non- Middle Eastern Countries. During poor Financial period
84
from 2006- 2009. The researcher used the DEA model to measure the efficiency of
these Islamic banks.
The findings showed that efficiency of Islamic Banks operates in Middle

Eastern and Non- Middle Eastern Countries have increased during an economic crisis.
The study extends research which suggests that large Islamic banks showed an
increase in efficiency during 2006- 2008 and decline in 2009.
Alexakis and Alexandros (2009) aimed to provide an overview of the

regulatory framework and key regulatory institutions and industry associations in
Islamic finance today and highlight areas that merit increased attention. The paper
results that the growth of the Islamic finance sector may be impacted by the increased
involvement in Islamic finance by Western regulators, as well as credit rating
agencies; existence of sound accounting procuders; increased protection of
stakeholders of Islamic Financial Institution
Fadma El Mosaid1* Rachid Boutti (2012) aimed to evaluate the level of

corporate social responsibility disclosure in Islamic bank and to analyse the
relationship between performance indices Return on Average Asset (ROA) and
Return on Equity (ROE) with the corporate social responsibility disclosure. An
emperical analysis is conducted based on the annual reports of 8 Islamic banks for the
year 2009- 2010. A Corporate Social Responsibility Index (CRSDI) is constructed to
varifythe ROA, ROE and CRSDI regression models are run.
The results indicate a lack in disclosing Corporate Social Responsibility, and

the regression model show that there is no relation statistically significant between
performance indices (ROA, ROE) and CSRD Index
Objective
 To study the concept of Islamic Banking

 To study the difference between Conventional Banking VS Islamic Banking
III. Then I Will Write on Research Methodology
Emerge of Islamic Finance: The subprime loaning emergency that had shock the
world in the year 2007 showed the restrictions of the conventional monetary
framework. All the monetary foundations have been destabilized and the
economy was injured while the Islamic monetary system kept its soundness and
manageability. The rise of the emergency and the monetary downturn that followed
have brought up afew issues about the part of banks in a particular episode and drove
different partnersto look for answers for monetary disappointments. In this manner,
unique consideration has been given to the Islamic account as a solution for a
framework that keeps on introducing challenges by scrutinizing its solidarity and
capacity to retain the disturbance overwhelming the monetary scene. Endurance and
manageability of these banks pulled in the consideration of everybody. A few
85
investigations guarantee that the current monetary emergency might have been
dodged if Islamic system of banking was presented rather than regular money since it
gave options and guaranteed a superior future for the whole mankind.
As indicated by them, to guarantee the successful working of the worldwide

financing framework, the inadequacies of the ordinary account should be tended to.
Subsequently, esteeming money has all the earmarks of being a fix to different issues.
Specialists and moral money allies have consistently guaranteed that an Islamic bank
liberated from revenue isn‘t not out of the question, but on the other hand is steadier
with a higher limit with respect to stun assimilation than a regular bank.
Nonetheless, a few investigations have scrutinized the viability of Islamic

system of banking by recommending that the stun ingestion limit and anticipation of
emergencies is restricted. With the trust emergency that at present wins the universe
of account, better danger the executives have become a need. Since Islamic banking is
presently important for the worldwide financial scene, they are worried by this need.
In the light of these occasions, banking emergency and Islamic money are like never
at the core of the discussion.
IV. Foundation on Which Islamic Finance Works
Mud araba(Contract): Mud araba is a trust financing method in Islam in which one
accomplice gives the investment ( rab- ul- maal) and the other partner invests in a
business enterprise ( mudarib) The profit are shared by a predetermined proportion. A
mudaraba transaction may consist of two or more parties comprising the investors (
rab- ul- maal ), who provides capital and develops a partnership with the working
partner ( mudarib), who contributes skills and expertise to earn profit. The benefits are
shared agreeing to a fixed ratio and the capital provider bears the losses. In practice,
mud araba financing is often limited in Islamic banking activities because it is based
on good faith and banks are regularly hesitant to enter such contracts because of the
risks involved.
Musharaka(PartnershipContract): Musharaka literally means ―sharing‖ and is

atype of joint enterprise through which the partners share their profit according to a
predetermined ratio, as with mudaraba. But musharaka is different from mudaraba
because it requires losses to be strictly shared according to the proportion of the
contributions. This arrangement accommodates partners who wish to pool their
financial resources to undertake a commercial transaction. The declining musharaka is
also known as musharaka mutanaqisah (diminishing partnership)
Murabaha (Cost Plus Contract): Murabha is characterized as an agreement of offer

in which a client demands the Islamic bank to purchase products from provider and
exchange them to the client at the first price tag in addition to costs and an arranged
benefit, on concurred footing. The monetary design is perhaps the most regularly
utilized strategies by Islamic banks and monetary foundations. Indeed 70% of Islamic
exchanges overall are directed through the murabaha structure.
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Since the Qur‘an licnses exchange however precludes usury, a murabaha is

viewed as a legitimate type of offer. As per Islamic law, the purchasing and selling of
products for a benefit during the time spent exchange is allowed. Moreover, the
accompanying principles for murabaha should be fulfilled for the exchange to happen:
The subject of the exchange should exist at the hour of the deal and be recognized to
the purchaser; The dealer should have the topic at the hour of offer and the deal
should be moment Outright and unrestricted; The topic ought to be an appropriately
having esteem and the topic ought to be viewed as allowable by Islamic legal
advisers and can exclude disallowed topic like liquor or illicit medications. The
conveyance of the item to the purchaser and the cost should be sure.
Maisir(Speculation): Sharia strictly prohibits any form of speculation or gambling,

which is called maisir. Thus, Islamic monetary establishments and banks cannot be
involved in contracts where the ownership of goods depends on uncertain events in
the future.
Gharar(Uncertainty): The standard of Islamic account boycott investments in

contracts with excessive risk and/or uncertainty. The term Gharar measures the
legitimacy of risk or uncertainty in investments. Gharar is observed with derivative
contracts and short- selling, which are forbidden in Islamic finance. Besides to the
above prohibitions, Islamic finance is based on two other crucial principles:
Material finality of the transaction: Each transaction must be related to a original

underlying economic transaction. Profit/loss sharing parties entering the contracts in
Islamic finance share profit/loss and risk associated with the transaction. Nobody can
profit from the transaction more than the other party.
Ijarah (Lease Contract): In this type of financing arrangement, the lessor (who must
own the property) leases the property to the lessee in exchange for a stream of rental
and purchase payments, ending with the transfer or property ownership to the lessee.
 Period of lease should be clearly defined.

 Damages to the asset (not caused by the customer‘s negligence) should be
borne by the owner.
 Damages to the asset (caused by the customer‘s negligence) should be borne
bythe customer.
 Lease rentals for the entire lease period should be fixed.
 Rent can be fixed on periodic revision, but periodic increment should be
agreedupon
 The rent may be tied to a known benchmark, acceptable to both the parties.
Sukuk (Islamic Bonds): Sukuk are bonds that are structured in such a way as to
generate returns to investors, without infringing Islamic law that prohibits ―Riba‖ or
interest. Sukuk aims at ―profit sharing‖ by offering to the investor, ownership in
Business and Assets.
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Salam (Forward Contracts): A ―Financer‖ pays for the goods, on behalf of

customer, cash is received by the seller of the goods immediately:
 Goods to be delivered at a ―Specified Future Date.‖

 Specified quality and ―quantity of goods‖
 Sale made at a ―Discounted Price.‖
 So that the Financer can make some profits.
 Prohibited for sale of ―Gold‖ & ―Silver.‖
V. The principal of Profit and Loss Sharing
This is additionally the pith of the standard of no benefit sharing without

hazard sharing al-ghunm bi-ghurm ( \"no torment no gain\"), and the procuring benefit
is legitimized simply by taking part in a financial endeavor and accordingly adding to
the monetary turn of events.In this respects, the presumption of business hazard is a
safeguard for the legitimacy of privilege to any benefit over the head. benefit must be
procured by sharing danger and prize of proprietorship through the standard of
products, administrations or usufruct of merchandise.
Interest in the Islamic setting isn't only a monetary or financial exchange in

which move of assets is the solitary action. speculation is viewed as just in the event
that it is a piece of genuine action or is itself a genuine movement. this is on the
grounds that cash has the potential for development when it holds hands with
entrepreneurship. it isn't perceived as capital and hence it can't procure a return.
The rule of decency is additionally reflected in the danger and benefit sharing
attributes of Islamic monetary exchanges. This necessity should be plainly
characterized at the beginning and fills in as an extra in-constructed component that
advances the reception of sound danger the board rehearses by Islamic monetary
establishments specifically, these highlights request the activity of fitting due
determination and better expectations of exposure and straightforwardness to be seen
by the Islamic monetary foundation. Which thusly authorizes market discipline and
limits educational asymmetric. Terms and conditions should be sincerely and
unmistakably spread out, uncertainty dependent on future occasions can't be essential
for Islamic exchanges to stay away from expected clashes in future.
Thanks to this mechanism, Islamic banks are greater in financed undertaking

profitability than traditional banks. The latter focus especially on receiving hobby
payments as its profitability is without delay connected to this price. However,
Islamic banks are concerned about the actual price of return and focus in the long time
of their relationships with their clients. This partnership engagement obliged the
Islamic financial institution to supervise and monitor projects as carefully as viable.
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How Islamic Financing is different from Conventional Financing.Conventional

Financing Islamic Financing
Cash is an item other than vehicle of Real Resource is an item. Cash is only a
trade and store of value mechanism of trade
Time esteem is the reason for Profit on trade of products and
charging revenue on capital procuring administrations is the reason for earning
benefit profit
The expanded cash in the currency Balance spending plan is the result of no
market without support the genuine development of cash
resources, results deficiency financing
Interest is charged even on the off Loss is shared when the
chance that, the association endures firmenduresmis for tune
misfortunes, in this manner no
understanding of sharing loss
While dispensing money account, The execution of understanding for the
running account or working capital trading of merchandise and
account, no arrangement for trade of administrations is must, while dispensing
products and administrations is made assets under Murabaha, Salam and Istisna
contracts
Because of non-presence of products Due to the presence of merchandise and
and administrations behind the administrations no development of cash
extension of cash happens, which happens and subsequently no swelling is
makes inflation made
Because of expansion the business Due to power over swelling, no additional
person expands cost of his cost is charged by the businessperson
merchandise and administrations, due
to joining inflationary impact into cost
of product
Scaffold financing and long- haul Musharakah and Lessening Musharakah
credits loaning isn‘t made based on arrangements are made after ensuring the
presence of capital goods existence of capital great prior to
dispensing assets for capital venture
Government effectively acquires Government cannot get advances from the
credits from National Bank through cash Office without ensuring the
Currency Market activities without conveyance of merchandise to public
starting capital advancement venture reserve
expenditure
Genuine development of abundance Real development in the abundance of
doesn‘t occur, as the cash stays in individuals of the public happens, because
scarcely any hands of multiplier impact and genuine
abundance goes into the responsibility of
hands
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Because of disappointment of the Due to disappointment of the venture, the

activities the credit is discounted as it administration of the association can be
becomes non- performing loan taken over to give up being a superior
administration
Obligation financing gets the benefit of Spasm product sharing benefits it there
influence for an undertaking, because of should be an occurrence to National
interest cost as deductible thing Government, these prompts limit the
structure available benefit. Accordingly taxation rate over salaried people.
causes colossal weight of expenses on Because of which reserve funds and extra
salaried people. Accordingly, the saving cash of individuals is expanded, which
and extra cash of individuals is affected results the increment in the real GDP
gravely. These outcomes decline in the
genuinegross arches
Because of reduction in the genuine Due to increment in the genuine Gross
Gross Domestic Product, unfamiliar Domestic Product, the net fares sum
obligations and nearby money becomes positive this pays off
becomes weaker unfamiliar obligations weight and
neighborhood cash gets more grounded
AppendixIslamic Banking—Basic Terminology
Term Explanation
Amana Deposits held at the financial institution for
(Demand deposits) safekeeping reason. They are assured in capital
cost, and earn no return.
Bay mu‘ajal or bay bithaman The seller can sell a product on the basis of a
ajil(BBA) deferred charge, in installments or in a lump sum.
(Pre-transport, deferred The fee of the product is agreed upon between the
payment) purchaser and the seller on the time of the sale, and
can't encompass any expenses for deferring charge.
In a BBA settlement, the lender isn't always
compelled to reveal the profit margin.
Salam The client can pay the seller the overall
(Pre-payment, deferred negotiated rate of a product that the vendor
delivery) guarantees to supply at a destiny date.
Ijara A birthday party rentals a particular product for a
(Lease, hire buy) particular sum and a selected time duration. In the
case of a lease buy, every charge consists of a
element that is going toward the very last buy
and transfer of possession of the product
Stisna A manufacturer (contractor) consents to produce
(Deferred charge and (build) and to supply a positive top (or premise) at a
shipping) given rate on a given date within the destiny. The
price does no longer ought to be paid in advance
(in comparison to bay salam). It can also be paid in
installments or component can be paid in advance
90
with the stability to be paid afterward, based totally

at the choices of the parties.
Ju‘ala (Service rate) A birthday party pays another a particular sum of

money as a price for rendering a particular service in
accordance with the terms of the agreement stipulated
among the two events. This mode usually applies to
transactions along with consultations and expert
offerings, fund placements and consider services.
Kifala It is a pledge given to a creditor that the debtor will
pay the debt, satisfactory or legal responsibility. A
0.33 birthday party will become surety for the charge
of the debt if unpaid by wayof the man or woman in
the beginning responsible.
Mudaraba Rabb -ul- mal (capital‘ s owner) offers the whole
(Trust-based totally contract) capital had to finance a mission while the
entrepreneur gives his labor and know-how. Profits
are shared among them at a certain fixed ratio, while
financial losses are solely borne through rabb -ul-
mal. The liability of the entrepreneur is constrained
simplest to his effort and time.
Murabaha The seller informs the buyer of his value of obtaining
(Mark-up financing) or producing a special product. The earnings margin is
then negotiated between them. The general value is
typically paid in installments.
Musharaka The bank enters into an equity partnership settlement
(Equity participation or with one or extra companions to mutually finance an
―sweatcapital finance‖) investment task. Profits (and losses) are shared
strictly in terms of the respective capital
contributions.
Qard Hassana (Beneficence These are 0-go back loans that the Qur‘an encourages
loans) Muslims to make to the needy. Banks are allowed to
rate debtors a carrier price to cover the administrative
prices of managing the loan. The price need to no
longer be related to themortgage quantity or adulthood
VI. Conclusion
Islamic banking system is an alternative to conventional banking system, this

