What is Financial inclusion?
Financial inclusion is defined as an ecosystem where individuals and institutions have access to useful and affordable financial goods and services that meet their needs that are delivered in a responsible and sustainable way.
What kind of products and services are covered under financial inclusion?
- Credit – loans
- Investment – mutual funds, pension plans, etc
- Insurance – life and nonlife
- Savings and payment (general banking)
Progess of India toward financial inclusion are as follows:
- Jan Dhan-Aadhar-Mobile (JAM) Trinity
- Pradhan Mantri Mudra Yojana
- Kisan Credit Cards (KCC) scheme
- Linkage of self-help groups (SHGs) with banks.
- Unified Payment Interface (UPI) by NPCI
- Pocket Money – aims at increasing financial literacy among school students.
- Sub-Saharan Africa – mobile money account ownership rose from 12% to 21%.
- Philippines – Nascent credit scoring industry
Challenges associated with Financial Inclusion:
- Informal and Cash-Dominated Economy – poses an barrier to digital financial inclusion
- Gender Gap in Financial Inclusion
- Digital Divide
- Non-Universal Access to Bank Accounts
- Lack of financial literacy