Ways to increase financial inclusion in India

Write an essay on “Ways to increase financial inclusion in India” in the comment section below in 300 words.

It will be evaluated. Peer reviews are welcome.


27 thoughts on “Ways to increase financial inclusion in India

  1. Shrikant Deshmukh:
    Financial inclusion is defined as the availability of all financial services in affordable and sustainable manner. The primary objective of financial inclusion is to meet financial needs of an individual or business without any discrimination. It is observed that financial inclusion brodens the base of financial resources and improves the socio economic condition of the nation. Considering this GoI has come up with different initiatives for financial inclusion.

    Financial inclusion in India started way back in 1969 with the nationalisation of the banks, but the real thrust to FI came in 2005-6 when RBI mentioned its significance in its annual statement. RBI persuaded banks to reach masses of people in rural area and who are excluded from the financial services. Then banks came up with the mortar and bricks model in rural area having population more than 2000 and for less population banking correspondent model was introduced. Priority sector lending is one of the mean for FI in priority sectors of the economy. Kisan credit cards, General credit cards, Launch of Rupay credit cards, launch of payment and small finance banks boosted FI in India significantly. The real thrust was given by the launch of PMJDY when launched in 2014 as a mass mission of opening bank account for vulnerable and excluded people in country with no frill account facility. According to World bank’s GLOBAL FINDEX report which measures the FI, Indian index was scored 53 in 2014 and 80 in 2017 shows the role of PMJDY in FI.

    Though india has set its basic infrastructure for FI, illiteracy amongs the people regarding the financial knowledge is impeding the pace of FI. It’s time to focus on creating awareness amongs the people regarding their financial rights, telling them to take more formal credits and paying them back on time will help to improve socio economic prospect of our nation. RBI along with other banks and educational institutions should make FI a compulsory subject in curriculum so that the awareness can be created amongs the people. Along with it RBI must focus on micro targets to improve FI further.

    1. You have exceeded the word limit. There are minor grammatical mistakes and 1 or 2 spelling mistakes. (amongst, broaden).
      Write India not india.
      Your first paragraph is good. You can reduce your 2nd para. You can also mention about PMSBY, APY etc.
      In last para, along with creating awareness you can say that the scope of pmjdy should be widened and private banks should also participate willingly etc.
      Overall good. Can be better.
      Keep practicing

  2. Financial inclusion is where individual and businesses have access to useful and affordable financial products and services that meet their needs and are delivered in responsible and sustainable way.
    For the past seven decades since Independence significant efforts have been made in India towards achieving Financial inclusion like
    a) Nationalisation of Banks in 1969 and 1980 which led to huge expansion of branches in the hinterland.
    b) PMJDY launched by the NDA Government through which crores of bank accounts have been opened and thereby paved the way for direct benefit transfer
    c) RBI- No frills account ,E KYC, UID , Electronic benefit transfer etc
    d) India Post payment bank for ensuring last mile connectivity.
    e) And many other schemes like Pension Schemes, Mutual Funds, Insurance (PMJBY,PMSBY) etc

    The vision for Financial Inclusion as envisaged by the Committee on Medium Term Path to Financial Inclusion is that by 2021, empowered by formal finance, over 90 per cent of the hitherto underserved sections of society would become active stakeholders in economic progress.

    1. Firstly, in India, when we talk of inclusive growth, there are three sections that would warrant special focus.
    i) the small and marginal farmers, share croppers: The credit absorption capacity of the farmers can be enhanced through consolidation of fragmented landholdings by ushering in land reforms or through pooling of land holdings in an SHG format. Efforts to enhance the credit absorption capacity must also be supplemented through financial literacy and vocational training initiatives, comprehensive insurance cover against failure of crop & innovative practices in farming..

    ii) micro and small industries: Enhancing financial capability of mainly the micro and small entrepreneurs from amongst the larger MSME fold would help these entrepreneurs to move away from the informal to the formal sources of finance.

    iii)the low salary earners in the unorganized sectors.:There is also a pressing need to scale up the skills of the low salary earners in the unorganized sector through training inputs. Integrating the skill development initiatives with secondary and intermediate level education would address the challenge of low education levels and also provide school dropouts with employability skills. It is heartening to note Government’s commitment in encouraging entrepreneurship in the country through the new national skill development mission.