system is based on principle of sharing Profit and Loss and strongly prohibits Interest
(RIBA) it considers Interest as a cause of injustice that consists in the unbalanced
equation linked to the interest-based loan; the increase, on one hand and the
opportunity cost, on the other.
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..Islamic finance does not deny that the switch of credit score and hazard are on
the heart of finance, without which an monetary gadget cannot characteristic.
However, it is clever to state that those two motors are a double-edged sword.
Although they can be used judiciously to lessen threat and decorate welfare, they can
without difficulty entice otherwise careful individuals to engage in ruinous
gambling‘s behavior, along with what we've got visible with the modern economic
crisis.
There is a basic difference between principals of the Islamic economic system

and the conventional one in regard to the treatment of money capital as a factor of
production. Whereas in the conventional system, money is treated on a par with labor
and land, each being entitled to return irrespective of profit or loss, this is not so in the
Islamic system which treats money capital on a par with enterprise.
The prominent feature of loss profit sharing that distinguishes the Islamic
financial system from the conventional one.
References
[1] Abid Usman & Muhammad Kashif Khan, (2012),‖ Evaluating the Financial Performance
of Islamic and Conventional Banks of Pakistan: A Comparative Analysis,‖ International
Journal of Business and Social Science Vol. 3 No. 7; April 2012.
[2] Christos Alexakis & Alexandros Tsikouras, 2009. "Islamic finance: regulatory
framework – challenges lying ahead," International Journal of Islamic and Middle
Eastern Finance and Management, Emerald Group Publishing, vol. 2(2), pages 90-104,
June.
[3] Naama Trada Mohamed Ali Trabelsib Jean François Gouxc (2017), ―Risk and
profitability of Islamic banks: A religious deception or an alternative solution?‖
,European Research on Management and Business Economics, Volume 23, Issue 1,
January–April 2017, Pages 40-45
[4] Fadma El Mosaid, R. Boutti (2012), ―Relationship between Corporate Social
Responsibility and Financial Performance in Islamic Banking Business‖, Research
Journal of Finance and Accounting, No 10 (2012)
Weblinks
 https://corporatefinanceinstitute.com/resources/knowledge/finance/islamic-finance/
 https://www.liv.asn.au/LIV-Home/Practice-Resources/Law-Institute-Journal/Archived-
Issues/LIJ-August- 2011/Mudaraba,-musharaka,-murabaha new-terms-to-bank
 https://aims.education/study-online/difference-between-islamic-banking-and-conventional-
banking-system/
 https://corporatefinanceinstitute.com/resources/knowledge/finance/islamic-finance/
 https://www.liv.asn.au/LIV-Home/Practice-Resources/Law-Institute-Journal/Archived-
Issues/LIJ-August- 2011/Mudaraba,-musharaka,-murabaha new-terms-to-bank
 https://aims.education/study-online/difference-between-islamic-banking-and-conventional-
banking-system/



92
Inslusion through Insurance - A Study on Crop and Cattle Insurance
K. Srinikhila
Research Scholar
Osmania University, Hyderabad
I. Introduction
Financial inclusion is defined as the availability and equality of opportunities to

access financial services. It refers to a process by which individuals and businesses
can access appropriate, affordable, and timely financial products and services. These
include banking, loan, equity, and insurance products.
The individuals and businesses have access to useful and

affordable financial products and services to meet their needs – transactions,
payments, savings, credit and insurance delivered in a responsible and sustainable
way. Financial Inclusion is directly correlated to the Poverty said by the World bank.
With the nationalisation of banks in 1969 and 1980 the initiation of financial inclusion
began the gradual speed up of financial inclusion introduced in 2005 by the RBI, as
of then it has provided more services to the common people in a large way such as
remittances or money transfer facilities, saving or deposit services, credit and
insurance. It aims to remove the barriers between both the demand and supply side.
As of the beginning in 2005 financial inclusion has been introduced in

microfinance institutions, and the scope of microfinance institutions has increased
from various farm and nonfarm activities to housing and shelter to the poor as a part
of financial inclusion. There has been a drastic change in the performance of loans
disbursement to the poor due to financial inclusion. It has issued credit cards to the
poor to provide hassle free credit.
Insurance is one of four pillars of financial inclusion. Insurance products can

make a significant positive difference in the lives of vulnerable individuals by helping
households to mitigate shocks and improve the management of expenses related to
unforeseen events such as medical emergencies, a death in the family, theft or natural
disasters. However, there is a persistent insurance gap, particularly in developing
countries.
The various activities done by the banks in the event of financial inclusion in
the stages wise from 2005 are restriction on taking of loans had been decreased, zero
or minimum balance accounts opened by banks, Relaxation of KYC norms, Kisan
Credit Cards timely rural credit to farmers, General Credit Card as an Indirect mode of
finance to the agriculture under priority sector, Setting up of Rural Development and
Self Employment Training Institute (RUDSETI), Mahatma Gandhi National rural
employment Guarantee Act (MGNREA).
93
As in 2015 financial inclusion is expanded to the insurance sector it first

concentrated on the life insurance and then it covered the non-life insurance sector
under the scheme Pradhan Mantri Fasal Bima Yojana (PMFBY).
As the need to introduce the concept is to provide universal banking services to

all over India. It came in to existence by the government under NATIONAL
MISSION FOR FINANCIAL INCLUSION(NMFI) under PRADHAN MANTRI
JHAN DHAN YOJANA(PMJDY).Under this they launched the schemes such as
Pradhan Mantri Jeevan JyotiBimaYojana(PMJJBY),Pradhan Mantri Suraksha Bima
Yojana(PMSBY),Atal Pension Yojana(APY),Pradhan Mantri Mudra Yojana(PMMY).
The agriculture sector is one of the most important industries in the Indian economy,
which means it is also a huge employer. It is the main source of food, income and
employment to the rural population. It is also associated with the forestry, dairy, fruit
cultivation, poultry, beekeeping, mushroom, arbitrary etc. Approximately 60 percent
of the Indian population works in the industry, contributing about 18 percent
to India's GDP. In the developed countries the share of agriculture is very less in
national income.
According to 2011 Agricultural Census of India, an estimated 61.5% million

Indian population is rural and dependent on agriculture. As the more percentage is
depending in the agricultural sector there is a need for the farmers to financially
support in the agriculture and animal husbandry.
Livestock Insurance system reduces the risk and transferred the risk for the
overall improvement of livestock sector. As per the 20th Livestock census the total
livestock population shows an increase of 4.6 per cent over the Livestock census
2012.
India accounts to 20.5 million dependents on livestock for livelihood. It

provides livelihood to two-third of rural community.
Livestock insurance and improved livestock management is directly related to

seven of the 17 Sustainable Development Goals (SDGs) - including no poverty, zero
hunger, and good health and well being.
The livestock population 535.78 millions include cattle, buffalo, sheep, goat
and others. It contributes to the 16% income of small farm households against average
of 14% of all households. It contributes 4.11% of GDP and 25.6% of total agriculture
GDP.
II. Review of Literature
As per the World Bank Group report on Agriculture Finance and Agriculture
Insurance (8 Oct 2020),says that these two are important to eradicate poverty of small
farm holding and increases the income of farmers and access to better technologies
risk diversification and access to financial tools As there is a drastic rise in the global
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population farming plays a major role in providing food to the people. As the
estimates suggest that demand for food will increase by 70 % by 2050 and 80 billion
annual investments needed to meet this demand.
According to the‖ Source Trace advanced technology Platform

DATAGREEN‖ it provides digital solutions to all aspects of agriculture and food
business and help in value chain management for farmers and is best in farming apps,
it mentioned that smallholder farms lack of access to financial assistance as they
didn‟t have saving deposit activity ,loan repayment, and other payment activity in
order to assess the creditworthiness of a potential borrower. It provides the data to
financial institutions in agriculture value chain such as credit, crop insurance etc. By
this the financial institutions can easily get access to the data. As all the transactions
are digitalized the farmer get transparency and accuracy of operation for accessing
credit.
Semanti Choudhury. (2018) in his article ―FINANCIAL INCLUSION AND

AGRICULTURAL DEVELOPMENT IN INDIA‖ stated that as a developing country
like India to attain the growth in agriculture inclusive growth is needed. It facilitates
to improve the quality of life, protection against vulnerability, manage day to day
resources and facilitate economic transaction. As in a developing country most of the
population dependent on agriculture, financial inclusion helps to provide the inclusive
growth in the economy by the proper plan of action ,it facilitates the agricultural
development and eliminate poverty and inequality conditions that the economy is
facing.
III. Concept
To provide credit in a timely and integrated manner they introduced short term
crop loans eligible for interest grant from the government through KCC, review of
finance required for raising the crop per unit cultivated area, helping the farmers
through Farmers and Producer Organisation(FPO).
Priority Sector Lending: Priority sector lending concept introduced in 1972 by

Dr . K .S Krishna Swamy it included the lending by banks to few specific sectors such
as Agriculture ,Micro Small and Medium Enterprise, Export Credit, Education,
Housing, Social Infrastructure, Renewable energy and others. It mainly concentrates
on these sectors and lend money to these sectors for all round development of the
economy as it is focussed on financial sector. It is applicable in Commercial bank
including Regional Rural bank, Small Finance Bank, local area bank and Primary
Urban Cooperative bank other than Salary Earners bank. It is a credit delivery
platform to the small-marginal farmers.
95
Table 1: Performance in Achievement of Priority Sector Lending Targets
Source: RBI Annual Report Publications from NABARD
Under the priority sector lending the public sector bank disbursement target is
41.05%,Privatesector is 40.32 and Foreign banks is 40.81.The targets of lending were
achieved by the Commercial bank compared to RRBs, Rural Cooperative Banks as
they were near to the targets. Under the PSL lending for agriculture includes Farm
Credit (Agriculture and allied activities),Lending for Agriculture Infrastructure and
ancillary activities.
The Government of India (GOI) fixes the agricultural credit target every year
for commercial banks, regional rural banks (RRBs) and rural co-operative banks.
During 2019-20, against the target of ₹13.5 lakh crore, banks have achieved ₹13.7
lakh crore (101.8 per cent of the target), of which commercial banks, RRBs and rural
co-operative banks achieved 109.2 per cent, 73.9 per cent and 92.8 per cent of their
respective targets (Table IV.2).
How it started on banking sector how the banks helped to reach out through:
Pradhan Mantri Jan-DhanYojana(PMJDY) is a central Government scheme launched
by PM on 28 August 2014 and implemented under the National Mission for financial
inclusion programme to access to the financial services in an affordable manner. The
financial services that are covered are Banking & saving deposit accounts,
Remittancecredit, Insurance, Pension. Under this scheme the bank account is opened
by citizens with minimum or zero balance. The main need of the program is to
empower the citizens financially and contribute them to the growth and development.
The special benefits under the scheme are life Insurance cover of 30,000accidental
96
Insurance of 1lakh.NABARD creates Financial Inclusion Fund to support the

development and promotional activities. Some regions are financially excluded to
ensure the equitable spread of activities FIF is put in place in 2019.It provided
platform to the three schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana
(PMJBY), Pradhan Mantri Suraksha Bima Yojana(PMSBY), Atal Pension Yojana
(APY) and Pradhan Mantri Mudra Yojana(PMMY).
Table 2: PradhanMantri Jan-DhanYojana Beneficiaries as on 10/30/2021
Source: PMJDY
IV. Insurance
As per Insurance Regulatory Development Authority (IRDA) we have Some

Insurance companies offering insurance were Agriculture insurance Company
(AIC),Bajaj Allianz General Insurance Co LTD, Bharati Axa General Insurance
Company Ltd, Cholamandalam Ms General Insurance Company Ltd etc.
Crop Insurance Schemes That Strated for Financial Inclusion: National

Agriculture Market (NAM) is an online trading platform that sells the agricultural
commodities in India. It is a trading platform to commodities with better discovery
and providing smooth marketing of their produce. Small farmers Agribusiness
Consortium (SFAC) implemented the national e-platform covering around
250,200,135 mandis during 2015-16, 2016-17,2017-18 respectively.
Pradhan Mantri Fasal BhīmaYojana(PMFBY) is a central government

programme launched by Ministry Of Agriculture& Farmers Welfare introduced in the
part of financial inclusion programme in Feb2016 to give the better financial services
to the farmers. The member who voluntary wishes to join this scheme can join form
from kharif 2020
97
Table 3: PMFasal BimaYojana.
Source: PMFBY
Pradhan Mantri Kisan Sammann Nidhi Scheme introduced in GOI budget in

Feb 2019,it is a direct financial assistance to the marginal and small farmers. As the
farmers are identified as per the land records available by the state government who
own less than two hectares of cultivable land are elgible. This scheme ensure the
farmers in continuance of farming activities.
Table 4: Beneficiaries of PM Kisan Scheme
Source: PMKISAN.gov.in
98
Kisan Credit Cards: Kisan Credit Card introduced in early 1998 by NABARD along
with RBI to farmers for so that they can readily purchase agricultural inputs such as
pests, fertilizers, seeds etc. It also included investment credit requirement of farmers
via allied and non-farm activities in 2014.It further extended by issuing the electronic
credit card. It has been implemented by commercial banks, RRBs, Small finance and
cooperatives. As the kisan Credit Card Scheme is also a part of financial inclusion. It
is a single window scheme for cultivation and other needs including for consumption,
investment and insurance.
Dairy farmers of Milk Cooperatives and Milk Producer Companies also get the
Kisan Credit Cards. Up to December 31 2020, 1.5Crore dairy farmers belonging to the
milk union and milk producing companies are to be provided with cards. Under this
drive 47.81 lakhs applicants collected the cards ,36.18 lakh applications forwarded to
the banks.
Table 5: Kisan Credit Card scheme Beneficiaries
Source: Retrieved from RBI Annual Report data from Public Sector and Private Sector
Banks
The current number of operating Kisan Credit Cards for the year 2019-20 is
241.5 Crores and outstanding Crop loan is 423587.8 crore.
National Live Stock Mission: National live stock mission is a centrally government
programme that concentrates more on standard of living and enhance the level of
nutrition of livestock keeper for safe and equitable live stock development. It has the
sub programs such as Sub-Mission on Livestock development, Sub-Mission on Pig
Development in Northern Eastern Region, Sub-Mission on Fodder and feed
development, Sub-Mission on Skill Development, Technology Transfer and
Extension.
Dairy Processing and Infrastrucure Development Fund: Dairy Processing and

