Analysis of Financial Inclusion for Economic and Social Development

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1 Volume-5, Issue-6, December-2015 International Journal of Engineering and Management Research Page Number: Analysis of Financial Inclusion for Economic and Social Development Chaman Kumar Faculty, Department of e-commerce Kumaun University Nainital, INDIA ABSTRACT With the progress of the Indian economy, especially when the focus is on the achievement of sustainable development, there must be an attempt to include maximum number of participation from all the sections of the society. But the lack of awareness and financial literacy among the rural population of the country is hindering the growth of the economy as majority of the population does not have access to formal credit. Financial inclusion enables improved and better sustainable economic and social development of the country. It helps in the empowerment of the underprivileged, poor and women of the society with the mission of making them selfsufficient and well informed to take better financial decisions. As the majority of the rural population is still not included in the inclusive growth, the concept of financial inclusion becomes a challenge for the Indian economy. Inclusive growth is possible only through proper mechanism which channelizes all the resources from top to bottom. This research paper aims to analyse the effect of financial inclusion on economic and social development of India. Keyword--- sustainable, credit, inclusive growth, economic and social development I. INTRODUCTION Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society, in contrast to financial exclusion where those services are not available or affordable. An estimated 2 billion working-age adults globally have no access to the types of formal financial services delivered by regulated financial institutions. Financial inclusion is the recent concept which helps achieve the sustainable development of the country, through available financial services to the unreached people with the help of financial institutions. Financial inclusion can be defined as easy access to formal financial services or systems and their usage by all members of the economy. The committee on financial inclusion, of government of India, has defined financial inclusion as the process of ensuring timely access to financial services and adequate credit where needed by vulnerable groups such as the weaker sections and low income groups at an affordable cost (Rangarajan Committee, 2008). The process of financial inclusion consists of ensuring bank accounts to each household and offering their inclusion in the banking system (Reddy, 2007). Access to financial services promotes social inclusion, and builds selfconfidence and empowerment. In an address Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India at the National Finance Conclave 2010, has mentioned that financial inclusion is no longer a policy choice but it is a policy compulsion today. And banking is a key driver for inclusive growth. There are various socio-cultural, economic issues that hinder the process of financial inclusion. For instance on demand side, it includes lack of awareness and illiteracy (see Throat, 2007). From supply side, lack of avenues for investment such as poor bank penetration, unwillingness of banks to do financial inclusion or high cost involved in financial inclusion seem to be some likely reasons for financial exclusion. However deputy governor of RBI has recently clarified that the latter two reasons are myths, i.e. the cost in involved in financial inclusion is not unbearable by the banks and that it is not true that the banks are unwilling to do financial inclusion. Since 2005, the Reserve Bank of India (RBI) and the Government of India (GOI) have been making efforts to increase financial inclusion. Measures such as SHG-bank linkage program, use of business facilitators and correspondents, easing of Know Your Customer (KYC) norms, electronic benefit transfer, separate plan for urban financial inclusion, use of mobile technology, bank branches and ATMs, opening and encouraging nofrill-accounts and emphasis on financial literacy have played a significant role for increasing the use of formal sources for availing loan/ credit. Measures initiated by the government include, opening customer service centers, credit counselling centers, Kisan Credit Card, Mahatma Gandhi National Rural Employment Guarantee Scheme and Aadhar Scheme. These renewed efforts are more focused than the earlier measures which were more general in nature having a much wider scope. Though the measures were initiated earlier, their impact on the 169 Copyright Vandana Publications. All Rights Reserved.