    Collectively, these sections makes a significant part of the population that needs enhancement in their financial capabilities. Also, these sections are extremely important contributors to the country’s GDP and labour force.

    2. The section of people who generate adequate surpluses may be encouraged to invest in the capital market through shares, mutual funds, gold bonds etc. The second category of people who generate meagre surpluses may invest in products like recurring deposits, SIPs etc. The third category of people who have recently come into the financial system, who live on subsistence income and do not generate any meaningful surpluses should be to encouraged to use the basic bouquet of financial products like BSBDA for daily transactions as well as introduce them to electronic remittance channels. Similarly, customised basic term insurance and pension products currently being made available to this target Group under the Government of India initiatives can also go a long way in providing them some financial security in the longer term.

    3. Apart from the existing and included banks which traditionally been leaders in bringing people in the formal financial system, the second category are financial Intermediaries like NBFCs and MFIs that have a good last mile reach and should be leveraged upon. The third type is of the new institutions like SFBs which have already started their operations. A coherent approach must be worked out so that the relative strengths of the three types of institutions can be leveraged upon.

    In conclusion, I would say that the cherished goal of universal Financial Inclusion can be achieved only through synergistic efforts between the mainstream financial entities and fringe players like rural co-operatives, NBFCs, MFIs, credit societies, NGOs ,etc. This is where the efforts of the Government and RBI are currently focussed. This is very much possible but it would require focussed efforts both on the supply side as well as on the demand side.


    1. You have to write in 300 words, you have written 666.
      Your 10-15 marks will be deducted for this blunder only. Keep this in mind in future.
      You don’t have to write in points.
      You deviated from the topic and had written about inclusive growth which is not the topic.
      The topic is ways to increase financial inclusion. You have to write points and give your own suggestions.
      Write it again in 300 words and remember you have to mention ways to increase financial inclusion not write about financial inclusion.

  3. Financial Inclusion is making available of financial services such as banking, credit, insurance etc, to all the sections of the society. The history of financial inclusion of India dates backs to setting up of Regional Rural banks and it has made tremendous progress until now.

    The future of financial inclusion should focus encouraging the people to use the formal banking facilities regularly, not just by opening the bank account or availing the service once and forgetting about it. This can be achieved by linking all the facilities to a single standard like adhaar across the country. The negative thoughts on adhaar or any technology needs to be addressed and the government should convince it is safe. The step should be educating the people of formal channels so that they come back and use it regularly rather than only once to avail the attractive benefits of freebies that government provides to increase the enrolment. There should be a mass campaign from the government, banks and the regulators to make this happen. There should be a behavioral change in the people just like in Swatch Bharat, which proved to a huge success. Having said this, the current approach, bringing the leftover people into formal financial net needs to be continued.

    Next, we can focus on having a common platform where all the implementing agencies can come together to make this happen. The government, regulators and implementing agencies can create a team with common objectives to work towards the success of financial inclusion. The government can also propose to have a separate regulator for this.
    It is well known that we have come a great way forward towards achieving universal financial inclusion, we need to accelerate this by using latest technology, innovative methods and it is very well visible that the government and the regulators are in a right path in achieving universal financial inclusion.

    312 words

    1. Your first paragraph is good.
      In 2nd paragraph mention the initiatives taken by gov to increase financial inclusion, then come to your suggestions. And ways that the existing schemes can be improved further.
      Spelling is Aadhar not adhaar.
      Rest is good. A lot of improvement can be done.
      Keep practicing.