Infrastructure Development fund (DIDF) announced in the Union Budget 2017-18
with the assistance of NABARD.To provide the capital assistance to milk
cooperatives and modernise the plant and machinery and create additional
infrastructure for processing more milk. It provide loan to State Dairy Federations,
District Milk Union, Milk Producer companies, Multi State Cooperatives and National
Dairy development board subsidiaries.
99
Table 6: Source of funding and Funding Pattern of DIDF
Source: DAHD
V. Cattle Insurance
Livestock census is used to collect to know the complete count of livestock and
poultry at predefined point of time. The collecting of census started in year 1919,So
far 20 livestock census have been conducted. The last census conducted in October
2018.The last conducted in 2012.First time livestock data has been collected through
tablet. In 2019 out of the total livestock population 535.78 million cattle (192.90
million) followed by goat(148.88 million),buffaloes(109.85 million),sheep(74.26
million) and pigs(9.06 million)
Department of Animal husbandry & dairying, Ministry of fisheries released the

livestock census report The schemes that contribute under the livestock insurance are
Kisan Credit Card to livestock farmers, National Livestock Mission, Rashtriya Gokul
Mission, Dairy Processing and Infrastructure development Fund, Livestock Census
and Integrated Sample Survey, Livestock Health and Disease Control, National
Animal Disease Control Programme. Livestock provides economic support and
source of employment for farm households. Animal husbandry is a thought of form of
saving it provides employment that might not be replicable if ―saving in money‖ were
to substitute for ―saving in animals‖
100
Table 7: 20th Livestock Census Increase over the previous census
Source: PIB Delhi
Table 8: Live Stock Head Count
Source: Ministry Of Animal Husbandry and Dairying
VI. Lessons/Conclusions
Report of the Internal Working Group to Review Agricultural Credit and

Implications for Agriculture Sector
As the contribution of agriculture sector is more in GDP and employment

generation ,to solve the issues in the agricultural sector such as credit availability to
101
loan waivers a committee has been set up in Feb 7 2019,and the report on RBI website
includes that due to digitalisation programmes in land records and financial inclusion
programmes such as opening bank accounts to the farmers there is more improvement
in the credit delivery, review of Priority sector guidelines more amount of fund is
disbursed to the farmers through Rural Infrastructure Development Fund(RIFD) by
NABARD we can give more credit The Internal Working Committee (IWG)
recommends that there is a need to take measures to curb mis-utilisation of funds in
increased extension to kisan Credit Cards, instituting a credit guarantee scheme for the
agriculture sector, addressing the consumption needs of households.
Out of 29 recommendations, six recommendations pertaining to introduction of

suitable MIS for monitoring purposes, short-term crop loans eligible for interest
subvention through KCC mode, financial literacy awareness drives for small and
marginal farmers, review of scale of finance for crop cultivation, FPO financing
models and collaborations with agri-tech companies/start-ups so as to provide access
to credit in an integrated, timely and efficient manner to the farmers have been
implemented during 2019-20.
By the introduction of financial Inclusion in 1969 by the nationalisation of

banks it had been moved a great head and the country has moved towards the growth
as a beginning and with the introduction in every stages in 2005 it had been a gradual
increase that the performance of India has been increased with the less restriction in
banking sector but a lot of efforts is needed to bring to develop the country and in all
the areas development has been done. By the introduction in Micro Finance sector ,it
has gained a lot of the importance on minimising the restriction in the taking of
finance.
Getting in to the view point of Insurance it gained lot more importance by

PMFBY scheme due to more number of beneficiaries but more is to be needed to the
country to getting in to steps to be the developed country in all areas.
VII. Tables and Contents
Table Name Title of Table Source

Table 1 Performance in Achievement of RBI Annual Report
Priority Sector Lending Targets Publications from NABARD
Table 2 Pradhan Mantri Jan- Dhan Yojana PMJDY
Beneficiaries as on 10/30/2021
Table 3 PM FasalBimaYojana PMFBY Website
Table 4 Beneficiaries Of PM Kisan PMKISAN.gov.in
Scheme
Table5 Kisan Credit Card scheme Retrieved from RBI Annual
Beneficiaries Report data from Public
Sector and Private Sector
Banks
102
Table 6 Source of funding and Funding Department of Animal

Pattern of DIDF Husbandry and Dairying
Table 7 Livestock CensusIncrease over the Press Information Bureau,
previous census Delhi (Release ID: 1588304)
Table8 LiveStock Head Count Ministry Of Animal
Husbandry and Dairying
Bibilography/References
[1] https://en.wikipedia.org/wiki/Financial_inclusion
[2] https://www.worldbank.org/en/topic/financialinclusion/overview.
[3] https://www.statista.com/topics/4868/agricultural-sector-in-india.
[4] https://brainly.in/question/13262085
[5] http://www.impactinsurance.org/sites/default/files/Paper_%20UPU_ILO_Financial_Incl
usion_Postal_Netw orks.pdf
[6] https://microinsurancenetwork.org/community/blog/insights-and-perspectives/inclusive-
livestock- insurance-best-practice-pitfalls-and
[7] https://vikaspedia.in/agriculture/livestock/role-of-livestock-in-indian-economy
[8] https://www.business-standard.com/about/what-is-financial-inclusion
[9] https://www.ideasforindia.in/topics/money-finance/financial-inclusion-in-india-
progress-and-prospects.
[10] https://financialservices.gov.in/financial-inclusion
[11] http://lib.unipune.ac.in
[12] https://pmjdy.gov.in/about
[13] https://www.worldbank.org/en/topic/financialsector/brief/agriculture-finance
[14] https://www.sourcetrace.com/blog/smallholder-farmers-and-financial-inclusion/
[15] https://www.rbi.org.in/commonperson/English/Scripts/Notification.aspx?Id=2311
[16] https://en.wikipedia.org/wiki/Pradhan_Mantri_Kisan_Samman_Nidhi
[17] https://www.ndtv.com/india-news/pradhan-mantri-kisan-samman-nidhi-what-is-pm-
kisan-scheme-2343657
[18] https://pmjdy.gov.in/files/QuickLinks/guide.pdf
[19] https://pmjdy.gov.in/
[20] https://pmjdy.gov.in/about
[21] https://www.india.gov.in/spotlight/pradhan-mantri-jan-dhan-yojana-pmjdy#tab=tab-1
[22] https://www.nabard.org/about-departments
[23] https://www.longdom.org/proceedings/role-of-agriculture-in-the-global-economy
[24] https://censusindia.gov.in/tables_published/a-series/a-series_links/t_00_009.aspx
[25] https://rbi.org.in/scripts/AnnualReportPublications.aspx?Id=1288Retrieved From RBI
annual Report
[26] https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11959Retrieved From
RBI annual Report
[27] http://journalijcar.org/sites/default/files/issue-files/2951-A-2017.pdf
[28] https://en.wikipedia.org/wiki/Priority_sector_lending
[29] https://enam.gov.in/web/Retrived from Small Farmers agribusiness Consoritium
Department of Agriculture Cooperation and farmers Welfare Ministry of Agriculture
and farmers Welfare,Government Of India
[30] http://dahd.nic.in/didf
[31] http://dahd.nic.in/kcc
[32] http://dahd.gov.in/national_livestock_mission
103
[33] https://www.slideshare.net/IFMRCIRM/livestock-insurance-lessons-from-the-indian-
experienceRetrieved from Institute for financial Management and Research Centre For
Insurance and RiskManagement
[34] http://dahd.nic.in/about-
us/divisions/statistics#:~:text=Animal%20Husbandry%20Statistics-
,ANIMAL%20HUSBANDRY%20STATISTICS,defined%20reference%20point%20of
%20time.
[35] http://www.nabard.org/auth/writereaddata/tender/1608180417NABARD-Repo-
16_Web_P.pdf
[36] Ankit Gupta (July 2018) ―Enabling Business of Agriculture via New Financing
Technologies‖ Journal of Agriculture and Allied Sciences
[37] Semanti Choudhury. (2018). ―FINANCIAL INCLUSION AND AGRICULTURAL
DEVELOPMENT IN INDIA.‖International Journal of Research -Granthaalayah,
6(9), 421-433. https://doi.org/10.29121/granthaalayah.v6.i9.2018.1254.
[38] UdhayaSweetline(2017) „Priority sector lending in India- An analysis‟, International
Journal of Current Advanced Research,
[39] 06(11), pp. 7829-7831. DOI: http://dx.doi.org/10.24327/ijcar.2017.7831.1236
104
Financial Inclusion in India – A Divergent Analysis
Dr. P. Srilatha
Lecturer in Commerce,
TSWRDCW, L.B.Nagar
Dr. Aleti Padma

Lecturer in Business Administration,
TSWRDCW, Sangareddy
Abstract
The role of financial development in the economic development of a country is

well recognized in literature both theoretically and empirically. A developed financial
system broadens access to funds; conversely, an underdeveloped financial system
narrows down access to funds which restricts the number of economic activities to be
financed and hence, retards the growth process. Therefore, strengthening increase of
their outreach covering the maximum possible population in a region can provide
necessary impetus to growth. Financial inclusion is identified as an essential
cornerstone of socio-economic development.
This paper made an attempt to analyse population group wise variation of the
key indicators of financial inclusion i.e. Branch Penetration, Deposit penetration and
Credit Penetration.
Key words: Financial inclusion, Branch penetration, Deposit penetration, Credit

penetration, socio economic development.
I. Introduction
Financial inclusion defined as the process of ensuring access to financial

services and timely and adequate credit where needed by vulnerable groups such as
weaker sections and low income groups at an affordable cost (Dr. C. Rangarajan
Committee (2008)). Financial inclusion is not a new trend in India. It has its existence
with creation of co-operatives in 1904. Since then various efforts have been done by
the Govt., RBI (Reserve Bank of India) and other regulatory bodies to boost the
financial inclusion in the country.
Nationalization of the Banks in 1969, establishment of Regional Rural Banks

(RRBs) in 1975, greater focus on social banking and rural credit, directives to priority
sector lending, interest rate ceilings, subsidies through banks, no-frills accounts,
simplification of KYC norms, SHGs bank linkage programme, promotion of banking
reach through branchless BC/BF model, Pradhan Mantri Jana Dhan Yojana (PMJDY)
scheme and National social security schemes named Pradhan Mantri Jeevan Jyoti
Bima Yojana (PMJDY), Pradhan Mantri Suraksha Bima Yojana(PMSBY) and Atal
Pension Yojana (APY) are some of the prominent measures. After all these measures
105
also, some extent of the population is still financially excluded. To include all the
financially excluded in to the formal banking fold the Government of India announced
‘National Strategy for Financial Inclusion for India 2019-2024’to ensure the
formal financial services to the financially excluded and to broaden, deepen and
promote the financial literacy.
II. Review of Literature
In recent years notable growth is marked in terms of bank branch penetration in

India (Paramjit Sujlana Chhavi Kiran, 2018).Banking is a primary source to augment
financial inclusion. A well performing banking system is indicator of financial
inclusion achievement. Performance of banks is directly related to financial inclusion
(Priyanka Koorse et al, 2015). Financial inclusion has positive effect on banks
performance(Prince Asare Vitenu Sackey, Jiang Hong Li, 2019).Increase in bank
branches has positive effect on both credit and deposit penetration(Nitin Kumar,2010)
and MSME financing increases the deposit in the banks (Abubakar GarbaRazaq et all,
2018). There is disparity in credit penetration to farmer community (Small and Big)
and other agri-businesses. Banks must create new methods to reach rural India without
any variation (Gourav Vallabh & Suraj Chatrath, 2006).
III. Objectives
 To study the Population Group(Rural, Urban, Semi Urban and Metropolitan)

and Bank Group-Wise Deposits of Scheduled Commercial Banks
 To study the ownership category of Population Group(Rural, Urban, Semi
Urban and Metropolitan)gender-wise
 To study the population group and bank group-wise classification of
outstanding credit
IV. Methodology
Secondary data was used to study divergence of financial inclusion indicators.

Data has been collected from Reports of Reserve Bank of India. Rural, Semi Urban,
Urban and metropolitan category was used to study the population groups. Gender and
population group wise analysis was done in Deposit penetration. Population and bank
group wise data was analyzed to study credit penetration. Percentages were used for
data analysis.
106
V. Financial Inclusion in India
Table 1: Population Group and Bank Group-Wise Deposits of Scheduled Commercial BanksAccording to Type of Deposits-
March 2020
(No of Accounts in Thousands and Amount (Rs.Crore)
Bank Population No. of Current Saving Term Deposits

Group Group Offices No. of Amount No. of Amount No. of Amount No. of Amount
Name Accounts Accounts Accounts Accounts
1 2 3 4 5 6 7 8 9
Public Rural 28938 15991 38027 426646 590308 34418 477982 477054 1106317
Sector
Banks
Semi- 24746 16654 83876 416916 783873 42124 794163 475695 1661912
urban
Urban 18546 12288 122160 199912 707904 46391 1191407 258592 2021471
Metropol 19268 15916 292729 181952 936611 60677 2556981 258546 3786321
itan
ALL 91498 60849 536792 1225427 3018696 183610 5020532 1469886 8576021
INDIA
Foreign Rural 15 1 1032 9 59 3 5697 13 6787
Banks
Semi- 7 2 320 11 189 3 4067 17 4577
urban
Urban 41 25 8290 258 4768 69 17402 353 30460
Metropol 249 840 203139 5208 64968 925 354857 6972 622964
itan
ALL 312 868 212781 5486 69984 1000 382023 7354 664788
INDIA
Regional Rural 15352 1652 4146 176568 155748 10263 100754 188483 260647
107
RuralBanks
Semi- 4783 938 2763 57066 60321 4472 55623 62476 118707
urban
Urban 1570 408 1973 11286 23277 2188 45093 13882 70343
Metropol 425 51 560 2209 5130 395 12035 2654 17725
itan
ALL 22130 3049 9442 247129 244475 17317 213505 267495 467422
INDIA
Private Rural 7200 1661 10585 31744 59548 4374 58866 37778 128999
Sector
Banks
Semi- 10880 3833 45932 58957 189833 9197 238149 71988 473915
urban
Urban 7355 4906 93475 55875 287925 12100 448057 72880 829457
Metropol 9538 10565 362510 91469 635114 23809 1547762 125843 2545386
itan
ALL 34973 20965 512503 238045 1172420 49479 2292834 308489 3977757
INDIA
Small Rural 812 26 70 1303 962 224 1670 1552 2703
Finance
Bank
Semi- 1618 86 312 5766 2676 652 6870 6504 9857
urban
Urban 1029 84 639 3808 3737 591 13366 4484 17742
Metropol 730 79 1217 2636 2908 568 28239 3283 32364
itan
ALL 4189 275 2238 13513 10284 2034 50145 15823 62667
INDIA
ALL INDIA 153102 86007 1273756 1729600 4515859 253441 7959040 2069047 1374865
5
108
From Table 1, it is evident that a majority of total deposits are from Public
sector banks with 1469886 accounts, amounting to Rs.8576021 crores ason March
2020. The number of deposit accounts of Private Sector banks and RRBs stood at
308489 and 267495 with the corresponding amount of Rs. 3977757 crores and Rs.
467422 crores. Thus, more than 70% of the deposit accounts emanate from public
sector banks. The rural group has highest number of accounts in public sector banks
and RRBs, possessing more number of savings account holders. The metropolitans
accounted for higher deposit amount in all the bank groups except RRBs. The Private
sector banks and RRBs accounted for 15% and 13% of total number of deposits
respectively. The amount of deposits mobilized by the private sector banks is more
than that of the RRBs. From population group-wise analysis, it is quite apparent that
RRBs opened more number of deposit accounts and procured highest amount in rural
segment. Among the deposits, savings account recorded high both in terms of number
of accounts. Nevertheless, the term deposit amount is more among all the bank groups
except in case of RRBs, whose savings deposit amount is higher. It is interesting to
note that the current and term deposit amounts of foreign banks are higher in rural
than that of semi-urban segment.
Table 2: Population Group-Wise Deposits of Scheduled CommercialBanks

