Financial inclusion is integral to holistic development

News: India is working on the path to achieving the motto of “Sabka Saath, Sabka Vikas, Sabka Vishwas“, a vision enshrined by the Prime Minister of India. Recently budget also shows that the government is focused on boosting financial inclusion.

What steps does government initiate to achieve financial inclusion?

Financial system: Reserve Bank of India has constituted an innovation hub to address the challenges of financial inclusion and efficient banking. The government took the initiative to resolve stressed assets worth ₹2 trillion via the National Asset Reconstruction Company (NARCL).

The government also introduces various steps to strengthen the financial system. e.g. An asset-quality review in 2021, reported that the gross non-performing assets (NPAs) of public sector banks had decreased by 31.2%. The reforms launched under this government have helped recover about ₹5 trillion from financial defaulters.

Expanding the banking system: In the recent budget, the government announced to bring 100% of India’s 150,000 post offices into the core banking system. The government has also provided infrastructure and policy support for the fintech sector to prosper. India has witnessed a 72% rise in the number of digital payments processed in 2021 over 2020.

The government has also launched bank mobile vans. It helps provide banking and ATM services to spread financial awareness and educate people

Schemes: The government introduced JAM Trinity, to increase financial inclusion and reduce leakages. In 2020-21, ₹2.1 trillion was sent directly to people’s accounts under various schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act, the public distribution system, Pradhan Mantri Awas Yojana, and others.

Source: This post is based on the article “Financial inclusion is integral to holistic development” published in Live mint on 4th January 2022.