  4. Ways to Increase Financial inclusion in India
    Financial inclusion is the process of bringing people into the formal financial sector and thus providing financial access s to them. The objective of this process was to provide people with convenient utilities to safeguard and manage their finance which they have earned. With the introduction PMJDY the government has initiated a programme which helped people open up bank accounts with much ease. Although opening bank accounts was a success still it lacked the objective coz many accounts were found to be inactive so with Aadhar linking and DBT, the people had made their accounts active and started utilising the services. Also they have brought new infrastructure that could handle all aspects of banking services for large segment of population like the BHIM (Bharat Interface for Money), UPI (Unified Payments Interface),Nesl ( National E-governance Services) ,BBPS (Bharat Bill Payment System) etc. All these helped improve the CRISIL score for FY 2016 is 58 from FY 2013 which was 50.Although improvement is seen, the credit penetration remains low at 56% compared to 78 % in deposit penetration. This problem was mainly faced by unbanked sector due to lack of proper tangible data for the credit sectors. With the introduction of CIBIL bureau, the CIBIL score index has helped many to provide better underwriters for unbanked customers. Also with Aadhar linking helped the credit writers get the required data to allow provide loans to people which was earlier limited only to large companies. This is what we now call democratisation credit.
    Financial literacy also helps in improving financial inclusion by bringing awareness to the people about their utilisation of banking facilities and services, loan facilities , how to microfinance their income, to avoid debt traps and also invest in proper schemes ,also benefit of having insurance etc. This can be achieved by providing education programme on finance literacy in schools ,colleges and in villages thereby helping the youth as well as adults be aware of the financial literacy The government have provided some initiate in this case as well like PMSBY (Pradhan Mantri Suraksha Bima Yojana) which is an accidental insurance and APY (Atal Pension Yojana) which is a pension scheme targeted for unorganised sector
    Although the government has made a large infrastructure for the financial inclusion it still needs larger role play of the regulators as well as the financial participants in bringing Financial literacy as well as services available to the common people thus paving the path for a better financial inclusion for all in India.

    1. Word limit exceeded. Word limit is 300 words.
      What is the CRISIL score you are mentioning?
      You might be talking about the CRISIL Inclusix.
      How cibil is helping in financial inclusion? No need to mention about this. The focus of financial inclusion is towards poor and unbanked. Gov is providing credit and overdraft without cibil also.

      You have not suggested any way to increase financial inclusion. The topic asked your views, not the initiatives taken by gov. In Concluding paragraph, you have to add your suggestions.

      A lot of improvement can be done. Keep practicing.

  5. Financial inclusion refers to offering banking and financial services to every individual in the society without any form of discrimination. In India where 5.3% of population lives below poverty line, financial inclusion is the need of the hour to lift people out of the vicious cycle of poverty which in turn contributes to the economic growth of the country. According to census 2011, out of 24.67 crore household, only about 14.48 core had access to banking services. In this regard, financial inclusion plays an important role in ensuring access and equity.

    In order to bring people into formal banking system, government has launched Pradhan Mantri Jan Dhan Yojana which brought an additional 310 Million Indians into formal banking system, social security schemes like Atal pension yojana and Vaya vandana yojana and Mudra yojana for the financial inclusion in MSME sector.
    Some other ways to achieve financial inclusion,
    1. Financial literacy is the first step towards achieving financial inclusion because most of the people are excluded from the financial services due to lack of awareness about the services being offered.
    2. Taking financial services to the remote areas by expanding branches of financial institutions and setting up ATMs within reach of people.
    3. Educating people about advantages of utilizing financial services.
    4. Giving more access to investment through national saving certificate, public provident funds etc.
    5. As Nachiket Mor committee suggests, Universal access to insurance and risk management products at reasonable charges and consumer right protection.

    Financial inclusion is a necessary building block for the sustainable economic development of a country. It not only promotes economic growth, but also helps in ensuring that prosperity is widely shared among all the sections of the society. Though India has come a long way in the process of financial inclusion, it still has a long way to go because India stands second in the unbanked population with 190 million people being deprived of formal banking services even today.