According to Broad Ownership Category-March 2019
(No of Accounts in Thousands and Amount (in Rs.Crore)
Population Individuals of which Female Others Total

Group No of Amount No of Amount No Of Amount No of Amount
Description Accounts Accounts Accounts Accounts
Rural 637368 1147185 212766 339910 30093 210108 667461 1357293
Semi-urban 553913 1459807 173782 450823 34934 600941 588848 2060748
Urban 316855 1664386 106462 553384 21893 1032667 338747 2697053
Metropolitan 346347 2816575 114969 959232 31317 3707339 377664 6523914
ALL INDIA 1854483 7087953 607980 2303348 118237 5551056 1972720 12639009
Table 2 displays the number of bank accounts and the amount held category-
wise with the banks as on March 2019. Of the total 1972720 accounts, 1854483 are
individual accounts (including Hindu Undivided Families with Rs. 7087953 crores) of
which female accounts number is 607980; and other entities (all other entities
excluding individuals) numbered to 118237 with Rs. 5551056 crores. Of 667461
accounts held in rural segment, the individuals accounted for 637368, out of which
212766 are females; and other entities being 30093. Although the deposit amount is
lowest in the rural segment, it can be observed that the number of individual accounts
registered is 94% of the total and the female accounts are about 30%. Table also
reveals that rural deposit accounts are 34%, semi urban 30%, urban 17%, and
metropolitan 19% of total deposits. It indicates the fact that the scheduled commercial
banks opened more number of accounts in rural compared to those in other segments,
thus, initiating the way towards financial inclusion.
109
Table 3: Population Group And Bank Group-Wise Classification of Outstanding Credit of Scheduled
Commercial Banks According to Occupation - March 2019
PUBLIC SECTOR BANKS FOREIGN BANKS PRIVATE SECTOR BANKS

OCCUPATION No. of Credit Amount No. of Credit Amount No. of Credit Amount
Accounts Limit Out- Accounts Limit Out- Accounts Limit Out-
standing standing standing
1 2 3 4 5 6 7 8 9
Rural 33109860 796651 554134 775179 11106 2985 12454210 204862 145602
Semi-Urban 33344437 1023970 818580 194144 11270 6881 17813303 506143 360804
Urban 14767926 1306203 962525 414413 62840 37874 22952377 968585 629345
Metropolitan 9382559 4930812 3496462 5044664 628513 365094 44237843 3607976 2174182
OCCUPATION REGIONAL RURALBANKS SMALL FINANCE BANKS ALL SCHEDULED

COMMERCIAL BANKS
No. of Credit Amount No. of Credit Amount No. of Credit Amount
Accounts Limit Out- Accounts Limit Out- Accounts Limit Out-
standing standing standing
10 11 12 13 14 15 16 17 18
Rural 19109606 234265 196671 1129910 4901 3485 66578765 1251784 902877
Semi-Urban 5405514 74761 64104 4532484 25671 18112 61289882 1641815 1268481
Urban 980872 28017 19755 4685429 28240 19835 43801017 2393884 1669334
Metropolitan 130296 5349 3964 1836873 23747 17201 60632235 9196398 6056903
From Table 3, it can be seen that the number of accounts, credit limit and outstanding amount are recorded high in public
sector banks, followed by RRBs, private sector banks and foreign banks among the rural segment. But, across other segments, the
credit limit and outstanding amount is higher in private sector banks than that of the RRB
110
Thus, all SCBs (scheduled commercial banks) except foreign banks extended
more credit limit to agriculture, industry and trade in rural and semi-rural regions. The
foreign banks credit limit is higher in personal loans. All SCBs, except private sector
banks extended more credit limit to agriculture, personal loans semi-rural regions. In
urban segment, all SCBs credit limit is extended more to personal loans except small
finance banks, which focused on finance and agriculture occupations. In metropolitan
segment too, similar pattern can be observed (excepting small finance banks). Besides,
the SCBs seem to grant credit limit to agriculture and the industry occupations as well.
VI. Conclusion
At the end of March 2020, there are 599,217 banking outlets in villages. There
are 574 BSBDA (255 through branches) million accounts with Rs. 1410 Billion (Rs.
878 Bn from branches) and the remaining from BCs. ICT-A/Cs-BC-Total transactions
are 2084 (Number in million) amounting to Rs. 5884 Bn. Thus, the progress of
financial inclusion need not be over emphasized.
In order to strengthen the BC Model, during the year 2019-20, more than
ninety-five thousand BCs have been certified by IIBF (Indian Institute of Banking and
Finance). Banks have facilitated the delivery of financial services at BC outlets by
enhancing overdraft limit in settlement accounts, providing financial support and
educating BCs on the precautionary guidelines.
A two-tier Train the Trainers (ToT) programme titled „Skill Up-gradation for
Performance of Resources – Business Correspondents (SUPER-B)‟ was designed for
effective delivery of financial inclusion. As on July 31, 2020, nearly 39,000 rural
branch managers were trained.
A mid-line survey on the pilot project of financial literacy suggested broader

reach of the programme with active participation of the respondents. As on March
2020, 1,467 Financial Literacy Centres (FLCs) were operational in India and 1,48,444
financial literacy related activities were conducted
National Strategy for Financial Education (NSFE) laid thrust on developing

financial literacy modules with specific target audience orientation (e.g. children,
young adults, women, new workers/ entrepreneurs, senior citizens etc.) by March
2021. The Second National Strategy for Financial Education (NSFE: 2020-25)
focused on the adoption of a multi-stakeholder approach in empowering different
sections of the population to develop adequate knowledge, skills, attitude and
behaviour for better financial planning in future. Financial literacy plays a key role in
utilization of available financial services, in turn financial inclusion will be fostered at
a progressive rate.
111
References
[1] https://www.academia.edu/45456897/Financial_Inclusion_and_Banks_Performance_An
_Empirical_Study_
of_10_West_African_Countries_Using_Panel_Cointegration_FMOLS_Regression_Met
hodology
[2] Kumar, Nitin. "Financial Inclusion and it Determinants : Evidence from India." Journal
of Financial Economic Policy (Vol.5,Issue 1,2013): pp 4-19.
[3] Chatterjee, Shanker. Longitudinal Study on Socio-Economic Aspects at Bankura,
West Bengal . National Institute of Rural development and Panchayati Raj, 2016.
[4] A Study on Banking Penetration in Financial Inclusion ―With Special Reference to
Tamilnadu‖International Journal of Engineering and Management ResearchVolume-5,
Issue-1, February-2015Page Number: 37-44.
[5] Annual Reports of RBI
[6] Report on Trend and Banking Progress in India, Various Issues.
[7] Report on „National Strategy for Financial Education 2020-25‟
[8] RBI Report on „National Strategy for Financial Inclusion (NSFI): 2019-2024‟
112
Financial Inclusion of Rural India: Challenges & Opportunities
Prof. Vandana Samba

Director Research &Training
St. Joseph‟s Degree &PG College,
Dr.Venkata Siva Kumar

Controller of Examinations (PG)
St. Joseph‟s Degree &PG College,
Agriculture is the backbone of the Indian Economy; it will continue to be

paramount. We need modern agriculture that is driven the latest technologies .India
which is a developing country has its eyes set on becoming $5-trillion economy by
2025.To achieve this target the Indian economy needs to grow @9% per year .The
aim of the Indian Government is becoming ―Atman nirbhar Bharat‖ or a Self-Reliant
India is another goal .The Indian Government announced a package to the tune of Rs
20 lakh crore to revive the Economy .However, one important area that really needs to
be focused upon is rural inclusion, Which helps in achieving the above said dual
objectives.
The rural economy contributes nearly 25-30% to the GDP. Agriculture was the
primary source of income and employment in rural India, but now it is displaced by
non-farm and other non-agricultural sectors. Thus, for bringing the rural revitalisation,
we need a transformative approach that will make our rural areas and better place to
work and live in.
Affordable and appropriate access to financial services is increasingly being

recognised world over as a key driver of economic growth, poverty alleviation and
prosperity. Access to formal finance can boost job creation, reduce vulnerability to
economic shocks and increase investments in human capital. At a macro-level, greater
financial inclusion can support sustainable and inclusive socio-economic growth for
all.
I. Current Scenario: Challenges& Opportunities

There a lot of challenges ahead for revitalising the county into fully digital and
financial inclusion would remain a dream unless the followings are addressed. The
main focus should be on the providing basic infrastructure facilities for accessing
basic banking facilities and awareness should be created regarding the various
schemes. According to the secondary research sources 87% of rural population uses
mobile phones to access internet services .which shows that there is a huge
opportunity to tap into this segment of people.
Another important area which is to be focused is building a robust Technology

Infrastructure. Though the usage of mobile devices is high in rural areas, many if them
113
still lack proper internet connections. In this connection, Bharat Net Project will be
able to boost digital inclusion in Indian Villages as it seeks to provide internet
connectivity to 2,50,000-gram panchayats in India. In addition digital banking had
gained a popularity in the urban areas but because of the lack of digital literacy it has
not been able to gather steam in rural India.
India needs modern agriculture that is driven by latest technologies and

markets. Hence financial growth and inclusion needs to be driven by agro-based
industrialization. This requires investments to be made in post -harvest rural activities
like agro-processing .cold chains, packaging cold storage and their transport.
Private sector investments play a very vital role in creating a favourable

environment in rural areas, developing specific Agro -based „Special Economic
Zones‟ in villages will boost the economies and increase the employment
opportunities.
More jobs can be increased in rural areas by creating a strong linkage between
the farm and non -farm sectors of the economy. Through such linkages, the farm
sector will be able to produce market-oriented commodities, slash their transportation
costs, receive excessively remunerative prices at the farm gate and reduce farm
wastage.
II. MSME - Backbone of Indian Economy
MSMEs are very important for rural industrialization as their products

constitute a large share of exports and generates a lot of employment opportunities for
millions of workers. MSME units contribute more than 90% of total industrial units in
India. To promote national economy Government is taking several steps to boost
manufacturing sector. Government‟s intention towards industrialization can be
analysed through formation of various institutions for policy designing and allocation
of funds through Five Year Plans. Formation of National Manufacturing
Competitiveness Council by Government suggest ways to enhance competitiveness in
the manufacturing sector to make sector globally competitive. Government has
announced National Manufacturing Policy for raising the share of manufacturing to
25% of GDP by 2022. Make in India announced in September 2014 by New
Government aims at to make India a Global Manufacturing hub.
III. Role of Panchayats
To raise the awareness, the panchayats with a wide coverage can paly a vital
role in enabling financial inclusion of rural India by spreading the financial literacy.
IV. Challenges
Despite the various measures that have been under taken by various take
holders in strengthening financial inclusion in the country, there are still critical gaps
114
existing in the usage of financial services that require attention of policy makers
through necessary co-ordination and effective monitoring.
Inadequate Infrastructure: Limited physical infrastructure, limited transport

facility, inadequately trained staff etc., in parts of rural hinter land and farflungareas
of the Himalayan and North Eastregionscreatea barrier to the customer while
accessing financial services.
Poor Connectivity: With technology becoming an important enabler to access

financial services, certain regions in the country that have poor connectivity tend to be
left behind in ensuring access to financial services thereby creating a digital divide.
Technology could be the best bridge between the financial service provider and the
last mile customer. Fin tech companies can be one of the best solutions to address this
issue. The key challenge that needs to be resolved would be improving teleand
internet connectivity in the rural hinterland and achieving connectivity across the
country.
Convenience and Relevance: The protracted and complicated procedures actasadeter

rent while on-boarding customers. This difficulty is further increased when the
products are not easy to understand, complex and do not meet the requirements of
the customers such as those receiving erratic and uncertain cash flows from their
occupation
Socio-Cultural Barriers: Prevalence of certain value system and be liefs in some

sections of the population results in lack of favourable attitude towards formal
financial services. There are still certain pockets wherein women do not have the
freedom and choice to access financial services because of cultural barriers.
Product Usage: While the mission-based approach to financial inclusion has resulted
in increasing access to basic financial services including micro insurance and pension,
there is a need to increase the usage of these accounts to help customers achieve
benefits of relevant financial services and help the service providers to achieve the
necessary scale and sustainability.
Payment Infrastructure: Currently, majority of the retail payment products viz.,