2 rural population needs to be analysed and reframed in order to understand the present scenario in the rural areas. Financial inclusion and financial literacy have been important policy goals for quite some time. The Finance Minister has emphasised inclusion in the budget speech. At various fora, the Reserve Bank of India (RBI) and senior government officials had been hinting at a big-bang action plan for financial inclusion to be announced by Prime Minister Narendra Modi in his Independence Day address to the nation. There were reports of the authorities getting ready with a Comprehensive Financial Inclusion Plan (CFIP) or Sampoorn Vittiya Samaveshan in Hindi, which will be breathtaking in scope and extremely ambitious. The Prime Minister did not disappoint. The Pradhan Mantri Jan-Dhan Yojana, which figured prominently in his speech, heralded the new plan of action. It will be based substantially on the CFIP. Details are, however, awaited. Recently, the RBI Governor Raghuram Rajan outlined, in conceptual terms, what inclusion should be. Simplicity and reliability in financial inclusion in India, though not a cure all, can be a way of liberating the poor from dependence on indifferently delivered public services and from venal politicians, he said. Further, in order to draw in the poor, the products should address their needs a safe place to save, a reliable way to send and receive money, a quick way to borrow in times of need or to escape the clutches of the money lender, easy to understand life and health insurance and an avenue to engage in savings for the old age. The RBI will accordingly nudge banks to offer a basic suite of services. While over the years the government has taken several steps to spread the banking habit, formidable tasks lie ahead. Of the crore households in the country, crore do not have access to banking services. In rural areas, 44 per cent households and in urban areas 33 per cent still do not have a bank account. The government s latest plan of action, as envisaged in the CFIP or Sampoorn Vittiya Samaveshan, hopes to extend coverage of basic financial services all excluded households. In the first phase, the CFIP will endeavour to provide universal access to all the beneficiaries through sub-service areas (SSAs). Each SSA will consist of 100-1,500 families in a cluster of villages and each SSA will be serviced by a BC agent (BCA) whose task it will be to facilitate account opening and smooth banking operation. The latest inclusion plan will have as its focus households rather than geographical areas. After satisfactory conduct of accounts it is proposed to offer reasonable need-based credit facilities for which overdraft facilities will be sanctioned. A smart card (RuPay card) will be issued to enable customers to operate their accounts even without BCs. Simultaneously suitable awareness will be created among the financially excluded. In the second phase, there is a proposal to make available a pension scheme for identified individuals in the unorganised sector and offer microfinance products through government-owned insurance companies. For the Jan-Dhan Yojana to succeed the following steps are indicated The business correspondent model should be extended to include entities such as kirana shops, corporates and others. It is obvious that BCs need to be properly remunerated and have the full support of banks. Banks have tied up with common service centres (CSCs) as BCs. Insistence on KYC (know your customer) norms has hindered the opening of new accounts even in urban areas. Great significance is, therefore, attached to e-kycs. The Aadhaar can play an extremely useful role. Since mobile banking through phones is to play an increasingly important role in a scenario where physical bank branches will be few, greater co-ordination between mobile telephone companies and banks will be necessary. It goes without saying that State governments support will be crucial. Commercial viability will be the key to the programme s success. Past experience suggests that without proper incentives, the facilities on offer will not be used by the really needy. Banks will be saddled with a large number of dormant accounts. Dimensions of Financial Inclusion The level of financial inclusion in India can be measured based on three tangible and critical dimensions. These dimensions can be broadly discussed under the following heads: Branch Penetration Penetration of a bank branch is measured as number of bank branches per one lakh population. This refers to the penetration of commercial bank branches and ATMs for the provision of maximum formal financial services to the rural population. Credit Penetration Credit Penetration takes the average of the three measures: number of loan accounts per one lakh population, number of small borrower loan accounts per one lakh population and number of agriculture advances per one lakh population. Deposit Penetration Deposit penetration can be measured as the number of saving deposit accounts per one lakh population. With the help of this measure, the extent of the usage of formal credit system can be analysed. Among the three dimensions of financial inclusion, credit penetration is the key problem in the country as the all India average ranks the lowest for credit penetration compared to the other two dimensions. Such low penetration of credit is the result of lack of access to credit among the rural households. Therefore, the problem of low penetration needs to be understood more deeply. An attempt has been made to study the problem by examining the progress of financial inclusion over the years and efforts made by the government for reducing the low penetration of credit. 170 Copyright Vandana Publications. All Rights Reserved.

