Financial Inclusion or inclusion financing is the delivery of financial products, at affordable costs to sections of disadvantaged and low income segment of society. It is in the contrast to financial exclusion, where those services are not available or affordable.
As per United Nations, the goal of financial inclusion is to ensure access to a full range of financial services, to ensure continuity, at a reasonable cost and certainty of investment.
India: RBI set up the Rangarajan Committee in 2004 to look into financial inclusion. Financial inclusion first featured in 2005 and Mangalam become the first village in India where all households were provided banking facilities.
- Opening of no-frills accounts (replaced by basic saving bank accounts);
- Simplified branch authorization for tier III to tier VI centers (population of less than 50,000) under general permission;
- Relaxation in KYC norms for small deposits accounts;
- Issue of general credit cards;
- Allowing engaging business correspondents;
- Implementation of Electronic Benefit Transfer (EBT) by leveraging ICT –based banking;
- Effective usage of Information and Communications Technology (ICT), to provide doorstep banking services;
Financial Inclusion Index:
On 25th June, 2013, CRISIL launched an index (Inclusix) to measure the statue of financial inclusion in India. Inclusix is a one of its kind tool to measurement the extent if inclusion in India, in each of the 632 districts. It is a relative index on a scale of 0 to 100, and combines 3 critical parameters of basic banking services (branch penetration, deposit penetration, credit penetration), into one metric.