CTS, AEPS, NACH, UPI, IMPS etc. Are operated by National Payments Council of
India (NPCI),a Section(8) Company promoted by a group of public, private and
foreign banks. There is a need to have more market players to promote in novation &
competition and to minimize concentration risk in the retail payment system from a
financial stability perspective.
V. Conclusion
Financial inclusion in the rural economy of India has a special importance. But
it is clearly reveals that, even though the efforts are being made by the RBI and the
government of India for financial inclusion in the rural economy of India, it did not
115
succeed to that extent. No doubt some efforts are being made for the financial
inclusion in the rural economy of India but the expected and desirable success we did
not get. There is an urgent need for sincere, honest and rigorous efforts for the
financial inclusion in rural area of India necessary for rural development. A separate
plan with due provision in the union budget is the urgent need of the hour.
References
[1] Anand Sinha (2012), ―Financial Inclusion and Urban Cooperative Banks‖, edited
transcript at the launch of the financial inclusion program of COSMOS Bank at Pune.
[2] Chakrabarty K.C (2011), ―Financial Inclusion and Banks: Issues and Perspectives‖,
RBI Bulletin, November, 2011.
[3] Chakrabarty K.C (2011), ―Financial Inclusion: A Road India Needs to Travel‖, RBI
Bulletin, November, 2011.
[4] Chakrabarty K.C (2012), ―Empowering MSMEs for Financial Inclusion and Growth –
Role of Banks and Industry Associations‖, address at SME Banking Conclave 2012.
[5] Chakrabarty K.C (2013), ―Financial Inclusion in India: Journey So Far And the Way
Forward‖, Key note address at Finance Inclusion Conclave Organised by CNBC TV 18
at New Delhi.
[6] Chakrabarty K.C (2013), ―Revving up the Growth Engine through Financial Inclusion‖,
address at the 32th SKOCH Summit held at Mumbai.
[7] Leeladhar V (2005), ―Taking Banking Services to the Common Man – Financial
Inclusion‖, Commemorative Lecture at the FedbankHormis Memorial Foundation at
Ernakulam.
[8] Mira Mendoza (2009), ―Addressing Financial Exclusion through Microfinance: Lessons
from the State of Madhya Pradesh, India‖, The journal of International Policy Solutions,
Vol 11Narayan Chandra Pradhan (2013), ―Persistence of Informal Credit in Rural India:
Evidence from All-India Debt and Investment Survey and Beyond‖, RBI Working
Paper Series, WPS (DEPR): 5/2013
[9] Radhika Dixit and M. Ghosh (2013) ―Financial Inclusion For Inclusive Growth of India
– A Study‖, International Journal of Business Management & Research, Vol.3, Issue 1,
pp. 147-156.
[10] Rangarajan C (2008), ―Report of the Committee on Financial Inclusion‖
[11] Raghuram G. Rajan (2009), ―A Hundred Small Steps - Report of the Committee
on Financial Sector Reforms‖.
[12] Reserve Bank of India - ―Annual Reports and „Report on Trend and Progress of
Banking in India‖, various issues.
[13] Reserve Bank of India - ―Annual Reports‖, various issues, Mumbai.
[14] Sadhan Kumar Chattopadhyay (2011), ―Financial Inclusion in India: A Casestudy of
West Bengal‖. RBI Working Paper Series, WPS (DEPR): 8/2011.
[15] Sarkar A.N (2013), ―Financial Inclusion: Fostering Sustainable Economic Growth in
India‖, The Banker, Vol. VIII, No.4, pp.44-53.
[16] Sarkar A.N (2013), ―Financial Inclusion Part-II: Fostering Sustainable Economic
Growth in India‖, The Banker, Vol. VIII, No.5, pp.32-40.
[17] Status of Microfinance in India: 2010-11, NABARD
116
Government Funding Schemes: An Aid for Rural Entrepreneurs
Ms. Smriti Nagaria

Research Scholar,
PT (Management)Osmania University,
Hyderabad Assistant Professor
St. Joseph‘s Degree & PG College
Abstract
“Don’t worry about being successful but work toward being significant and the
success will naturally follow”
Oprah Winfrey
An entrepreneur is a person who comes up with new ideas to start a business

and has ability to undertake risk in order to make profit. Management, leadership
skills and team building abilities will help them become a successful entrepreneur who
can manage their business effectively. Entrepreneurship is the art of starting a
business which offers new products, process or services and contributes to the socio
economic development and employment opportunities. It is highly risky and
rewarding as it generates wealth, economic growth and innovation. Once a business is
set up the need for capital and labour is essential in order to produce goods or render
services. India is a developing country with an average GDP growth rate of 7% for
over one decade whereas the primary sector including agriculture, forestry and fishing
has major population of 68% with average annual growth rate of 4 % which is leading
to disparities between urban and rural livelihood. Rural communities have good
opportunities and resources which are viable and sustainable and lead to developing
entrepreneurial activities in rural areas. Rural entrepreneurship is gaining immense
significance in the economic development of a nation as well as development of
industries which utilizes the resources and facilitates self employment. The chapter
focuses on the significance, need, types, various schemes offered to rural
entrepreneurs. At the end the problems and prospects along with successful stories of
rural entrepreurs is also discussed which will help them to nourish as job creators
instead of becoming job seekers which has a bright future.
Key Words: Abilities, Business, employment, growth rate, risk and reward.
I. Introduction
Rural entrepreneurship is gaining popularity as it contributes to the

employment opportunities, upliftment of economic conditions and reduces poverty. It
ensures that rural economy grows and develops which in turn develops the nation.
Government is also extending help to support and promote rural entrepreneurs.
117
II. Meaning of Rural Entrepreneurship
It refers to entrepreneurial activities carried on by establishing industrial and

business units in rural areas.
III. Definition of Rural Entrepreneurship
Rural entrepreneurship is defined as entrepreneurship whose roots lie in

the rural areas but has a lot of potential to drive various endeavors‘ in business,
industry, agriculture, etc. and contribute to the economic development of the country.
IV. Significance of Rurall Entreprenueship
Its plays a significant role in uplifting socio economic status of a country

thereby developing rural areas. It plays a key role in:
1. Generating employment opportunites - A wide range of employment

opportunities is offered to rural community and it will benefit them in a positive
way.
2. Utilization of resources – proper utilization of resources help in maximizing
profits.
3. Growth and development of the economy – this is possible through motivation
to the youth and talented people to come up with new ideas in rural sector.
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V. Need for Rural Entrepreneurship
VI. Types of Rural Entrepreneurship
According to the industry they are classified into:
1. Agro Based Industries – it deals with the processing of agro products such asoil
products and dairy products.
2. Forest Based Industries – they deal with wood and bamboo products
3. Mineral Based Industries – it deals with cement industries and stone crushing
4. Textile Industry – they deal with colouring and weaving
According to Ownership:
1. Individual Entrepreneurship
2. Group Entrepreneurship
3. Cluster formation
4. Co-operatives
VII. Schemes for Rural Entrepreneurship

1. A Scheme for promoting innovation ,Rural Industry & Entrepreneurship
(ASPIRE): This scheme focuses on creating new job opportunities so that
unemployment can be reduced and promotes innovation by setting up incubators
through research institutes in agro rural industries Prime Minister‘s which will
strengthen MSME sector.
2. Prime Minister’s Employment Generation Programme(PMEGP): This is a

credit linked subsidy scheme which provides self employment opportunities by
establishing Micro Enterprises in nonfarm sector helping the artisians. This
scheme was implemented by Khadi & Village Industries Commission at National
Level.
3. Credit Guarantee Scheme for Micro and Small Enterprises – This facilitates
collateral free credit facility up to 100 Lakhs provided for MSME units and 75 %
of the loan amount is guaranteed by the trust.
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4. Credit Linked Capital Subsidy Scheme – This scheme provides capital subsidy
up to 15 lakhs for technology upgradation of plant and machinery of small
enterprises.
5. Market Development Assistance – this scheme provides financial assistance to

for khadi institutions to improve production process.
6. Development of Production Infrastructure – this scheme provides modern

infrastructure leading to enhancement of quality and productivity.
VIII. Impact of Covid 19 on Rural Enterprises
The sudden outbreak of Covid 19 has an impact on the following variables:
1. Livelihood: There is a decline in income due to crisis leading to unemployment

and declining demand for products. Most of the people are employed in
agricultural farms which may be owned or hired where employment opportunities
is provided based on the need of work.
2. Health: Covid 19 has a huge impact on the health of the people as most of them
were not aware of this spread of deadly disease and had no access to doctors for
which people felt that their lives were worstly affected.
3. Support from Government: Support in form of cash, grocery items was given and
loan concession provided by Government.
IX. Success Stories of Rural Entrepreneurs
1. Sheetal Mehta Walsh – She has founded Shanti Life, a micro finance platform
which provides loan at low rate of interest i.e 12 % to the poor in Gujarat village
and slums. It also provides financial training, mentoring and has now created a
online market to sell goods.
2. Saloni Malhotra – She is the founder of first BPO in the country where it
provides employment to untrained inexperienced youth of rural areas of
Tamilnadu and Karnataka.
3. Pabiben Rabari -She has started an enterprise that empowers women artisan who
make bags, cushion covers, quilts .She has created employment for 60 women who
have become strong and independent.
4. Mansukhbhai Jagani hailing from a poor family of a farmer developed a

motorcycle based tractor for India’s poor farmers that is both cost efficient
and fuel efficient. He also developed an attachment for a motorbike to customize
which is a multipurpose tool bar called Bullet Santi which can carry out various
farming activities like furrow opening, sowing, inter- culturing, and spraying
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operations. This innovation led to increase in productivity, turned out to be a

blessing for hundreds of farmers in India. Bullet Santi has won a patent in India and
US.
5. Kailash Katkar was born in small village of Rahimatpur who quit her studies
as he had to help her family and started working in calculator repair shop. He
became proficient in the repairing of popular office gadgets and other appliances.
In 1993, he took the big step and founded CAT computer services, now
famously known as Quick Heal Technologies which employs more than 1200
workforce with a customer base of 17 million across the world.
6. Gyanesh Pandey had the idea to generate power from renewable farm waste
(Husk). The rice Husk was used to supply power to micro power plants which
generated electricity. A year later a company called Husk Power Systems (HPS)
was set up which has gone on to set up numerous power plants across different
villages.
X. Innovative Solutions for Rural Entrepreneurs
1. Ampere Vehicles: It is an electronic vehicle based in Coimbatore that is used by

retailers to distribute water and milk to villagers.
2. iKure Techsoft: It is a network of health care centres where doctors are
available and has a software plalt form which all health records are stored.
3. Nanopix: This is a product used by farmers to sort out agricultural products
using Image and video processing.
XI. Prospects of Rural Entrepreneurship
1. Rural entrepreneurs receive lot of support and motivation from rural people.
2. Setting up businesses in rural areas require less amount of money.
3. Government support rural entrepreneurs through the policies and subsidies.
4. Availability and utilization of resources which are farm based.
5. Good employment opportunities are provided for rural folks
XII. Challenges of Rural Entrepreneurship
1. Lack of infrastructure facilities

2. Difficulty in cash collection
3. Lack of technical knowhow
4. Management difficulties
5. Lack of training services
6. Financial problems
XIII. Conclusion
Rural entrepreneurs are setting up an example for rural folks who are helping
rural people accomplish their dream of setting up enterprises and generating
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employment. Government is also helping them by offering various schemes which is

eliminating poverty and contributing to the rural development.
References
Websites
 https://economictimes.indiatimes.com/five-entrepreneurs-offering-innovative-
solutions-in-rural-india/articleshow/26478096.cms?from=mdr
 https://www.ukessays.com/essays/economics/opportunities-and-challenges-for-rural-
entrepreneurship-in-india-economics-essay.php
 https://liftmystartup.com/rural-entrepreneurship/
 https://www.slideshare.net/MadhusudhanGoud/rural-entrepreneurship-55403827
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122
Micro Finance for Women Micro-Entrepreneurship
Mrs. Mamatha
Assistant Professor.
Mahalaxmi K
Student
I. Introduction
―THERE IS NO FORCE POWERFUL THAN A WOMEN DETERMINED TORISE.‖
Women today are eternally dynamic and certainly there isn‘t a doubt in the fact
that feminism has spread its wings all over. So, did it even for budding women
entrepreneurs all over to incredibly blossom into self-relied and self-dependent pillars
of the corporate sectors as well.
The twenty first century has seen an innumerous number of women rising
beyond expectations to break barriers and register themselves as strong willed
entrepreneurs of the new generation.
And more to the bliss of the world, the gen Z and alpha generation have
exposure to so many facilities to make these iconic success tales a regular household
one to cater to every woman‘s dreams. And undoubtedly micro-finance is one of
them.
If a startup idea is the foundation to a successful business, then it‘s the finance
which holds rest of the building erect and strong. We are blessed with a youthful
country where talent and innovation are no less but what is lacked is the mainstream
channelization of such ideas into big corporate plans. And on an obvious note, to do
any sorts of such moves irrespective of it being a big or a small one money plays the
big game.
Capital is that part of wealth which is often devoted to obtaining future wealth.
So, we need to make smart and wise moves and borrow in order to start up on
something very carefully. Calculative steps always fetch hefty returns but even if we
go down well with taking it who is the noble soul to lend it? However, this isn‘t
anymore an excuse for the women today. Multiple gates of micro finance have opened
for the folks outside to start up their business. As such, all of these is opened to every
section of the society but however the women stratum has benefitted the best out of
these. A massive change is clearly evident in the way a woman experiences her
lifestyle variation.
123
II. Objectives of the Study
 To understand the behavior of women entrepreneurs

 To analyse the important factors influencing the entrepreneurial nature of
womenin businesses
III. Literature survey
Prakash Goyal (2011) addresses the various obstacles faced by women

entrepreneurs apart from their routine challenges related to education, family issues,
women issues, etc. He points out that women lack self-confidence, and have outdated
social outlookwhich are the hurdles for the entrepreneurship.
Vijayakumar, and Jayachitra (2013) opined that women entrepreneurs are on

par with men entrepreneurs who are very inspirational and challenging in overcoming
economic problems. Women are expected to not only have entrepreneurial skills, but
also proficiency skills to survive and sustain. Only a few women are benefited by the
various governmetal programmes, as they lack proficiency skills.
Devpriya, Dey (2014) studied the various factors which influence the work-
family life balance of women entrepreneurs under the scheme called Start up India. He
concluded that the various demographic factors such as their ages, marital status, their
education levels influence the abilities of women entrepreneurship, because they have
responsibilities of both family and business.
Rizvi, A. F., & Gupta, K. L. (2009). & Zhang, Z., Zyphur, (2009) observed
that in India, women entrepreneurs have gender inequalities which still exist. In
contrast, they say that the situation is different in developing nations where majority
of women entrepreneurs do well in balancing entrepreneurial and familial
commitments.
IV. Research Methdology
It is a conceptual paper drawing theories with concepts based on literatures

available and hence it a descriptive study
V. Discussion
When we talk about a woman being independent, if she is effortlessly able to

not shoulder stress relating to gathering finance for her start up, well that‘s when she
is actually independent.
Looking at it from the corporate angle, well certainly all the big houses
involved in earing bread and butter through lending money and receiving a piece of
interest on it obviously try to expand their business. During the course of which they
try to make every possible sector of the society their target market either by one way
124
or the other. Let‘s say just one of those ways is by simply promoting women
empowerment and attracting the female section of the society into their business.
Nevertheless, as long as it has its own effect of positive impact on the society its fair
enough.
When we talk about budding entrepreneur, we don‘t intend to talk about a

young girl sitting with a lantern in middle of the thick vicious cycles of poverty try to
figure out the next software gloom up to bring in the revolution to define the future. A
budding entrepreneur in our context is also a courageous woman who chooses to
proudly make 12 coins of money by herself with hard work and honesty even if it was
less and trying to define independency her own way.
It could simply be a 35-year middle aged woman who wants to set her own
tailoring store and make a living. Now, there might rise a doubt that is it that
necessary to talk in depth about the micro finance to such micro set ups of these micro
entrepreneurs? Well, it is certainly important as micro finance has its own long history
which has its references from the traditional and poisonous vicious cycles of poverty
which lived on the massacre of several tender lives and ideas for many years now.
The non-financial institutional finance has created every sort of havoc it can in
the households and families of the poor. The lenders of such finance often charge
unreasonable amounts of interest and take ugly advantages of the helpless situation of
the uneducated people. They trap these poor lives into the unescapable debt trap and
the relief from these traps even go up to an extent of merciless sacrifice of lives as
well. So, when we glorify the finance given by financial institutions, we actually talk
in praise of an initiative which helps the poor to come out or not fall into such debt
traps.
In today‘s world, digitalization has become such a key part of daily agenda that
it often decides the lifestyle of a person. With government trying hard to make the
country a digital one with having digitalization in every house it has actually educated
many houses the know how‘s of different walks of lives. And also, it has taught them
with many opportunities they can exploit to have a better future.
Often people never used to make optimum use of such opportunities as they
feel the complex formalities of paper work isn‘t that feasible for them to complete as
they are not that equipped with knowledge and more importantly this population
largely owes to the massive rural sector and can‘t dwell much with the urban policies.
In such rural households, the little bit formalities are often done by the men so no
exposure is given to the women but now due to the finance given by the financial
institutions specifically to the female gender, women nowadays get educated with
several know how‘s of life.
What makes micro finance amazing is the fact that it doesn‘t demand any
collateral. So now a will to live a respectably independent life and a desire to make it
big in future is what acts as a collateral to acquire micro finance in order to invest it in
125
any kind of income generating activity to support a living. Well, all of this is just
micro credit which is a tiny part of the complex micro finance. This economic
empowerment is expected to generate increased self-esteem, respect and other forms
of empowerment for women beneficiaries. Involvement in successful income-
generating activities should translate into greater control and empowerment.
VI. Conclusion
The conceptual framework of women entrepreneurship is the empowerment

through micro finance which includes accessibility for loans, non-financial services
and loan repayment services. We see that the Governments of various nations make
all efforts to make women empower through various entrepreneurship schemes. But it
is the cultural background and the social background which make them to be
entrepreneurs and take it forward to be successful.
Bibliography
[1] Devpriya, Dey (2014),The Challenging Factors for Women Entrepreneurs in

