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  • FINANCIAL INCLUSION IN INDIAN ECONOMY: URVI AMIN
    FINANCIAL INCLUSION IN INDIAN ECONOMY: URVI AMIN editor editor on Friday, September 9, 2016 reviews [0]
    FINANCIAL INCLUSION IN INDIAN ECONOMY: By Urvi Amin...
    Part: II: Frame work of financial inclusion at Indian economy
    in this article we discuss about frame work of financial inclusion in Indian economy and how it would impacted on GDP on nation. 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. Risk management ignites volatile to different financial sector. When high financial integration affects economy banking system the volatility also gets affected. Glocal financial market affected bear affect to developing nations. When financial organization provided innovative product financial sector improve for better ways. Financial product heterogeneity provides some special properties to the financial market. When in any economy financial intermediary’s number reduces which give growth to competitive banking system and its result into higher growth rates. 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.” Such up-gradation into financial system time to time would reshape financial institutions. Center for Education Research Partnership (CERP) analyses, "In European Union (EU) followed single banking directives and respective measures which aimed at creating a more integrated competitive financial markets."
    Dr. Rangnajan committee provided National Sample Survey Office (NSSO) data reveal bases as :
    1. Need a strong credit delivery mechanism to reach to the unbanked region.
    2. Suggesting measures for improving credit absorption capacity especial amongst marginal and sub marginal farmers and poor non cultivator households.
    3. Evolving new models for effective outreach
    4. Leveraging on technology based solution.
    Definition of Financial Inclusion (FI):
    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.
    What is weaker section of society?
    The website https://www.Reserve Bank of India.org. accredits, weaker section of society/ neglected sector as fellows
    No. Category
    1. Small and Marginal Farmers
    2. Artisans, village and cottage industries where individual credit limits do not exceed ₹ 1 lakh
    3. Beneficiaries under Government Sponsored Schemes such as National Rural Livelihoods Mission (NRLM), National Urban Livelihood Mission (NULM) and Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS)
    4. Scheduled Castes and Scheduled Tribes
    5. Beneficiaries of Differential Rate of Interest (DRI) scheme
    6. Self Help Groups
    7. Distressed farmers indebted to non-institutional lenders
    8. Distressed persons other than farmers, with loan amount not exceeding ₹ 1 lakh per borrower to prepay their debt to non-institutional lenders
    9. Individual women beneficiaries up to ₹ 1 lakh per borrower
    10. Persons with disabilities
    11. Overdrafts upto ₹ 5,000/- under Pradhan Mantri Jan-DhanYojana (PMJDY) accounts, provided the borrowers’ household annual income does not exceed
    ₹ 100,000/- for rural areas and ₹ 1,60,000/- for non-rural areas
    12. Minority communities as may be notified by Government of India from time to time


    Write any quarries to
    urviamin@ymail.com
    submitted by :
    Prof. Urvi Amin
    Assistant Professor
    SJPI (core finance faculty)
                               

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