3 II. NEED OF FINANCIAL INCLUSION According to the United Nations the main goals of inclusive finance are as follows: Access at a reasonable cost of all households and enterprises to the range of financial services for which they are bankable, including savings, short and long-term credit, leasing and factoring, mortgages, insurance, pensions, payments, local money transfers and international remittances. Sound institutions, guided by appropriate internal management systems, industry performance standards, and performance monitoring by the market, as well as by sound prudential regulation where required Financial and institutional sustainability as a means of providing access to financial services over time multiple providers of financial services, wherever feasible, so as to bring cost-effective and a wide variety of alternatives to customers (which could include any number of combinations of sound private, non-profit and public providers). There has been a many objectives related to the need for financial Inclusion such as Economic Objectives For the equitable growth in all the sections of the society leading to a reduction of disparities in terms of income and savings the financial inclusion can serve as a boom for the underdeveloped and developing nations. Mobilisation of Savings If the weaker sections are provided with the facility of banking services the savings can be mobilised which is normally piled up at their households can be effectively utilised for the capital formation and growth of the economy. Larger Market for the financial system To serve the requirements and need of the large section of society there is a surgent need for the larger market for the financial system which opens up the avenue for the new players in the financial sector and can lead to growth of banking sector also. Social Objectives Poverty Eradication is considered to be the main sole objective of the financial inclusion scheme since they bridge up the gap between the weaker section of society and the sources of livelihood and the means of income which can be generated for them if they get loans and advances. Sustainable Livelihood Once the weaker section of society got some money in loan form they can start up their own business or they can support their education through which they can sustain their livelihood. Thus financial inclusion is turn out to be boom for the low income households. Political Objectives There are certain other political objectives which can be achieved with the wider inclusion of lower strata in the society and an effective direction can be given to the government programmes. III. RESEARCH AND METHODOLOGY The information is collected through secondary sources during the research. That information was utilized for evaluation and based on that interpretations were made. The secondary data was collected from journals, books, newspapers and websites etc. Objective of the Study To explore the need and significance of financial inclusion for economic and social development of society. To analyse the current status of financial inclusion in Indian economy. To study the access of rural people to bank branches and the number of ATM opened in those areas. To study the progress of State Cooperative Banks in financial inclusion plan. IV. FINANCIAL INCLUSION IN INDIA In India, financial inclusion first featured in 2005, when it was introduced by K C Chakraborthy, the chairman of Indian Bank. Mangalam Village became the first village in India where all households were provided banking facilities. Norms were relaxed for people intending to open accounts with annual deposits of less than Rs. 50,000. General credit cards (GCCs) were issued to the poor and the disadvantaged with a view to help them access easy credit. In January 2006, the Reserve Bank permitted commercial banks to make use of the services of non-governmental organizations (NGOs/SHGs), micro-finance institutions, and other civil society organizations as intermediaries for providing financial and banking services. These intermediaries could be used as business facilitators or business correspondents by commercial banks. The bank asked the commercial banks in different regions to start a 100% financial inclusion campaign on a pilot basis. As a result of the campaign states or U.T.s like Pondicherry, Himachal Pradesh and Kerala announced 100% financial inclusion in all their districts. Reserve Bank of India s vision for 2020 is to open nearly 600 million new customers' accounts and service them through a variety of channels by leveraging on IT. However, illiteracy and the low income savings and lack of bank branches in rural areas continue to be a roadblock to financial inclusion in many states and there is inadequate legal and financial structure. The progress in the development of financial inclusion in India can be examined by understanding the stages involved in it. The concept of examining financial access became important immediately after the All-India Rural Credit Survey that was completed in the 1950s. The results of the survey revealed that farmers relied heavily on money-lenders in the year Only the urban areas had large number of bank branches 171 Copyright Vandana Publications. All Rights Reserved.