Blending family & Work, European Academic Research · - Vol. II, Issue 6, September
2014
[2] Prakash, Goyal (2011) ―Women Entrepreneurship in India: Problem and Prospects‖.
International Journal of Multidisciplinary Research Vol.1 Issue 5, September 2011,
ISSN 2231 5780.
[3] Vijayakumar, and jayachitra (2013) ―Women Entrepreneurs in India: Emerging issues
and challenges‖. International Journal of Development Research Vol. 3, Issue, 04, pp.
012-017, April, 2013, ISSN: 2230- 9926.
[4] Rizvi, A. F., & Gupta, K. L. (2009). Women entrepreneurship in India – problems and
prospects. OORJA Journal of Management and I.T., 7(2), 35–41.
[5] Zhang, Z., Zyphur, M. J., Narayanan, J., Arvey, R. D., Chaturvedi, S., Avolio, B. J.,
Lichtenstein, P., & Larsson, G. (2009). The genetic basic of entrepreneurship: Effects
of gender and personality. Organizational Behaviour and Human Decision Process, 110,
93–107.)
126
Financial Inclusion- A Retrospection
Dr. Sindhu Varghese

Assistant professor,
Loyola Academy
Secunderabad.
Abstract
The distance dream of Financial Inclusion is no more elusive to Indian

continent. The government of India has robustly trying to decrease the gap between
the haves and have-nots by various initiatives. The purpose of this paper is to enlist
the benefits and the challenges faced in the implementation of financial inclusion. The
worldwide reports have shown a considerable improvement. The proportion of the
financially included population grew from 54% to 81%.Between 2014 and 2018.
The access to financial services has increased considerably from 9 percent to 15
percent in Non-bank financial Institutions, 52 to 82 percent in banking facilities, 0.3
to 2 percent in mobile money, overall 55 to 83 percent in NBFI, bank and mobile
money. Financial inclusion is not a make up to hide the many pits and scares. It
should be addressed from the roots. The population has to be compulsory educated.
Infrastructure has to be improved. It is a long journey which the Indian has taken up.
Lot more has to be done; the real work takes time persistence from the side of all the
stake holders.
Key Words: Financial Inclusion, Banks, Non-bank Financial Institution, Mobile

Money.
I. Introduction
Financial inclusion is the access to useful and affordable financial products and
services that meet their needs – transactions, payments, savings, credit and insurance
– delivered in a responsible and sustainable way to individuals and businesses (The
World Bank). Financially included individuals are those who have an account in their
name with a full-service financial institution. Financial inclusion is created through
the uptake and use of individual accounts with institutions that offer financial services
like – savings, credit, money transfers, insurance and investment. Banks, mobile
money service providers, and nonbank financial institutions, such as deposit-taking
microfinance institutions (MFIs) and financial cooperatives are all part of Full-service
financial institutions
Benefits of Financial Inclusion
Bringing every citizen under the formal banking system, encouraging digital
payments and making financial services easily accessible and affordable for people
across the country are some key aspects of financial inclusion.
127
Benefits of Financial inclusion

 is an important benchmark of the socio-economic development of a country as
well as
 it enables of poverty alleviation &
 Boosts prosperity.
It bridges the gap between rural and urban by ensuring that people across the country
get
 access to easy online transactions,
 Banking facility and reliable daily payments.
Financial inclusion includes rural masses

 easy access to credit for small-scale revenue-generating businesses,
 opportunities to invest for unforeseeable risks and
 Insurance products.
Issues face for fulfillment of 100% financial Inclusion
Demand side or rural population
There are a few setbacks for the implementation of financial inclusion like
 Dearth of high -end and reliable technology and infrastructure.
 Lack of awareness and trust in digital payments
 affordable and reliable internet connectivity options
The other major Issues facing the implementation of financial inclusion is

 The large size of the unbanked population spread across vast geographies,
 Low skills,
 Unfamiliarity with technology,
 Limited access to credit,
 High loan default rates and
 Lack of financial literacy.
On the other hand

 The reluctance from the side of financial institutions to serve small value and
unprofitable customers,
 and a feeling of obligation
 The growing number of cyber security issues
 Lack of proper awareness and knowledge.
 Corruption,
 Inadequate rural banking infrastructure and
 lack of accountability
128
II. Objectives of the Study
To discuss the benefits of financial Inclusion

To study the challenges for implementation of financial inclusion in India
III. Literature survey
Rohit Kumar, (2021), states that investments in physical and social

infrastructure as well as in need-based products are required. Financial literacy plus
an innovative way of delivery is need of the hour so as to ensure inclusive growth of
the economy. Further, there has to be focus on tailor made tailor-made services.
Credit disbursement should be more flexible to attract the masses that are used to
informal sources of credit. A better delivery infrastructure efficient and secure should
be provided eliminating multiple layers of governance, leverage modern technology;
better participatory role should be encourages; procedures should be made simple. 1
In August 2014, ―Pradhan Mantri Jan-Dhan Yojana‖ (PMJDY) scheme was
announce by Prime Minister Narendra Modi to overcome the vices of black
money in the economy and provide 75 million Indians zero-balance bank accounts
who did not have accounts in banks. Therefore the people could have access to a
range of financial services, like pension, credit and insurance.
Bank accounts are the main parameters of financial inclusion.
The other initiatives by the Government of India were

 Digital financial services (DFS) through Aadhaar biometric identification
 Aadhaar cards are being linked with mobile phones, SIM cards and
financial service accounts to improve delivery of government schemes and
benefits2
IV. Research Methodology
The methodology undertaken for the present study is explanatory in

nature.Data and information collection for this study is done through secondary
sources i.e.,e-journals, ―Finclusion‖ survey reports, etc.
V. Discussion
The proportion of the financially included population grew from 54% to

81%. Between 2014 and 2018, It has been observed that over the years the
Government of India is making a conscious effort to increase the financial Inclusion
of the masses. We can observe it by the report of survey conducted by Inter Media
India FII Tracker surveys.The data ranges from year 2014 to year 2018. The access
has increased considerably from 9 percent to 15 percent in Non-bank financial
Institutions, 52 to 82 percent in banking facilities, 0.3 to 2 percent in mobile money,
overall 55 to 83 percent in NBFI, bank and mobile money.
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Figure 1: Access to Financial Services
Source: www.finclusion.org
Truly the benefits are what the world is opting as the best solution for removal
of poverty and differences amongst various groups like rural, urban, male female etc.
It is a commendable work the Government of India has taken up the herculean task of
opening Bank accounts to nearly 70 percent of the rural and poor population who did
not have the access not the intention or the means to . It has to go a long way to
nurture the country into financial inclusion. According to the data 81% of Indian
population has bank accounts, whereas only55 % is active registered bank accounts in
2018 according to the survey.
Figure 2: Comparison between Account holders with access to bank account and
active account holders
Source: www.finclusion.org
Financial inclusion is not like a make up to hide the many pits and scares. It
should be addressed from the roots. The population has to be compulsory educated.
Infrastructure has to be improved. Just opening Bank accounts of illiterate and
unaware rural population can only increase the financial inclusion percentage in the
world data metrics. The real work takes time persistence from the side of all the stake
holders.
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VI. Conclusion
Truly the benefits are what the world is opting as the best solution for removal
of poverty and differences amongst various groups like rural, urban, male female etc.
It is a commendable work the Government of India has taken up the herculean task of
opening Bank accounts to nearly 70 percent of the rural and poor population who did
not have the access not the intention or the means to . It has to go a long way to
nurture the country into financial inclusion. According to the data 81% of Indian
population has bank accounts, whereas only55 % is active registered bank accounts in
2018 according to the survey.
The Government can give special privileges and tax cut to the banks who take
up financial inclusion, like education and training the population in their vicinity for
accessing their accounts. It can be considered as a CSR activity in kind, and Income
tax rebates can be advocated to motivate the banks and other financial organizations.
Bibliography
[1] Rohit Kumar, (2021), Financial inclusion is still a challenge in India; here's how we can
face this issue.
https://www.cnbctv18.com/finance/financial-inclusion-is-still-a-challenge-in-india-heres-
how-we-can-face-this-issue-8625871.htm
[2] https://finclusion.org/country/asia/india.html#overview
131
Fintech for Financial Inclusion
Ms. S. Swapna
Assistant Professor
Department of Business Management
I. Introduction to Financial Inclusion
The World Bank defines financial inclusion as having ―access to useful and
affordable financial services‖ that make the day-to-day lives of individuals and
businesses easier. Having a bank account is considered to be the first step toward
financial inclusion because transaction accounts allow people to store, send and
receive payments.
At the same time, financial inclusion is necessary for small and medium
enterprises (SMEs): A high percentage of SMEs report limited access to credit as a
key constraint, especially throughout the Middle East, North Africa and Central Asia
regions.
If we look at the positive impact fintech has had on financial inclusion, two
key examples stick out: the reduction of costs in payments and the increased access
to credit for businesses in certain markets. Furthermore, digital payment services are
helping penetrate the financial inclusion landscape in more complex, rural
landscapes, like India, which has seen a boost.
Fintech is undeniably contributing to financial inclusion. It is successfully

expanding financial services and tools to those living abroad, in poorer households
and in underdeveloped regions, through low-cost digital payment services. Fintech is
also increasing access to credit for struggling businesses, which has a positive
economic impact. When businesses grow, more jobs become available.
The rapid growth of fintech players has helped in accelerating financial

inclusion and new age technologies like AI and ML will further quicken digital
adoption in the country, benefitting both the industry and the consumers in the
coming years, according to experts.
Key FinTech models that will impact financial inclusion
FinTechs face multiple challenges like lack of trust due to security concerns,
non-availability of physical branches, almost zero awareness of financial products
and lack of proper infrastructure. Nevertheless, with the shift in regulations to
provide more support to NBFCs and incumbent FinTech players, disruptive
innovation and increasing funding, FinTechs are becoming a key catalyst in the
expansion of financial inclusion. Below are a few key models of financial services
132
which can have an impact on financial inclusion, if they are adopted on a larger
scale:
 Incorporation of e-KYC or video KYC for faster processing by SHGs/

authorised kirana stores
 Instant money transfer (IMT) facilities or kiosks to facilitate IMT
 Alternative database for customer onboarding to approve loans and check
credit repayment history
 Smart villages and smart panchayats where kiosks are set up for banking
 Bank on bike initiative in which banking services are extended to remote
villages
 Initiation of no-frills account
 Electronic benefits transfer (EBT) schemes
Financial Inclusion in India
The financial landscape in India looks vastly different from that of other
regions: There are roughly 50,000 very small community banks and credit unions
spread across many rural areas. Anyone visiting these rural areas will quickly notice
there are no ATMs, no debit cards and limited services. The banks themselves serve
as merely a place for consumers to deposit and withdraw funds at a counter.
As a result of the limited services, Mandar Agashe, founder, and managing

director of Sarvatra Technologies, decided to develop a solution. Agashe set about
helping smaller banks hook into a digital payment infrastructure and bring more
consumers into the mix.
After years of attempting to make India more digital, Agashe‘s quest was
boosted by that country‘s demonetization, combined with its Unified Payments
Interface (UPI). COVID-19 safety measures also helped elevate the project further
when more Indian consumers were forced to stay at home, and thus, carry out more
transactions online.
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In the first half of October 2020, UPI logged an enormous 1 billion

transactions, crossing upwards of 2 billion by month-end. All-in-all, digital services
are gaining momentum and contributing to financial inclusion to a broad section of
society.
Why Fintech is the biggest driver of Financial Inclusion?
The role of financial inclusion in reigniting the global economy in a post-

pandemic world cannot be understated. Ensuring universal access to financial
products and utilities features in eight of the UN‘s seventeen Sustainable
Development Goals, identified as an enabler for ending poverty and hunger and
achieving gender equality.
However, financial inclusion also has the power to boost economic growth and
support industry and innovation. It will help nations, particularly emerging
economies, find a path out of the fiscal damage wrought by the pandemic. A report by
the McKinsey Global Institute previously estimated that digital finance would add
$3.7trn to the GDP of emerging economies in the years leading up to 2025.
But the overall idea of financial inclusion is still dogged by several

misconceptions, including the idea that the problem is limited to low and middle-
income countries. In the United States, the world‘s biggest economy, an estimated
22% of people are either unbanked or underbanked, meaning they‘re often losing
money on short-term payday loans or check-cashing services.
This leads to another common myth, not helped by the fact that ―banking the
unbanked‖ has come to be the slogan of choice for solving the challenges of universal
financial access. However, in the digital age, the idea of financial inclusion has
evolved to mean something different than simply equipping everyone on earth with a
checking account.
Traditional banks have fallen behind the digital curve
Regulation is perhaps the most critical challenge facing the traditional banking
sector when it comes to the issue of financial inclusion. According to Deloitte, it‘s a
double-edged sword. Over recent years, regulation has proved to be a limiting factor
in the ability of banks and traditional financial services providers to innovate and keep
pace with the increasing shift to digital and mobile-first. However, compliance also
creates high barriers to entry for banking services. In his recent letter to shareholders,
Jamie Dimon, the CEO of JP Morgan Chase, highlights the Dodd-Frank regulation as
actively preventing banks from lending more and supporting the economy. This
combination has enabled nimbler, digital-native fintech firms to get ahead of their
traditional counterparts; in some cases, banks simply can‘t compete in certain
segments due to the heavier capital requirements placed on them versus the lighter
regulation for their rivals in fintech.
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The change is visible across the wealth spectrum, indicating that fintech is
playing a pivotal role in financial inclusion while also emerging as a popular choice
for more affluent consumers.
The rise of prepaid services
The rise in prepaid services is one of the more intriguing developments in

enhancing universal access to products and services. It used to be the case that prepaid
services were considered somewhat inferior to subscription-based plans.
However, the shift to mobile has well and truly reversed this perception, with
consumers actively choosing prepaid mobile services over subscription-based models.
Ding‘s findings showed that 61% of its 7,000 respondents used a prepaid mobile
account, rising to 75% in Brazil, the Philippines, and the Gulf States. Take-up of other
prepaid services is also on the rise, with 45% of respondents saying they used two or
more services, including prepaid utility bills, gift cards, vouchers, or credit cards.
A core reason for this shift is the speed and flexibility of prepaid services.
Anyone can purchase a SIM card and start using it instantly, topping up within a few
seconds. Similarly, prepaid models allow users to have a high degree of control and
visibility over their spending.
The future outlook
So what comes next? After all, the journey to universal financial inclusion is
still underway. Further development of the pillars underpinning the ongoing fintech
transformation is critical to success. For instance, while mobile penetration is high
among the unbanked, increasing the availability of 4G and, eventually, 5G services
will provide the bandwidth to offer a more sophisticated range of mobile-first
financial services beyond pure payments and remittances. These may include the
provision of credit lines or insurance coverage, further narrowing the financial
inclusion gap.
Finally, the success of platforms such as Europe‘s challenger banks and