    Word Count – 325

    1. What is source of the population below poverty line? It is much more than that as per rangarajan estimates.
      Rest of your essay is good. Try not to write in points.
      Your writing skills are good. Keep practicing.

      1. True, I should have mentioned it clearly.
        Around 30% of population is below poverty line according to Rangarajan committee.
        5.3% is the population that lives in extreme poverty. (Source : TOI article, 2018)

  6. Financial inclusion can be defined as the process of bringing unbanked people into the banking net. It is the initiative to bring awareness and enable financial services to reach everyone in the country.

    Many people in the country are not aware of the advantages and convenience of banking facilities. Farmers, artisans and other people involved in small business depend upon non institutional lenders for loans. These lenders charge very high interest rates and also harass the borrowers. With financial inclusion, all the people can use financial institutions to save and borrow money in an effective manner.

    There are several ways to increase financial inclusion in India. First and foremost is to educate people and give them information about banks. There are currently banking correspondents who are involved in helping rural people use banking services. But, their number has to be increased and they need to be trained well. Every banks must have branches in rural and remote areas. Another important step taken by the Government was launching Jan Dhan Yojana in 2014 to open no frill acounts for people in the age group 18-65. Almost 30 crore Jan Dhan accounts were opened till 2018. Banks should continue working hard to add people and ensure usage of these accounts. Lastly, there is also need to educate people about small finance and payments banks and to ensure priority sector lending reaches the needy.

    There is still a long way to go before achieving complete financial inclusion in India. NABARD’s recent survey on financial inclusion shows that almost 87% rural people have accounts. This is definitely good news but it should not stop here. The government, financial institutions and people need to work together and ensure that no one is deprived of banking facilities.

    (Words: 298)

    1. Financial inclusion is not about only banking services. Credit, insurance, pension, investment etc are also included in that. So, your opening sentence can be better.
      Again in 2nd paragraph, you talked about banking services. You can include other gov initiatives also PMSBY, APY etc.
      Your last paragraph is good. But in your whole essay you are inclined towards only the banking services that shows that you might not be aware about the financial inclusion concept. Keep it in mind next time. You have to give an overview covering all aspects until specified.
      Overall good. Keep practicing.

    2. Financial inclusion can be defined as the process of providing financial services to the vulnerable and low income groups in a timely manner and at affordable costs. It envisages access of credit, banking services, insurance, pension to everyone without any discrimination. The need for financial inclusion was recognized years ago with the first step being the nationalization of banks in 1969.

      This has accelerated in the recent times with many initiatives being launched to boost financial inclusion. Banks have been mandated to open 25% branches in the rural areas alongwith banking correspondents who are required to help rural people in using banking services. But they need to be trained well and must be available to all the needy people. The Jan Dhan Yojana was launched in 2014 to enable the unbanked to open savings account. The number of accounts under this has reached 31 crore in 2018. But there is a need to ensure that these accounts are being used and more people access formal credit. The Government has launched insurance schemes like PMJJBY and PMSBY to make sure every person has access to insurance. Atal Pension Yojana is targeted at the people in the unorganized sector who need to be brought under the pension net. These schemes need to reach every vulnerable person. There is also a need to educate people about small finance banks and payments banks as they are functioning especially for small businesses and rural people.

      There is still a long way to go before achieving complete financial inclusion in India. NABARD’s recent survey on financial inclusion shows that almost 87% rural people have accounts. This is definitely good news but it should not stop here. The government, financial institutions and people need to work together and ensure that no one is deprived of these services.

