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SPEEDY Railway Book (English)

Financial Inclusion and Development - An Overview for Bank Exams

Financial Inclusion and Development - An Overview For SBI PO, IBPS PO, BANKING EXAMS



RBI focused on channelling credit to segments that get crowded out in the absence of specific targets. It include small and marginal farmers, micro enterprises and the weaker sections while broadening the scope to include other underserved categories of national priority, such as agriculture infrastructure, social infrastructure, renewable energy, exports and medium sized enterprises.

RBI has initiated several measures to achieve greater financial inclusion, such as:
  • Opening of no-frills accounts
  • Relaxation on know-your-customer (KYC) norms
  • Engaging business correspondents (BCs)
  • deliver government benefits to the doorstep of the beneficiary
  • Simplified branch authorization
  • Opening of branches in unbanked rural centres:

Financial inclusion pertains to:
  • Credit flow to priority sectors: Macro policy formulation to strengthen credit flow to the priority sectors. Making priority sector lending a tool for banks for capturing untouched business opportunities among the financially excluded sections of society.
  • Financial inclusion and financial literacy: Help expand Prime Minister’s Jan Dhan Yojana (PMJDY) to become a sustainable and scalable financial inclusion initiative.
  • Credit flow to MSME: Stepping up credit flow to micro, small and medium enterprises (MSME) sector, rehabilitation of sick units through timely credit support.
  • Institutions: Strengthening the institutional system management, such as, State Level Bankers Committees (SLBCs), Lead bank scheme, etc., to facilitate achievement of above objectives.
Next step towards financial inclusion:
  • Powerful communication of the Reserve Bank’s priority sector definition to stakeholders.
  • Frequent and close monitoring of priority sector target achievement of banks.
  • Effective monitoring through State Level Bankers’ Committees (SLBCs). Simple and clear guidelines on evaluation of extent of crop loss where natural or any other calamity is on account of production effectiveness.
  • Assess the regional/sectoral & industry wise disparities in credit flow to Micro Small Entreprises. Sharing success stories of various players (Private/ PSBs/RRBs/ Co-ops) on stepping up flow of credit to MSMEs.
  • Engage with the curriculum setting bodies like the National Council of Educational Research and Training (NCERT), Education Boards like the Central Board for Secondary Education (CBSE), Central and State Governments to try and embed financial concepts in school curriculum.
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