China‘s WeChat provide a blueprint for what financial inclusion success could look
like in emerging economies, in the form of 'super apps.' WeChat users can get updates
from official government and company accounts, make everyday payments, book a
medical appointment, apply for a loan, take a taxi, top-up their phone, and many
more. Revolut has expanded from being a convenient way to pay across borders into
offering investments in commodities and crypto currencies, along with insurance
services, savings plans, and other financial services
The ease and convenience of having all of these services in a single app,
available across international borders, will be a huge step forward for inclusivity.
Ultimately, it seems likely that, for retail users at least, the role of traditional banks
will diminish on the global stage as emerging economies continue their shift toward
financial inclusion powered by fintech.
135
References
[1] https://fintechmagazine.com/financial-services-finserv/why-fintech-biggest-driver-
financial-inclusion
[2] https://economictimes.indiatimes.com/industry/banking/finance/fintech-industry-
accelerates-financial-inclusion-to-push-faster-digital
adoption/articleshow/80046641.cms?from=mdr
[3] https://www.bis.org/publ/work841.pdf
[4] https://responsiblefinanceforum.org/four-fintech-financial-inclusion-trends-2020/
[5] https://about.crunchbase.com/blog/does-fintech-actually-contribute-to-financial-
inclusion/
[6] https://www.afi-global.org/thematic-areas/inclusive-fintech/
[7] https://content.centerforfinancialinclusion.org/wpcontent/uploads/sites/2/2020/10/PFFI
EA.pdf
136
Financial Inclusions – Rural Women Entrepreneurship
Anitha Kumari. B
Assistant Professor
Reva University
Bangalore
Financial inclusion is the expanding outreach of banking or financial services

at an affordable cost to a vast section of disadvantaged groups of society which may
provide them a financial cushion for their sustenance as well as social empowerment.
In India where women constitute approximately 48.53 per cent (2011 census) of total
population majority of them are denied to opportunities and rights because of their
financial dependence. Through disbursement of funds by various methods of financial
inclusion like self-help groups and microfinance by Banks an attempt has been made
by the Govt. to provide women economic independence and self-confidence, as well
as achieve more respect in their socially defined roles. Considering the importance of
financial inclusion for the economy of the country the Government of India (Ministry
of Finance), Reserve Bank of India and NABARD are adopting different measures for
the financial inclusion. As such it is essential to know what the main causes for
financial exclusion of women are. It is equally essential to have a clear idea on
financial inclusion and empowerment. So in this chapter an attempt is made to study
the causes and effects of financial exclusion. Besides an attempt is made to
understand the meaning, importance and approaches for financial inclusion and
meaning and definitions of empowerment, historical background of women
empowerment in India and measures for estimating women empowerment.
Financial inclusion is one of the most important aspects in the present scenario
for inclusive growth and development of economies. The financial inclusion term was
first time used by British lexicon when it was found that nearly 7.5 million persons
did not have a bank account. But financial inclusion concept is not a new one in
Indian economy. Bank‘s Nationalization in 1969, establishment of RRBs and
introduction of SHG- bank linkage programs were initiatives taken by RBI to provide
financial accessibility to the unbanked groups.
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Figure 1: Household Access to Financial Services
Source: Sonu Garg and Parul Agarwal, ―Financial Inclusion in India – a Review
of Initiatives and Achievements‖, Journal of Business and Management, Vol.16,
No.6, June 2014, pp.52-61.
Financial inclusion can be described as the provision of affordable financial

services, viz saving, credit, insurance services, access to payments and remittance
facilities by the formal financial systems to those who are excluded. So, financial
inclusion refers to access to vast range of financial product and services at affordable
cost. It not only includes banking products but also other financial services such as
loan, equity and insurance products.
Households need access to finance for several purposes like creating buffer,
retirement, saving to hedge against unpredictable situations and take products for
insurable contingencies. Household also needs access to credit for livelihood creation,
housing, consumption and their emergencies. Finally households require financial
services to access a wide range of saving and investment products for wealth creation
but it is all depends upon their level of financial literacy.
Despite witnessing substantial progress in financial sector reforms in India, it is

disheartening to note that nearly half of the rural households even today do not have
any access to any source of funds- institutional or otherwise. Hardly one-fourth of the
rural households are assisted by banks. Hence the major task before banks is to bring
most of those excluded, i.e. 75% of the rural households, under banking fold. But the
task is not so easy since they are illiterate, poor and unorganized. They are also spread
far and wide. What is needed is to improve their living standards by initiating
new/increased economic activities with the help of banks, NGO‟s and local
developmental agencies. To start with, it is necessary to develop a fair understanding
138
of their profile. In addition, their perception about the bank and its services needs to
be understood.
So there is a need for the formal financial system to look at increasing financial
literacy and financial counseling to focus on financial inclusion and distress amongst
farmers. Indian banks and financial market players should actively look at promoting
such programs as a part of their corporate social responsibility. Banks should conduct
full day programs for their clientele including farmers for counseling small borrowers
for making aware on the implications of the loan, how interest is calculated, and so
on, so that they are totally aware of its features. There is a clearly a lot requires to be
done in this area. Relevant data analysis and an outreach by women business
correspondents can close our gender gap.
Over the past year, the covid-19 pandemic has thrown existing inequalities into
sharp focus. While the nation‘s attention has been drawn to the plight of migrant
workers and farmers, the worsening gender gap has not received similar attention.
Analysis of the Centre for Monitoring Indian Economy‘s Consumer Pyramids
Household Survey data by researchers at Azim Premji University showed that women
were seven times more likely to lose their jobs during last year‘s lockdown, and 11
times more likely to not return to work. An ongoing survey (tinyurl.com/z8f574vy) on
micro, small and medium enterprises by Global Alliance for Mass Entrepreneurship
and LEAD at Krea University shows that women-owned small businesses were hit
more badly by the pandemic; 43% of women-owned enterprises surveyed reported
monthly profit less than ₹10,000, compared to just 16% of units owned by men.
India‘s government was quick to announce and transfer ₹500 per month for
three months of lockdown last year to women through their Pradhan Mantri Jan Dhan
Yojana (PMJDY) accounts. This seamless transfer of money was made possible by
the Centre‘s direct benefit transfer-PMJDY linkage, but more importantly, this could
happen because the government knew which accounts were held by women.
Unfortunately, the lack of gender-disaggregated data in the banking sector overall
meant that only PMJDY account holders received the benefit, and many other
deserving women were left out. According to estimates by the Yale Economic Growth
Center, more than half of India‘s women poor missed the cash transfers.
Even though 55% of PMJDY accounts are owned by women, making for 232.1
million accounts, the problem goes two ways—not all poor women have PMJDY
accounts and not all PMJDY accounts belong to the poor. The Financial Inclusion
Insight survey from 2017 used by the Yale study showed that while 78% of poor
women respondents reported having a bank account, just 23% reported owning a
PMJDY account. Global Findex 2017 showed an immense improvement on inclusion
with the PMJDY. The percentage of women in India who reported owning a bank
account, or an account at any other financial institution, rose from 26% in 2011 to
43% in 2014, and to 77% in 2017. The gender gap in terms of account ownership
effectively reduced from 20 percentage points in 2014 to just 6 percentage points in
2017. But the gender gap in the usage of these accounts stayed high at 11 percentage
points.
139
While economic data is usually spliced by states, geographies (urban-rural) or

sectors, the gender angle stays out of the common discourse. So though we all know
that women employees and entrepreneurs traditionally face more challenges than
men, the extent of disparity remains in the shadows. The case for gender-
disaggregated data in banking and financial sectors is a first step towards closing the
gender-gap in India. As a member of the Alliance for Financial Inclusion, India had
pledged to close the gender gap in financial inclusion by implementing the Denarau
Action Plan adopted in Fiji at the April 2016 Global Policy Forum. To redeem that
pledge, we must first generate gender-wise data. The country‘s regional and social
heterogeneity makes it crucial that this data be granular. The Reserve Bank of India
(RBI) and Department of Financial Services (DFS) need to get this implemented.
Second, apart from gender-specific data, there is another important initiative

that the DFS and RBI should commit themselves to. That is the appointment of more
women as business correspondents (BCs) by banks. The pay-offs will be manifold for
economic and social progress in the country. One of the greatest challenges in
increasing access to and usage of financial services by women is the time and cost
expended on reaching a bank outlet. Although it is gratifying that a forthcoming
working paper, The Fintech Gender Gap from the Bank for International Settlements,
finds that Indian women are as likely to use fintech as Indian men, there are bound to
be wide regional and rural- versus-urban disparities in this finding. That is another
case for granular data. In states like Uttar Pradesh, Bihar, Rajasthan, etc., where the
mobility of women is severely restricted, the situation is likely more serious. Women,
in rural areas especially, are reluctant to visit bank branches, where they are often
dealt with summarily by male staff.
Reference
[1] Porkodi S., and D. Aravazhi, ―Role of Micro Finance and Self Help Groups in
Financial Inclusion‖, International Journal of Marketing, Financial Services &
Management Research, Vol.2, No.3, March 2013, p.137.
[2] Sonu Garg and Parul Agarwal, ―Financial Inclusion in India – a Review of Initiatives
and Achievements‖, Journal of Business and Management, Vol.16, No.6, June 2014,
p.58.
[3] N.Mehrotra, V. Puhazhendhi, G. Nair G, B. B. Sahoo, Financial Inclusion – An
overview (Occasional Paper – 48), Department of Economic Analysis and Research &
National Bank for Agriculture and Rural Development, Mumbai, 2009, p.11.
[4] C Rangarajan, Report of the committee on Financial Inclusion, 2008, p.14.
[5] Report of Financial service provision and the prevention of financial exclusion, Report
of European Commission, 2008, p.8.
[6] Asli Demirguc-Kunt and Leora Klapper, Measuring Financial Inclusion: The Global
Findex Database, World Bank policy research Working paper 6025, 2012, p.23.
[7] Goodwin D., Adelman L., Middleton S., and Ashworth K., debt, money management
and access to financial services: evidence from the 1999
[8] PSE survey of Britain (Working Paper–8), Poverty and Social exclusion survey of
Britain Centre for Research in Social Policy,1999, p.5.
140
[9] Neha Dangi and Pawan Kumar, ―Current Situation of Financial Inclusion in India and
Its Future Visions‖, International Journal of Management and Social Sciences
Research, Vol. 2, No. 8, August 2013, pp.155-166.
[10] Ghorude, K.N., ―Micro Finance for Financial Inclusion and Sustainable Rural
Development”, Southern Economist, Vol. 48, No.1, 2009, p.49.
[11] Gupte R., Venkataramani B. & Gupta D., ―Computation of Financial Inclusion Index
for India‖, proceedings of International Conference of Emerging Economies –
Prospects and Challenges, Procedia –Social and Behavioral Sciences 37,2012, p.138.
[12] Gender, Power, and Control over Loan Use in Rural Credit Programs in Bangladesh.‖
World Development 24(1), 1996, pp. 45-63.
141
Agricultural and Artisanal activities in Rural India
Mahnaaz Mukarram
Student - MBA 1st Year.
Abstract
For the Financial Inclusion of rural areas, Business Management is observed

