Financial Inclusion and

exclusion
Presented by - Group 1

Submitted to: Dr. Chandan Desgupta

 Financial Inclusion
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.
By- The Committee on Financial Inclusion

51.4% of farmer Of the total farmer

households are households, only 27%
financially excluded
from both formal/
1 3 access formal sources
of credit.
informal sources.

one third of this

group also 2 4 Overall, 73% of farmer
households have no access
borrowed from to formal sources of credit.
non-formal
sources.
 These include not only banking products but also
other financial services such as insurance and
equity products.

 The essence of financial

inclusion is to ensure
delivery of financial
services which include

 Bank accounts for savings and transactional 2 purposes, low

cost credit for productive, personal and other purposes,
financial advisory services, insurance facilities
 NEED
1 It broadens the resource base of the financial system by
developing a culture of savings among large segment of
rural population and plays its own role in the process of
economic development

2 By bringing low income groups within the perimeter of formal

banking sector; financial inclusion protects their financial
wealth and other resources in exigent circumstances.

3 Financial inclusion also mitigates the exploitation of vulnerable

sections by the usurious money lenders by facilitating easy access
to formal credit.
 Objective of Financial
Literacy
BANK ACCOUNT

• ECONOMIC: Equitable growth & Fis can boost the

FINANCIAL development process.
LITERACY
• MOBILIZATION OF SAVINGS: Capital formation and
economic growth
REMITTANCES

• LARGER MARKET FOR FINANCIAL SYSTEM: Emergence

CREDIT for new players & participation of retail investors..
PRODUCT KCCs.
GCCs etc
• SOCIAL: Poverty eradication a & financial literacy.
INSURANCE
PENSION
• SUSTAINABILITY: To improve income generation by low
income groups.
CAPITAL
MARKET
PARTICIPATION
 Financial Inclusion

Financial inclusion can be 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.

Importance of Financial Inclusion and Financial

Exclusion
 A bigger financial deepening has a direct impact on the
growth rate of the countries, due to the consumption
capacity expansion and increase in investment potential.
 Access to financial services has positive effect in reducing
poverty.
 It empowers people and the improvement of their living
conditions become sustainable.
Financial Exclusion
Financial exclusion refers to individuals and populations without
access to common financial services.
• Financial exclusion makes poverty much worse.
• People are excluded because of their socio-economic status and
because they can’t meet the requirements of a formal banking
institution.
• Borrow from informal lenders whose loan limits are low, and
interest rates are usually very high.
6 Pillars of Financial Inclusion
Access

Quality
Infrastructure

Financial
Inclusion

Quality
Social

Education
Financial Literacy
Financial literacy refers to the ability to understand and apply
different financial skills effectively, including personal
financial management, budgeting, and saving. Financial
literacy makes individuals become self-sufficient, so that
financial stability can be accomplished.

5 Key Components of Financial Literacy

1. The Basics of Budgeting
2. Understanding Interest Rates
3. Prioritizing Saving
4. Credit-Debt Cycle Traps
5. Identity Theft Issues & Safety
Financial Literacy Initiatives The Financial Tripod

Financial education, financial Financial Education

inclusion and financial stability are
three elements of an integral strategy,
While financial inclusion works from
supply side of providing access to
various financial services, financial
education feeds the demand side by
promoting awareness among the
people regarding the needs and
benefits of financial services offered
by banks and other institutions.

Financial Inclusion Financial Stability

 Benefits of Financial Literacy

Effective creation of a Ability to make better

structured budget 6 financial decisions.
1
Increase in ethical
decision-making when
selecting insurance, 5 Effective management
of money and debt.
loans, investments, and
using a credit card.
2

Greter equipped to
Less financial stress reach financial goals &
and anxiety. 3 4 reduction of expenses
through better
regulation.
 Sources of Finance

Long Terms Sources of

Finance

External Sources

Medium Term Sources

of Finance

Internal Sources

Short Term Sources of

Finance

Borrowed Capital

Owned Capital
Sources of Finance
 Government Schemes
1. Adult Literacy Programme- The Adult Literacy Programme aims at equipping women with basic
literacy and numeracy skills required to adapt themselves to the fast-changing environment of our
modern world, at the same time furthering their self development through Adult Literacy Courses in
various outstation.

2. The Adult Literacy for Entrepreneurship Development (ALED) for Women was tailored to provide
relevant skills to women who wish to engage in income generating activities to raise their economic
situation.

3. Pradhan Mantri Jan Dhan Yojona- To ensure comprehensive financial inclusion of all the households
in the country by providing universal access to banking facilities with at least one basic bank account
to every household, financial literacy, access to credit, insurance and pension facility.

4. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

5. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

6. Stand Up India Scheme

 PSL & Financial Inclusion

 The PSL norms are meant to promote financial inclusion by lending to vulnerable
segments. However, there is a genuine business case for allowing flexibility in sub-
targets for various categories of priority sector lending by giving more freedom to
the government.

 Priority Sector includes the following categories:

(i) Agriculture
(ii) Micro, Small and Medium Enterprises
(iii) Export Credit
(iv) Education
(v) Housing
(vi) Social Infrastructure
(vii) Renewable Energy
(viii) Others
 Banking- Paradigm Shifts
1.The Digital Shift- Every bank is trying to reduce spending on physical branches and going the
digital way. This shift in mentality has been accelerated by-
•Considerable number of people going digital and connecting to the Internet
•Card payments and digital wallets eliminating the need for physical cash and thus reducing
physical interactions

2. Flexibility & Adaptability is key to surviving the Digital Age- The banking behemoths must be
agile and quickly adapt to this changing technological landscape to out-maneuver their
competition.

3. Embrace Digital to see a great process efficiency and high RoI-  In the long term, the digitization
project will help you go ‘Branchless’ real fast and the cost savings in running thousands of bank
branches per month will be more than the investment in a robust digital technology.

4. Solving the Customer Acquisition Hurdle- Other than servicing your existing customers,
digitization is all about acquiring new customers through the digital channel.

5.The Cashless Push- In most countries, cash is now discouraged by the regulatory bodies.
Cashless transactions mean improved compliance, thus increased taxation.
 Banking- Paradigm Shifts

Challenges Initiatives

 Cybercrime  Dedicated Bank Mobile App

 Attaining Application Perfection  ATM

 Delivering Quality at Speed  Net banking 24*7

 Technology Upgrades  UPI Promotion

 Fear Factor  Cashless Economy

 Superheating with Innovation  Core Banking Solutions (CBS)

Thank You