4 compared to rural areas. Such a condition continued in the country until RBI started financial inclusion growth model in the 2000s. Because the urban areas were fully concentrated with numerous bank branches, this resulted in the higher absorption of bank credit in the urban areas. Thus, the growth of the private business credit was seen in the year from 44 percent to 60 percent in the year 1970 Therefore, for increasing the level of financial inclusion, the GOI and RBI have taken few actions which include the following: Nationalization of banks (1969, 1980) Priority Sector Lending Requirements Establishment of Regional Rural Banks (RRBs) (1975, 1976) Service area approach (1989) Self-help group-bank linkage program (1989, 1990) The other measures taken by GOI, RBI and National Bank for Agriculture and Rural Development (NABARD) are shown in Table 1. Table 1: Measures taken by GOI, RBI and NABARD Customer Service Role of NGOs, SHGs Financial Inclusion Centres and MFIs Technology Fund Credit Counselling BF and BC models Separate Plan for Urban Centres Financial Inclusion and Micro Pension Model Electronic Benefit Adhaar Scheme Nationwide Electronic Transfer Scheme The National Financial Inclusion Financial Literacy Agricultural Insurance System through Audio Visual Scheme Project Financial medium - Doordarshan No-frill Account Literacy Support to Cooperative Know Your Customer National Rural Financial Banks and RRBs for Inclusion Plan setting up of Financial General Credit Card Literacy Centres Financial Inclusion Project on Processor Fund Farmers Club Program Cards Project on e-grama Rural Volunteers as Micro Finance Development Fund SHG-Post Office Linkage Source: RBI, Economic Survey, Government of India, Various Issues. Book Writers Though a number of measures have been initiated by the GOI, RBI and NABARD, the status of financial inclusion in the country still needs more support. The condition of financial inclusion in the different states of India in 2002 was not encouraging (Table 2). It shows that the all India percentage of the level of non-indebtedness, i.e. level of not accessing formal credit, of the rural household is 51.4 percent. This low credit penetration after years of measures was a matter of concern. State/Region Table 2: Financial Inclusion in India 2002 Non-indebted Farmer State/Region Households Non-indebted Farmer Households Lakh % Lakh % 172 Copyright Vandana Publications. All Rights Reserved.

5 Northern West Bengal Haryana Central Himachal Pradesh Chhattisgarh Jammu & Kashmir Madhya Pradesh Punjab Uttar Pradesh Rajasthan Uttaranchal North Eastern Western Arunachal Pradesh Gujarat Assam Maharashtra Manipur Southern Meghalaya Andhra Pradesh Mizoram Karnataka Nagaland Kerala Tripura Tamil Nadu Sikkim Eastern Bihar Jharkhand Orissa All India Source: GOI (2008). In recent years, the CRISIL Inclusix index for 2009 and 2010 also shows a dismal situation (Table 3), although, 2011 shows some progress in the development of financial inclusion in India. Table 4 shows the further progress of all banks that are associated with financial inclusion including RRBs Table 3: Financial Inclusion at regional level Region Inclusix 2011 Inclusix 2010 Inclusix 2009 India Southern Region Western Region Northern Region Eastern Region North-Eastern Region Source: CRISIL (2013). Table 4: Financial Inclusion Progress: Banks and RRBS Year ended Year ended. March 2010 March 2014 Banking Outlets in Villages- Branches 33,378 46,126 Banking Outlets in Villages- Branchless Mode 34,316 3,37,678 Banking Outlets in Villages- Total 67,694 3,83,804 Urban Locations covered through BCs ,730 Basic Savings Bank Deposit A/c through branches (No. in million) Basic Savings Bank Deposit A/c through branches (Amt. in Copyright Vandana Publications. All Rights Reserved.

