Financial Inclusion: A Comparative Study of Initiatives Taken by Indian Government Pre and Post 1991

Abstract

Financial Inclusion is the process of ensuring provision of financial services in a transparent and timely way to the vulnerable sections of the society. Provision of such services would thereby help any economy increase saving rate and directly or indirectly increase investment rate and hence contributing to economic growth of a nation. Since, higher saving and investment rate is the key for sustainable economic growth of any nation. Financial Inclusion as a concept was introduced in India in 2005; however Indian Government and The Central bank have been working in this regard since India achieved Independence.

During the time when India achieved independence, People were relying on informal financial system for borrowing and thereby being exploited in form of higher interest rate or higher cost of borrowing. While, formal financial system was perceived to be channel for saving and credit only for the higher sections of the society and the corporate. This distinction was attributed to lack of three dimensions defined by Alliance for Financial Inclusion (AFI) namely access, usage and Quality. To add on to these dimensions "Literacy” played a key role. Present study attempts to explain policy measures adopted by Indian Governement for financial inclusion and success rate of each of the listed measure.