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  • Chief Editor : Manilal B. Par |  Executive Editor : Bipul A. Singh
    FINANCIAL INCLUSION IN INDIAN ECONOMY editor editor on Saturday, August 13, 2016 reviews [0]
    Part: I By Urvi Amin

    Gandhi Nagar : Financial inclusion is not a new term now a day. But here we will discuss financial inclusion with a different perception. Traditional financial system only focuses on entry barriers removing and wish to adopt product liberalizing restriction. Recent changes adopted global financial market changes into the economy. Global financial crisis need to deal with financial policies to stable economy. This holistic approach provided prudential regulation, at institutional macroeconomic level to address wider systemic risks. Financial crisis has shown market discipline, key information gaps and encouraging more robust government and risk management systems. Undue competition adversely affected banking system growth. Consolidation of financial system leads to develop more opaque firms. In recent phase of competition, technology and customer relationship opt major contribution. Competition and stability are not obvious paradox.
    As financial institution is also consider as a financial market where rules for competition implied in different manner. In financial sector market structure associated indicators, contestability and regulatory indicators with gauge contestability and formal competition measures taken into consideration.
    For any developing nation to raise won Gross Domestic Production (GDP) is a challenging task. To raise productivity financial resources becomes essential. In India, after 1991, Liberalization-privatization- Globalization (LPG) policy was introduced to remove economic obstacles and new direction towards development was initiated. To allocate financial resources remained challenging task for economy. With this regards, in India financial inclusion comes to the picture in the year 2006.
    Financial sector revolutionary movements are associated with technological up-gradation in Glocal world. Competition in financial sector is more naive as compare to other industry. In financial sector changes adoption as per customer requirement and needful implication adopted as per financial world needed. For financial sector many reasons, like network implications, Complex competition, financial growth decision and performance measurement and will be considered. Financial Inclusion (FI) provided new platform for financial sector improvement.

    Financial reforms ignite competition into financial markets. Strahan and Phillip stated, “In United States (US) financial reforms enforced in United States (US) economy to abolished restriction on intra and interstate banking.”
    In developing nations, the authenticated and standardized financial regulations ignited the growth of organized sector. The website www.imf.org.com acknowledges, "Financial integration allows greater international specialization and diversion where risk, contagion and probable chances for financial risk would be at elevated extent."
    This generation of empowerment provides social and political stability to the economy. Access financial services at the affordable cost opens up source of revenue to empowering poor. 59% adult population became financial literate with financial inclusion. Still 41 % remain unbanked which chunk also affect efficiency of the organization. Any economy has empowered economy and all individual for better integration sufficient contribution for economic development and afford provide protection shield against economic shocks. Financial inclusion serves vulnerable groups of people such as low income persons, weaker sections of the society which sizable population with limited opportunities and services.
    Even after 60 years of independence, more than 40% of Indian population still remains under below poverty line and live in unbanked area. This situation has led generation of financial instability and pauperism among the lower income group who do not have access to financial product and services. The website www.worldbank.org acknowledges, "1991 impact on the percolate to all the sections of the society. The website http://www.wds.worldbank.org acknowledges, “As per world bank report in Indian economy 35% of adult have bank account and 8% borrowed from formal financial institution.”
    Lets we now discussed definition of financial inclusion to understand it better way.
    Leyshon and Thrift (1995) defines, "Financial exclusion as referring to those processes that serve to prevent certain social groups and individuals from gaining access to the formal financial system."
    Sinclair (2001) explains, “Financial exclusion means the inability to access necessary financial services in an appropriate form. Exclusion can come about as a result of problems with access, conditions, prices, marketing or self-exclusion in response to negative experiences or perceptions.”
    A World Bank report states, “Financial inclusion, or broad access to financial services, is defined as an absence of price or non price barriers in the use of financial services.”
    Rangarajan Committee (2008) labels “ Financial Inclusion as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as the weaker sections and low income groups at an affordable cost”
    Major all definitions emphasize on the unique factor of Financial Inclusion (FI) for developing nation as it provide financial services to the poor and disadvantaged group who remain un served till the time. Financial Inclusion (FI) is the gateway of economic growth for the developing nation.
    Next time, focus will be given on development of banking correspondent in Indian economy and its development aspect.
    ...to be continued in the next issue.

    For any further quarries kindly mail: urviamin@ymail.com
    Name of Writer: Prof. Urvi Amin


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