      (Words – 300)

      1. Your content is good. But you did not addressed the topic asked. You have to mention ways which you think can be helpful. You have mentioned what government is doing.
        Try to suggest something which you think can help increase the financial inclusion.
        Overall good. Keep practicing

  7. Financial inclusion refers to delivery of basic financial services to every section of society at affordable cost.In indian financial system there is lack of simplicity and cost effectiveness .It is necessary to involve poor and low income group to financial mainstream. in the past the Government of India and The Reserve bank of India took various initiative regarding financial inclusion like nationalisation of banks. In recent , the Government and Reserve Bank of India some are
    1.PMJDY (Pradhan Mantri Jan Dhan Yojna) which aims to expand and make affordable acess to financial services such as bank accounts,remittances,credit,insurance and pension. With the JAM Trinity DBT will effectively take place without any leakages (PMSBY,PMJBY).
    2.For payment section the govt. launch BHIM-UPI for digital payments.
    3.Reserve Bank of India issue various guideline for financial inclusion in India No Frill account -2005, BSBDA, Small Finance Bank, Payment Bank, Business correspondence model,E-KYC etc.
    4. RBI compulsory requirement of opening branches in unbanked villages, Bank are directed to allocate at least 25% of the total number of branches to be opened during the year.
    The ways to increase the financial inclusion in India are,
    Firstly, There is lack of financial literacy among the poor and low income group peoples.For increasing
    the financial literacy the Banks will organised seminars, workshops on weekly or monthly basis and
    provide the correct information to peoples How to use the technology to provide ease of living.

    secondly, “Each Coin has Two sides”one is positive and the other side is negative, more the uses of
    digital technology create ease of living ,ease of access to financial products but it will create a threat to
    banking fraud and cyber attack.The government along with the reserve Bank of India will take various
    steps toward preventing banking fraud and provide a cyber security to banking sector.and create safe
    and secure banking habit among peoples.

    The economic growth of a country can be enlarge by using Financial Inclusion as a bridge that would
    facilitate fuller participation by weaker section of society.It enhance GDP growth by broadening the
    resource base of the financial system by developing a culture of saving among large segment of rural
    population bringing low income group into the banking sector.

    1. Word limit exceeded. Lot of basic grammatical mistakes.
      Your content is very good. Try to make 3 or 4 paragraphs and do not write in points.
      The formatting of your essay is not good.
      Work on your grammatical skills.
      Overall good. Keep practicing.

      1. sir please grammaticall error kaha hai unhe highlight kar de mujhe kaise pata chjalega ka error kaha hai.then mai usko thik kar sakti hu.

  8. Financial Inclusion means providing basic banking facilities to the poor and needy people on time especially in unbanked rural areas. Till now RBI has mandated all banks to open new branches in unbanked rural areas, appointment of business correspondents to improve financial inclusion. In 2014, Government launched a scheme called PMJDY(basic savings bank and deposits account) which is a major boost for financial inclusion in India in recent years like never before.

    Financial Inclusion is not only useful for providing banking facilities but also it will boost economic growth. The use of technology will help a lot to improve Financial Inclusion in India. AEPS transactions,RUPAY cards which was introduced by NPCI in purview of boosting Financial Inclusion. AEPS(Aadhaar Enabled Payment System) introduced especially for rural people is seeing its growth each and every day. Instead of having a brick and mortor branches in each village, if bank are appointing a Business correspondents and providing basic facilities like withdrawal, deposit, card transactions,small value Ekyc account opening, Loan remittance, FD and RD account opening and remittance, enrollment for social security schemes(like PMJJBY,PMSBY), subscription for Atal Pension Yojana, withdrawal and deposit for Self Help Groups will help a lot to improve financial inclusion. To provide above facilities through BC agents, there should be appropriate security measures like authentication for each and every financial transaction using Aadhaar authentication through biometric, IRIS and OTP etc.. .It will also improve the cross selling of products through banks and helps to improve its business growth.

    If all the above facilities are provided in unbanked rural areas through BC with essential security measures in place along with appropriate technology, it will definitely boost financial inclusion in India and provide more number of jobs to rural people through banking sector as BC’s. Finally a robust economic growth is possible through Financial Inclusion.

