{"id":133830,"date":"2021-09-14T20:37:57","date_gmt":"2021-09-14T15:07:57","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=133830"},"modified":"2021-09-16T17:51:05","modified_gmt":"2021-09-16T12:21:05","slug":"how-to-boost-financial-inclusion","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/how-to-boost-financial-inclusion\/","title":{"rendered":"How to boost financial inclusion"},"content":{"rendered":"\n

Synopsis<\/strong>: Greater flexibility in financial products will lead to greater inclusion of nano-enterprises, a segment which is critical to the growth of our rural economy.<\/p>\n

Introduction<\/strong><\/h5>\n

There are 63.4 million MSMEs in India, 99% of which are micro enterprises with less than Rs 10 lakh in investment. These tiny businesses<\/strong> are run by nano-entrepreneurs,<\/strong> a growing segment that is absolutely critical to the growth of our rural economy.<\/p>\n

For daily wage earners such as vegetable sellers, loan flexibility is given only by the moneylender and not by the bank.<\/p>\n

What is the present situation wrt formalization of nano-enterprises?<\/strong><\/h5>\n

If we assess our progress against the definition of \u201cfinancial inclusion\u201d<\/strong> i.e. accessibility of banking and availability of credit, we have made significant progress.<\/p>\n

However, if we question the adequacy of the financial products that they find access to, we fall short. Financial inclusion is not the same as financial integration<\/strong>.<\/p>\n

The journey from inclusion to integration is not only about making products available and accessible, but also about making them relevant, applicable, and acceptable.<\/p>\n

What are the associated challenges?<\/strong><\/h5>\n

Supply side issues<\/strong><\/p>\n

Risk associated and no customer-centric products:<\/strong> limited risk appetite, lack of data on customers and challenging regulatory oversight and agile capital makes it difficult to design bespoke products.<\/p>\n

Apathy of bankers<\/strong>: Bankers and private financial institutions believe that a poor person takes a microcredit loan because she cannot save. In reality, they are able to save because of village postal agents who collect their savings from their doorstep.<\/p>\n

One-size-fits-all is no longer viable:<\/strong> Products must be designed and delivered intelligently to meet the customer where they are, and by keeping in mind that they use products to reach their goals.<\/p>\n

In the traditional financial system, the design, expensive technology development and brick-and-mortar infrastructure, distribution cost on financial products contribute to an impractical model.<\/strong><\/p>\n

Consequently, financial service providers are not attempting to reach rural and financially excluded areas.<\/p>\n

Demand side issues<\/strong><\/p>\n

Financial literacy and technology<\/strong> readiness<\/strong>: Financial education assists people in making sound financial decisions. These are not just challenging of the Indian market, but other economies too.<\/p>\n

What is the way forward?<\/strong><\/h5>\n

First, tailoring the products to the needs and income profile<\/strong> of the customer, including being cognisant of their environment, geography, and demography.<\/p>\n

Second, use the power of machine learning and cloud infrastructure to <\/strong>lower operating costs while offering customers affordable, bespoke financial products that help them reach their goals.<\/p>\n

Source:<\/strong> This post is based on the article \u201cHow to boost financial inclusion<\/strong>\u201d published in Indian Express<\/strong> on 14th September<\/strong> 2021<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Synopsis: Greater flexibility in financial products will lead to greater inclusion of nano-enterprises, a segment which is critical to the growth of our rural economy. Introduction There are 63.4 million MSMEs in India, 99% of which are micro enterprises with less than Rs 10 lakh in investment. These tiny businesses are run by nano-entrepreneurs, a… Continue reading How to boost financial inclusion<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[276,212,9738],"class_list":["post-133830","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-financial-inclusion","tag-gs-paper-2","tag-nano-enterprises","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/133830","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=133830"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/133830\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=133830"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=133830"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=133830"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}