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Financial Inclusion – Role of Commercial Banks in India

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Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. It is argued that as banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of public policy. The term "financial inclusion" has gained importance since the early 2000s, and is a result of findings about financial inclusion sand its direct correlation to poverty. Financial inclusion is now a common objective for many central banks among the developing nations.
Joint Liability Groups (JLGs) of the poor such as landless, share croppers and tenant farmers is another innovative mechanism towards ensuring greater financial inclusion. This mechanism has already been operationalised in a few regions under a Pilot Project of NABARD. Commercial Banks have been actively promoting such groups for effectively purveying credit and other facilities to such clients. In the current budget the govt. has earmarked a sum of Rs 100 Crores for Banks to open branches in un banked and difficult areas. Biometric card based authentication devices, are being used by the bank’s Business Correspondents at the villages.
So far, 344 districts have been identified by State Level Bankers Committee for 100 per cent financial inclusion. As a result of the campaign of the public sector banks, 175 districts in 21 States and 7 Union Territories have reported having achieved the target. The self-help group (SHG)-bank linkage Programme has emerged as the major micro-finance Programme in the country and is being implemented by commercial banks, RRBs and co-operative banks. As on March 31, 2008 3.6 million SHGs had outstanding bank…...

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