by understanding the government help received by businesses in rural India and over
viewing how the stereotypical agricultural and artisanal activities are supported by the
government. Most of the rural populations are bend towards agricultural activities
which might not be as fruitful throughout the year causing financial disabilities for the
farmers and their families however trying out different businesses like opening a
poultry farm, clothing stores, door to door water supply, fertilizers seeds storages,
electronic stores or small scale manufacturing units can have a lesser turnover yearly
but fulfill the needs immediately. However, there might be farmers interested in
agriculture or artisanal activities because of the knowledge passed through their
ancestors hence focus of this research is on understanding how the government has
strategized to improve their conditions by viewing schemes and important events over
some time in Rural India. Twists from the encouragement of investing in agriculture
to the investments in small businesses by the government and other institutes are
observed.
Empower and Facilitate
Keywords: business management, Agricultural and Artisanal sectorial developments.
I. Introduction
Rural Development is the goal for any developing country but the lack of
proper guidance and equipment has made it quite difficult for the new generations to
survive in the ever-changing economy. Research by H.R PRABHATI AND DR.
INDRA DUTTA on AGRICULTURAL SITUATION IN INDIA predicted the
demand-supply gaps for various crops concluding the gap for total cereals was
expected to be -0.6 mt in 2021 whereas was projected at -13.3 mt in 2026, the gap for
pulses, edible oils, and sugars present a deficit supply -21.1 mt, -14.2 mt and -29.0 mt
for the year 2021 and -32.6mt, -21.4 mt and -54.5 mt for the year 2026 which should
have caused serious concerns for the policymakers due to increasing demand but
decreasing supply. However, it is observed that there is a severe lack of investment in
the agricultural sector creating a hole between development and sustainability which
doesn‘t allow the Indian economy to work at its fullest speed. A summary from
TRADING ECONOMY, an online platform that provides historical data, economic
forecast news, and trading recommendations, the GDP From Agriculture in India is
expected to be 5439.00 INR Billion by the end of this quarter. (as per Trading
Economics global macro models and analysts expectations). They also estimate GDP
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From Agriculture in India to stand at 4012.00 in 12 months and the long-term, the
Indian GDP From Agriculture is projected to trend around 4292.00 INR Billion in
2022 and 4571.00 INR Billion in 2023, which will only sum up to 14% to 15% of the
national GDP leaving no room for the personal development of the farmers investing
their time and efforts daily.
Perhaps the rural populations are more inclined to go for other businesses
today than following the stereotypes, according to research by NICOLE DOBSON
from WALDEN UNIVERSITY a study about EFFECTIVE STRATEGIES TO
SUSTAIN SMALL BUSINESSES IN RURAL AREA the participants of rural areas
owning small businesses have dedicated their time and efforts to run their businesses
effectively through understanding how to achieve customer satisfaction to fulfill their
community requirements. NICOLE observed that most of these participants expressed
that it wasn‘t their education or the number of equal successes which lead them to
success but it was understanding their local community and providing as such.
While enduring all the hindrances in the current economy, many startups and
government schemes have popped up to empower and facilitate the rural crowd to
open up small businesses instead of following the stereotypes for finding stability in
the economy. An article by the AWFIS EDITORIAL on 5 STARTUPS a REFINING
INDIA espies that rural India is looking into the undiscovered areas of business and
increasing connectivity through the internet bridging the gap between rural and urban
India which opens new doors. Regardless of the rural populations turn over other
easier businesses the government still strategies to motivate the agriculturists and
artisans to keep pursuing development since the whole country stands on these
traditional norms. The ministry of textiles has organized a DEVELOPMENT
COMMISSIONER for Handicraft whose website states its objectives as development,
marketing, and exports of handicrafts.
Noting all the facts and understanding all the dimensions of the Indian
economy the question that arises is, How can the youth‘s aggression to open small
businesses and manage them be supported? Should the farmers and artisans be given
more conveniences and what are the already existing ways they are considered? What
will become of the generations ahead in rural areas?
II. Method
Government Assistance for Business Management in Rural Areas
As per an article in ECONOMIC TIME in 1978 around 81 percent of rural

males considered agriculture as their primary job however, the ratio fell from 67% in
FY05 and 55% in FY10. The rural populations interact with urban standards and try
to copy those in their areas to gain brand population. Improved literacy rates help in
strategizing imports and exports also helps in understanding the process of research
and development for the rural small business owners.
143
Rural markets are different from Urban markets and may also vary as per the
different communities residing in the areas hence the rural markets require immediate
management strategies to run businesses. The business owners need to keep in mind
what might be popular in the community for example opening up a poultry farm or a
meat shop in an area where people only prefer vegetarian meals would only lead to
depression then bankruptcy for the business owner. A businessman should opt for
flexible strategies to enhance his success rates however one of the popular trends to
start a business in rural areas is taking up a loan from a local money lender or a small
bank and getting a location closer to the owner‘s residence so that traveling cost is
cut. Some of these business owners might not have proper suppliers or might have
more than one supplier leading to extra costs which might be a big blow if the
business cycle loops towards depression.
If the business owners require any extra help or extra push financially they can
turn towards government facilities like MSME business loans which was a scheme
introduced in 2018 where both existing and new businesses can opt for financial
assistance as per the different criteria provided by the scheme. Another such scheme
is MUDRA loans which assist micro-business units at low-interest rates. There is A
NATIONAL SMALL INDUSTRIES CORPORATION SUBSIDY assists in mainly
two aspects i.e RAW MATERIAL ASSISTANCE AND MARKETING
ASSISTANCE which might solve a few complications. When a business has enough
financial assistance managing other business activities like sales, marketing,
financing, accounting, maintaining public relations, customer services, and human
resources becomes relatively easier and more efficient. Some local investors try to
provide other facilities for small businesses in whatever way they can other than
monetary benefits.
Government Assistance to Agriculturists and Artisans
Agriculture is as important for any nation as breathing air for humans, without
a good agricultural strategy, the whole GDP will fall apart. To maintain a balanced
economy the Indian government has various schemes popular amongst the farming
community, for example, a scheme called E-NAM also known as NATIONAL
AGRICULTURE MARKET is a pan-India electronic trading portal that creates a
unified national market for agricultural commodities. Its main goal is to remove the
information asymmetry between buyers and sellers to promote real-time price
discovery based on demand and supply. Another scheme that helps the farmers feel
more secure is PRADHAN MANTRI FASAL BIMA YOJANA which is a sponsored
crop insurance scheme integrating multiple stakeholders on a single platform with the
main focus on facilitating farmers insurance on crops even if there is a failure due to
natural calamities while trying to stabilize farmers income along with encouraging
them to opt for modern agricultural methods. The government also facilitates a
MICRO IRRIGATION FUND (MIF) dedicating around Rs.5000 crore to bring more
land area under micro-irrigation as part of its objective to boost agriculture production
and farmer‘s income. The fund was set up under NABARD i.e NATIONAL BANK
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FOR AGRICULTURE AND RURAL DEVELOPMENT which is to be released to

the states on concessional interest rates to promote micro-irrigation.
The rural crowd also plays a great role in maintaining the cultural balance in
our nation. The artistic skills passed down from ancestors are still practiced by a few
families or artisans to continue the legacy. People still train the youth of their families
in different arts and try to make a business out of it although in difficult economic
times it may not be the best way to provide for the artisan‘s needs hence resulting in
people discontinuing the arts to opt for something more productive. The government
is always looking for ways to maintain a cultural balance in the country and has
provided several schemes such as distributing an ARTISANS IDENTITY CARDS
under PAHCHAN initiatives to handicraft artisans which provides many benefits like
easy loans, insurances, credit guarantees along opportunities to participate in
international events. This card also facilitates life insurance and Rs. 1200 per year for
the artisan‘s children studying between class IX and Class XII. Another helpful
scheme for artisans is PRADHAN MANTRI JEEVAN JYOTI YOJANA for life
insurance of the artisans. The government also supports artisans in indigent
circumstances who are the recipients of Shilp Guru Awards, National Awards, or a
merit certificate or who secured a state award in handicrafts above the age of 60. The
assistance to an amount of Rs.3500/- per month is provided to the eligible master
craftspersons on the recommendation of field offices whose income should not exceed
Rs.50,000/- per annum, a relaxation in age is considered in the case of disability.
The schemes might not always be available to all the artisans but several
NGOs try to work with government bodies to reach out to as many rural populations
as possible.
III. Results
MSME Scheme Development for the Years 2019-2020
ESTIMATES IN LAKHS
Activity Category SHARE (%)
RURAL URBAN TOTAL
MANUFACTURING 114.14 82.50 196.65 31
ELECTRICITY 0.03 0.01 0.03 0

TRADE 108.71 121.64 230.35 36
OTHER SERVICES 102.00 104.85 206.85 33
ALL 324.88 309.00 633.88 100
145
Statement No.1: Estimated Number of MSMEs (Activity Wise)
Diagram No.1: showing the estimated number of MSME‘s (ACTIVITY WISE)
The table and graph show the developments of people opting for the MSME
schemes and how the different expenses have been covered. As it appears the four
main activities which were manufacturing, electricity, trade and miscellaneous other
services. The manufacturing amounted to 31%, electricity up to 0% share, however,
trade had a 36% variation and other services got up to 33 %.
Mudra Scheme Development Agency Wise for Years 2019-2020
146
Statement No. 2: Agency Wise Performance of Mudra Scheme
Diagram No. 2: Target VS achievement agency-wise.
The above table and graph express the agency-wise growth of the scheme. The
public sector banks including regional rural banks contributed to 7% whereas the
private sector banks had a 43% contribution. The small finance banks, microfinance
banks, and non-banking finance companies made -1%,-9%,-14% contributions
respectively.
NSIC Development for the Years 2019-2020
147
Statement No. 3: ANNUAL Income and Expenditure Statement for NICS
The above table depicts the annual income and expenditure statement for NICS
showing its developments in promotional and commercial aspects in primary
segments or business segments. The agricultural and artisanal schemes have yearly
increments and decrements in numbers since some farmers and artisans might still not
be able to fulfill their necessities even after opting for the government schemes. There
are many more factors to be considered other than the financial aspects of running
agriculture or artisanal business and there are a lot of startups or NGOs trying their
best to guide the rural populations but sometimes it might not be enough. However,
agriculture still stands as a strong pursuit for rural populations and artisanal activities
are also taken up by both urban and rural youths leading to increasing cultural values
in the nation.
IV. Conclusion
The Indian economy will only develop when all its rural parts are treated with
the same humbleness our nation‘s hero GANDHIJI taught us about. In a paper by
BENOY KRISHNA HAZAR on SIGNIFICANT GANDHIAN COMMUNICATION
AND ITS RELEVANCE FOR SUSTAINABLE RURAL DEVELOPMENT IN
INDIA, he speaks GANDHIJI concept of rural development was ―UPLIFTING THE
COMMON MAN‖ GANDHIJI emphasized on small scale industries and agriculture
for the development of rural areas. For the inclusion of Rural areas or the backward
communities, the new generations must survive the variations in economic conditions
of the country hence starting up various small-scale businesses should help the future
generations to gain the support and knowledge to excel in their fields of option.
Starting an agriculture business is encouraged to increase the countries GDP and to
decrease importing of food items and increasing exports of different goods which will
help the economy grow stronger and let the country have good relations with other
nations. As a country that has high values for cultures, India needs to keep pushing
forward breaking the new norms and entering new fields of business to normalize it in
the country and encourage its commencement in rural areas.
148
Acknowledgment
I would like to express my deepest appreciations to Manisha Agarwal for helping with
the research
References
[1] Sangeeta Verma, P.C Bodh and Piyush Kumar (2014). Future of Indian Agriculture:
Prospects and Challenges. In Agricultural Situation in India, Directorate of Economic
and Statistical department of agriculture and co-operation of Ministry of Agriculture,
57-58.\
https://www.researchgate.net/publication/319204294_Agricultural_Situation_in_India
[2] Nicole A.Dobson(2018). Effective Strategies to Sustain Small Businesses in Rural
Areas. Walden Dissertations and Doctoral Studies collection. 135-136.
[3] https://www.google.com/url?sa=t&source=web&rct=j&url=https://scholarworks.walde
nu.edu/cgi/viewcontent.cgi%3Farticle%3D6351%26context%3Ddissertations&ved=2a
hUKEwjIqMe-
np7wAhUD7XMBHQ4NBc4QFjAAegQIAxAC&usg=AOvVaw06gv4P5XRXu9PZQ
ZKzOkb9
[4] S.Jaideep (2018). Top 15 Reasons For Rural Market Boom in Your Article Library, 1-
2.
[5] https://www.yourarticlelibrary.com/marketing/rural-marketing/top-15-reasons-
responsible-for-rural-market-boom/48720
[6] Benoy Krishna Hazar (2018). Significant Gandhian communication and its relevance
for Sustainable Development for Rural Development in India. Global Media Journal-
Indian Edition, 12-13.
[7] https://www.caluniv.ac.in/global-mdia-journal/SR-Dec-2018/SR1.pdf
149
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Financial Inclusion for Rural Development

Chapter · June 2022

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Rev. Fr. Dr. D. Sunder Reddy

InSc Publishing House (IPH)

Chief Editor: Rev. Fr. Dr. D. Sunder Reddy

Associate Editor: Dr. K. Martina Rani

PUBLISHER & PRINTER: Selfypage Developers Pvt. Ltd.

IMPRINT: INSC Publishing House (IPH)

Message from Chairman

Most. Rev. Poola Anthony

It gives me immense pleasure to present this Editorial Book on FINANCIAL INCLUSION

I would like to appreciate the Institution which

I WISH BEST SUCCESS!

GOD BLESS YOU

Most. Rev. Poola Anthony

Financial Inclusion through Micro Finance –Insights into Various 1 -16

Identifying Various Sources Contributing to Improve Financial 40-51

Institutional Assistance to Scheduled Caste Rural Entrepreneurship 52-63

Women Entrepreneurship in Micro, Small and Medium Enterprises 64-74

Facets of Rural Development through Financial Inclusion 75-83

Working of Islamic Banking- A Conceptual Study 84-92

Inclusion through Insurance - A Study on Crop and CattleInsurance 93-104

Government Funding Schemes: An Aid for Rural Entrepreneurs 117-122

Micro Finance for Women Micro-Entrepreneurship 123-126

Financial Inclusion through Micro Finance –Insights into Various

The aim of this paper is to look at the role of microfinance in individuals

Key words: Empowerment, MFIs, Credit Institutions, Organizations

Financial Inclusion is described as the method of offering banking and

Microfinance is a small-scale financial service offered to the poor by financial

A Self-Help Community (SHG) is an unregistered or registered group of micro

It is a voluntary association of people formed to attain certain collective goals,

Registration of micro-finance Organisations with NABARD mandatory and no

The Bill recommends the creation of a contingency fund where a minimum of

The following are the objectives of this paper:

III. Literature Review

Jayati Ghoshin the article represents an important assessment of

It must be regulated and subsidized to accomplish even some of its social

Savita Shankar highlighted the Financial inclusion, or giving access to

Raman, A. mentioned in his study that the topic of financial inclusion is

IV. Key Features of Microfinance

Some of the significant features of microfinance are as follows:

 These loans are usually repaid at higher frequencies

Lenders Offering Microfinance Loans to MFIs

Reliance Money – Reliance Money partners with microfinance organisations

State Bank of India (SBI) – SBI provides loans to microfinance institutions

quarterly, or at 6-month intervals. Cash credit loans should be renewed on an annual

DCB Bank – As part of its micro financing programme, DCB Bank

Microfinance Companies in India

1. Arohan Financial Services Pvt Ltd:

Products offered by Arohan Microfinance

2. Disha MicrofinPvt Ltd: Disha Microfinance Private Limited is based in

In Gujarat, Rajasthan, Madhya Pradesh, and Karnataka, Disha Micro fin

3. Annapurna Microfinance Pvt Ltd: Annapurna Microfinance Pvt. Ltd, also

To meet the changing needs of the society, Annapurna Microfinance Pvt.

The following are the offerings from this financial institution:

 Loan for Paddy Cultivation

 Loan for Bamboo Craft

Income generating loans for family members of Leprosy affected Patients:

Income Generating Loans for Widows/ Unmarried women/ Single Mothers:

Income generating loans for persons belonging to the community of Eunuch/

4. BSS Microfinance Limited: BSS Microfinance Limited is a microfinance