Financial inclusion may 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 lower income groups at an affordable cost. Financial inclusion, broadly defined, refers to universal access to a wide range of financial services at reasonable cost. These not only include banking products, but also other financial services such as insurance and equity products.


As per the general laid down standards following are the key indicators of financial inclusion:

 · Formal banking system

This refers to the existence and usage of banking services which are regulated by formal mechanism.

· Formal credit

The usage of formal or recognized credit providers indicates the presence of an inclusive financial system.

· Insurance

Apart from formal lending and depositing the citizens will also have access to proper insurance providers in a well inclusive financial system.

· Savings options

 An inclusive financial system should provide attractive options to deposit the saved funds irrespective of the customer background.

 · Modern banking

Each and every user should have access to modern banking services like electronic banking, mobile banking, internet banking, etc.


Access to financial services have been recognized as an important aspect of development and more emphasis is given to extending financial services to low-income households. The lack of financial services limits the range of financial services and 7 credits for households. There are multiple factors which have affected the access to financial services, like

· Place of living

 The area of operation of banks are limited to some specific geographical areas which leaves a significant portion of the rural population unbanked.

 · Absence of legal identity and gender biasness

 Due to lack of financial independence and unemployment there exists a bias on the basis of gender in having access to formal financial services.

· Limited knowledge of financial services

 Illiteracy and lack of proper knowledge about banking system has led to reluctance towards formal banking practices among deprived classes.

· Level of income and bank charges

 The charges and fines levied by banks make them less attractive for some classes of society.

 · Rigid terms and conditions

Since formal banking system is subject to strict rules and regulations, many finds it difficult.


 Financial inclusion 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. Further by bringing low -income groups within the perimeter of formal banking sector, financial inclusion protects their financial wealth and other resources. Financial inclusion also mitigates the exploitation of vulnerable sections by the usurious money lenders by facilitating easy access to formal credit.

India is a nation with a major chunk of the population living under vulnerable conditions. So, it is the duty each and every privileged section to lift the conditions of the underprivileged. Financial inclusion will pave a path of uplifting the society and empowering the people.

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