6 billion) Basic Savings Bank Deposit A/c through BCs (No. in million) Basic Savings Bank Deposit A/c through BCs (Amt. in billion) Basic Savings Bank Deposit Accounts Total (No. in million) Basic Savings Bank Deposit Accounts Total ( Amt. in billion) Overdraft facility availed in Basic Savings Bank Deposit Accounts (No. in million) Overdraft facility availed in Basic Savings Bank Deposit Accounts (Amt. in billion) KCCs (No. in million) KCCs (Amt. in billion) 1, ,684.5 GCC - (No. in million) GCC - (Amt. in billion) ,096.9 Information and Communication Technology A/Cs-BC Transaction - (No. in million) (During the year) Information and Communication Technology A/Cs-BC Transactions - (Amt. in billion) (During the year) Source: RBI Annual Report ( ) V. ANALYSIS OF VARIOUS STATISTICS ON FINANCIAL INCLUSION IN INDIA A financial inclusion survey was conducted by World Bank team in India between April-June, 2011, which included face to face interviews of 3,518 respondents. The sample excluded the north eastern states and remote islands representing approximately 10 per cent of the total adult population. The survey suggest in developing countries India lags behind in opening bank accounts, but is much closer to the global average when it comes to borrowing from formal institutions. In India, 35 per cent of people had formal accounts versus the global average of 50 per cent and the average of 41 per cent in developing economies as can be seen from the table 5 The survey also points to the slow growth of mobile money in India, where only 4 per cent of adults in the Global Findex sample report having used a mobile phone in the past 12 months to pay bills or sends or receive money. Keeping in view the goal of bringing banking services to identified 74,414 villages with population above 2,000 by March 2012, and thereafter progressively to all villages over a period of time, the Reserve Bank advised commercial banks that while preparing their Annual Branch Expansion Plan (ABEP), they should allocate at least 25 per cent of the total number of branches proposed to be opened during the year in unbanked rural centres. Table - 5: Key Statistics on Financial Inclusion in India: A Survey 174 Copyright Vandana Publications. All Rights Reserved.

7 Source: Asli Demirguc - Kunt and Klapper, L. (2012): Measuring Financial Inclusion, Policy Research Working Paper, 6025, World Bank,April Thus a lot has to be done at to done to bridge the gap between the formal financial institutions and the rural people needs.to make them aware of the fact about the facilities available for their benefit and which can help India to turn out to a developed nation from a developing nation. As can be seen from the below table- 6 that the financial inclusion plan has shown a tremendous growth in the past two years. Banks are gaining momentum in areas like opening up of new banking outlets in rural areas, deploying new business correspondents (BC s),opening of new frills accounts, granting more credit through KCC(Kisan Credit Card) AND GCC s(general Purpose Credit Card). Table-6 : Progress of SCBs in Financial Inclusion Plan (excluding RRBs) Particulars March March March Variation March 2012 over March No. Of BCs/BC33,042 57,329 95,767 62,725 Agents Deployed Number of banking 27,353 54,246 82,300 54,947 outlets In villages with population above 2,000 Number of banking 26,905 45,937 65,234 38,329 outlets In villages with population less than 2,000 Total number of 54,258 1,00,183 1,47,534 93,276 banking outlets in villages Of which a) Through21,475 22,662 24,701 3,226 Branches b) Through BCs 32,684 77,138 1,20,355 87,671 c) Through Other ,478 2,379 Modes Urban Locations 433 3,757 5,875 5,442 covered through BCs No-Frill accounts Number (millions) Amount (` billions) Overdraft availed in No -Frill Accounts Number (millions) Amount (` billions) KisanCreditCard KCC Number of Accounts ( millions) Outstanding amount 175 Copyright Vandana Publications. All Rights Reserved.

