Beyond bank accounts

Relevance: RBI has published the Financial Inclusion Index (FI- Index)

Synopsis: Given the need to attain equitable growth, it is important to Focus on financial inclusion. The study of RBI report becomes important in this regard.

Click here to read about FI-Index

What is the need for Financial Inclusion?

Financial Inclusion is the process of ensuring affordable financial products and services that meet the need of individuals. The government over the years has worked to connect more households to the financial system

For this, the government also launched Jan Dhan accounts and the use of direct benefit transfers. However, the RBI index acknowledged this, that mere opening of bank accounts or transferring the government benefits will not serve the purpose

What needs to be done

1. Provide financial literacy to people and encourage them to keep their savings with the banking system and invest in financial products.
2. Also, the government has to make sure that the person is able to access the account frequently with relative ease. For this, technology will play the great role

Benefits of Financial Inclusion

• It will not only help individuals or lower-income groups but will also increase financial savings at the aggregate level.
• This will further help boost investment over time and increase long-term growth potential.

However, many financial products — particularly insurance products — have been mis-sold to a large number of middle and upper-middle-class investors. These incidents can affect trust and defeat the very objective of financial inclusion.

Way forward:

Financial institutions are based on trust. This government and all regulators must work to build trust.