    1. Financial inclusion is not only about banking. It also includes credit, insurance, pension etc.
      Spelling mistake – mortar
      Your essay is more inclined on BCs. It shows that you don’t have in depth knowledge of the topic.
      Mentioning BC is fine. But you spend 2 paragraphs on that.
      You can cite some data, before and after pmjdy.
      You can write, financial literacy can be promoted. Seminars, workshops can help.
      Overall good. But can be better.
      Keep practicing.

  9. The pursuit of making financial services accessible to all individuals and businesses at affordable costs is called Financial Inclusion (FI) or Inclusive Financing. It is a global critical indicator for development and social well-being of a society.

    The major thrust for FI came in 2005 when the Reserve Bank of India (RBI) highlighted the significance of FI in an annual policy statement. The basic financial products namely a basic bank account, affordable need-based credit card, remittance, insurance and pension services became more accessible to the public with the introduction of 3-year Financial Inclusion Plans (FIP) and Pradhan Mantri Jan Dhan Yojana (PMJDY). The utilization of technology in the form of The RuPay card, and the concepts of Payments and Small Finance Banks helps in further inclusion of people in the formal financial sector. With its own FI system for measuring progress at a grass root level, India improved its score in Global Findex (GFX) from 35 in 2011 to 80 in 2017.

    The first wave of FI witnessed the introduction of beneficiaries into the banking sector. The next wave should prompt beneficiaries to use their access to financial services for improving their economic and social well-being. The lack of Financial and Digital Literacy is the major challenges for the second wave. A bottoms-up top approach should be present in tackling this issue. The basic concepts of FI, Finance should be compulsorily taught at various levels of education. The RBI, banks and government think tanks should coordinate with education boards at various levels of education to achieve this. The new beneficiaries should be made aware of the importance of paying loans in time. NGOs, the corporate sector, banks, NBFCs (Non-Banking Financial Companies), and government departments currently engaged in FI should be persuaded to increase the utilization of FI infrastructure.

    1. Good essay. You have good knowledge of the topic. Well framed. No grammatical mistakes.
      You can also include about rbi financial literacy week.
      Keep practicing.

  10. Financial inclusion means to provide financial service at affordable rate. The main motto is to help needy and poor so that they access all the financial facility at minimal rate. India is an agriculture based country and thus majority of population lives in rural area. so to make them aware of financial facilities and ease their day to day financial work is termed as financial inclusion.

    The first step towards financial inclusion was taken in 1969 when banks were nationalized. The reason behind it was to reduce or prevent banks from creating monopoly or targeting particular group of people. Nationalization leads to financial inclusion as banks were encouraged to operate in rural areas. Many more steps like establishing RRBs, NABARD, IRDAI etc. were carried out which helped to improve access of financial facilities.
    present NDA government launched JAN DHAN YOJNA in 2014 this was also a step towards financial inclusion. This was a huge step towards financial inclusion as it provided many other facilities like accidental cover, Death cover, Over draft facility, zero balance etc. Other insurance schemes like PRADHAN MANTRI SHURAKSHA YOJAN and PRADHAN MANTRI JEEVAN JYOTI BEEMA YOJNA also provides death cover at nominal premium of Rs 12 and Rs 330 annually respectively. Financial inclusion also means to make the life the poor class of the society financially stable.
    The question is are the people benefited with this schemes? Steps must be taken to spread awareness about the schemes and financial services. For this government is carrying out many programs and seminars to spread financial literacy. If one illiterate person is taught about the services, he will teach others too thus a chain will be formed and one day majority of rural people will be able to access the financial services and that will be a true financial inclusion.

    1. Some grammatical mistakes are there. Some spelling mistakes also.
      Good introduction.
      Try to avoid using political party name, just write government.
      No need to write full scheme names and their amount. It shows that you are just extending the sentence to complete the 300 words.
      The suggestions in last paragraph can be better. You should try to include more points here as the topic of the essay is demanding this.
      Overall good attempt. Keep practicing.

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