8 (` billions) General Purpose Credit Card (GCC) Number of Accounts (millions) Outstanding amount (` billions) ICT Based Accounts through BCs Number of Accounts ( millions) Number of transactions during the year (millions) Source: Asli Demirguc - Kunt and Klapper, L. (2012): Measuring Financial Inclusion, Policy Research Working Paper, 6025, World Bank,April From the above table it is inferred that statistics the number of Business Correspondents have increased and the number of rural banking branches have increased from 27,353 in 2010 to 82,300 in 2012.The primary mode which has gained momentum for opening new saving account in rural banks is through Business Correspondent (BC s).we can see the account opened by business correspondents in 2010 is 32,684 which has increased to 1,20,355 in 2012.Also the opening of new no-frill account is on the higher side i.e from 50.3 million account to million account.the distribution of KCC (Kisan credit cards) and GCC (General purpose credit card) has also been on increasing side but still there is major scope for reaping its benefits.hence the survey states that though the govt has initiated many steps and the steps are also moving in positive direction and the financial inclusion has shown an immense growth which if channelize in proper manner can make the life of many rural villagers easy and steady. Table 7: Outreach of Banking Sector Country wise position India vis-à-vis the World Geographic and demographic penetration indicates the outreach of banking sector. Geographic penetration can be measured in terms of number of bank branches per 1000 sq km and number of ATMs per 1000 sq km. larger number of branches and ATMs per Sq. kms.the following table represent the comparison of Geographic and Demographic penetration of Banking Services of various countries. Country Geographic Penetration Demographic Penetration No of bank No of ATMs per No of branches No of ATMs branches per 1000 sq km per 100,000 per 100, sq km people people Korea U.K India Indonesia USA Mexico Brazil China Russia Source: Reaching Out: Access to and use of banking services across countries, Thorsten Beck, Asli Demirguc-Kunt and Maria Soledad Martinez Peria, World Bank Policy Research, WPS 3754, World Bank, 2005 # - As per Trends and Progress of Banking in India, RBI, (Appendix Table III.35), end March 2007 there were 27,088 ATMs of Scheduled Commercial Banks in India. 176 Copyright Vandana Publications. All Rights Reserved.

9 From the above table it is inferred that India being the developing nation and having a large number of rural sector still it lags behind in providing the basic facility of opening of number of bank branches in the rural areas. VI. RBI RECOMMONDATION FOR FINANCIAL INCLUSION The Reserve Bank had advised all public and private sector banks to prepare and submit their board approved financial inclusion plans (FIPs) to be rolled out in 3 years from April 2010 to March These FIPs contained self-set targets in respect of opening of rural brick and mortar branches, deployment of business correspondents (BCs), coverage of unbanked villages through various modes, opening of no-frills accounts, Kisan Credit Cards (KCCs) and General Credit Cards (GCCs) to be issued etc.in India, RBI has initiated several measures to achieve greater financial inclusion, such as facilitating no- frills accounts and GCCs for small deposits and credit. Some of these steps are: Opening of No-Frills Accounts: Basic banking no-frills account is with nil or very low minimum balance as well as charges that make such accounts accessible to vast sections of the population. Banks have been advised to provide small overdrafts in such accounts. Relaxation on Know-Your-Customer (KYC) Norms: KYC requirements for opening bank accounts were relaxed for small accounts in August 2005, thereby simplifying procedures by stipulating that introduction by an account holder who has been subjected to the full KYC drill would suffice for opening such accounts.the banks were also permitted to take any evidence as to the identity and address of the customer to their satisfaction. It has now been further relaxed to include the letters issued by the Unique Identification Authority of India containing details of name, address and Aadhaar number. Use of Technology: Recognizing that technology has the potential to address the issues of outreach and credit delivery in rural and remote areas in a viable manner,banks have been advised to make effective use of information and communications technology (ICT), to provide doorstep banking services through the BC model where the accounts can be operated by even illiterate customers by using biometrics, thus ensuring the security of transactions and enhancing confidence in the banking system. Adoption of EBT: Banks have been advised to implement EBT by leveraging ICT-based banking through BCs to transfer social benefits electronically to the bank account of the beneficiary and deliver government benefits to the doorstep of the beneficiary, thus reducing dependence on cash and lowering transaction costs. GCC: With a view to helping the poor and the disadvantaged with access to easy credit, banks have been asked to consider introduction of a general