Overview of financial inclusion and micro credit

Financial Inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups. A sizable population of the world particularly poor is excluded from the most basic financial services provided by financial sector. It has been universally accepted that Financial Inclusion can act as an effective instrument to accelerate economic growth and alleviate poverty in the world. All the countries are making all out efforts to bring vast segment of population especially under privileged section of the society in rural and urban areas in to banking fold. In India despite existence of co-operative banks for over a century and special efforts of commercial banks over four decades since nationalization of major banks, 41 per cent of the adult population do not have even bank accounts.

In April 2005 Reserve Bank of India explicitly made Financial Inclusion as its major policy objective to make available banking and payment services to the entire population without discrimination as banking services are in the nature of public good. Government of India and RBI have taken series of measures in this regard. Banking system has also taken a number of steps for Financial Inclusion leveraging technology. National Rural Financial Inclusion Plan has been drawn and is in operation since 2008-09. It is a stupendous task before banks to bring willing population into banking fold.

I have made an attempt to bring out this book giving an Overview of Financial Inclusion and Micro credit and challenges ahead for the benefit of student community and young bankers.

The contents have been divided into two parts. Part I deals with global concerns of financial inclusion and policy initiatives taken in developed and under developed countries and their experiences. Special coverage is given for the policy initiatives in India. Part II deals with Micro credit and certain pilot projects/studies.