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The IUP Journal of Bank Management
Financial Inclusion in India: Rethinking the Banking Initiatives
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Despite being high on the government’s agenda, financial inclusion remains an unrealized dream in India. Against this backdrop, the present study is a pathfinding attempt to suggest measures that can assist banks deepen financial inclusion in India. Primary data for the study was collected from bank officials engaged in the development and/or execution of strategies. The final sample comprised 364 responses from officials employed with 21 public sector and 12 private sector Indian banks. Care was taken to ensure substantial rural representation in the sample. An empirical analysis of the views of the respondents revealed that widening the bank network, technology solutions, targeting the neglected niches, regulatory support, and building trust and awareness can successfully augment the transformation of India into a financially inclusive economy.

 
 
 

Financial inclusion—providing everyone access to financial services and products—is a win-win situation for all stakeholders. The theory behind it is multifaceted. From the point of view of the economy, its implications on development are well known. Many growth theories have implied its practice as a prerequisite for economic development (Schumpeter, 1912; and Hicks, 1969). Most development planners have also advocated it in one form or the other. Economic leaders believe that financial inclusion creates economic opportunities that bring hitherto excluded people into the economic mainstream (Bindu and Jain, 2011). It transfers resources from the resource surplus to the resource deficit units (Bihari, 2011; and Sajeev and Thangavel, 2012) leading to inclusive, sustained and balanced growth. From the point of view of the society, financial inclusion provides vital social benefits (Karlan, 2014). It helps reduce poverty (Beck et al., 2007; and Ktona and Ninka, 2013) and insulates people from unanticipated financial shocks (Shetty and Veerashekharappa, 2009; and Lokhande, 2011). Its welfare effects allow people to effectively manage their lives and livelihoods. At the micro level, this alters the financial landscape of the poor and at the macro level, the economic landscape of the country.

On the other side, financial exclusion aggravates social inequality and poverty (Raman, 2012). The poor outreach of financial services discourages savings and creates dependency on expensive credit provided by non-formal moneylenders (Goyal, 2008).

 
 
 
Bank Management Journal, Financial Inclusion in India, Rethinking the Banking Initiatives