purpose credit card facility up to `25,000 at their rural and semiurban branches. The objective of the scheme is to provide hassle-free credit to banks customers based on the assessment of cash flow without insistence on security, purpose or end use of the credit. This is in the nature of revolving credit entitling the holder to withdraw up to the limit sanctioned. Simplified Branch Authorization: To address the issue of uneven spread of bank branches, in December 2009, domestic scheduled commercial banks were permitted to freely open branches in tier III to tier VI centres with a population of less than 50,000 under general permission, subject to reporting. In the north - eastern states and Sikkim, domestic scheduled commercial banks can now open branches in rural, semi-urban and urban centres without the need to take permission from RBI in each case, subject to reporting. Opening of Branches in Unbanked Rural Centres: To further step up the opening of branches in rural areas so as to improve banking penetration and financial inclusion rapidly, the need for the opening of more bricks and mortar branches, besides the use of BCs, was felt. Accordingly, banks have been mandated in the April monetary policy statement to allocate at least 25% of the total number of branches to be opened during a year to unbanked rural centres. Engaging Business Correspondents (BCs):In January 2006, RBI permitted banks to engage business facilitators (BFs) and BCs as intermediaries for providing financial and banking services. The BC model allows banks to provide doorstep delivery of services, especially cash in-cash out transactions, thus addressing the last-mile problem. The list of eligible individuals and entities that can be engaged as BCs is being widened from time to time. With effect from September 2010, for-profit companies have also been allowed to be engaged as BCs. VII. CONCLUSION The government and Reserve Bank of India have been making concerted efforts since mid1950 s and with renewed vigor since 2005 but success has been rather slow, due to lack of a strong network, and financial instruments not suited to rural residents. Moreover, lack of awareness and financial literacy among rural population are primarily responsible for low penetration of financial services. Branch density in a state measures the opportunity for financial inclusion in India. Literacy is a prerequisite for creating investment awareness, and hence intuitively it seems to be a key tool for financial inclusion. But the above observations imply that literacy alone cannot guarantee high level financial inclusion in a state. Branch density has significant impact on financial inclusion. It is not possible to achieve financial inclusion only by creating investment 177 Copyright Vandana Publications. All Rights Reserved.

10 awareness, without significantly improving the investment opportunities in an India. For standing out on a global platform India has to look upon the inclusive growth and financial inclusion is the key for inclusive growth.there is a long way to go for the financial inclusion to reach to the core poor according to K.C. Chakrabarty RBI Deputy Governor Even today the fact remains that nearly half of the Indian population does not have access to formal financial services and are largely dependent on money lenders. Mere opening of no-frill bank accounts is not the purpose or the end of financial inclusion while formal financial institutions must gain the trust and goodwill of the poor through developing strong linkages with community-based financial ventures and cooperative. Financial Inclusion has not yielded the desired results and there is long road ahead but no doubt it is playing a significant role and is working on the positive side REFERENCES [1] Agarwal, Parul (2014), Financial Inclusion in India: a Review and Initiatives and Achievements, IOSR Journal of Business and Management, Volume 16, Issue 6, June [2] Gupta, Sanjeev Kumar (2011), Financial Inclusion IT as an enabler, RBI Occasional Paper, Volume 32, No. 2. [3] Asli Demirguc - Kunt and Klapper, L. (2012): Measuring Financial Inclusion, Policy Research Working Paper, 6025, World Bank,April [4] Dr Chakrabarty KC, DG, RBI. Keynote address on Furthering Financial Inclusion through Financial Literacy and Credit Counselling. [5] Subbiah, Nalini (2014), Role of Banks in Financial Inclusion, Research Journal of Commerce and Behavioural Science, Volume 1, No. 4. [6] Michael Chibba Financial Inclusion, Poverty Reduction and the millennium Development Goals, European Journal of Development Research Vol. 21, [7] Srikanth, R. (2013), A Study on - Financial Inclusion - Role of Indian Banks in Reaching Out to the Unbanked and Backward Areas, International Journal of Applied Research and Studies, Volume 2, Issue 9, September. [8] RBI (2014a), Report on comprehensive financial services for small businesses and low Income households (Chairman: Dr. N. Mor). [9] RBI (2014b), Report of the Technical Committee on Mobile Banking (Chairman: Mr. B Sambamurthy). [10] Subbiah, Nalini (2014), Role of Banks in Financial Inclusion, Research Journal of Commerce and Behavioural Science, Volume 1, No Copyright Vandana Publications. All Rights Reserved.