By Vinod Behl
“I dream of a digital India where mobile
& e-banking ensures fincial inclusion”
— Prime Minister rendra Modi
Fincial Inclusion’ is the way the governments strive to take the common man along by bringing them into the formal channel of economy, thereby ensuring that even the person standing in the last is not left out from the benefits of economic growth and is added in the mainstream economy. It encourages the poor person to save, safely invest in various fincial products and to borrow from the formal channel when he needs to borrow.
Lack of fincial inclusion is costly to society and the individual. As far as the individual is concerned, lack of fincial inclusion forces the unbanked into informal banking sectors where interest rates are higher and the amount of available funds much smaller. Because the informal banking structure is outside any legislative framework, any dispute between lenders and borrowers cannot be settled legally.
As far as the social benefits are concerned, fincial inclusion increases the amount of available savings, increases efficiency of fincial intermediation, and allows for tapping new business opportunities.
State sponsored universal banking has therefore contributed to greater economic diversification in rural areas than is the case in more competitive banking environments. With structural adjustment programs being introduced in the 1980s and 1990s, fincial market reforms swept over many developing countries. At the beginning of 20th century, India had insurance companies (both life and general) and a functiol stock exchange
Scope of fincial inclusion is not limited to only banking services but it extends to other fincial services as well like insurance, equity products & pension products etc. Thus, fincial inclusion is not just about opening a simple bank account with a branch in an unbanked area.
Adding the common man into the mainstream economy has other advantages as well. On one hand, it helps inculcate the vulnerable section of the society to save money for its future and rainy days, take benefits of economic activities of the country by participating in various fincial products like banking services, insurance & pension products etc.; on the other hand, it helps the country to increase the rate of ‘capital formation’, which in turn give a push to economic activities by channelizing the money from every nook & corner of the country.
Without people of a country fincially included in the mainstream, they often tend to park their savings or invest in non-productive assets like land, buildings & bullion etc. Fincially included people can easily avail of credit facilities, whether they are sitting in the organised or unorganised sector, urban or rural sector. Micro Fince Institutions (MFIs) are the classic examples for providing easy & affordable credit to poor people.
This phenomenon of fincial inclusion also helps the government plug gaps and leakages in public subsidies & welfare programmes as government can directly transfer the subsidy amount into the account of the beneficiary rather than to subsidise the product. In fact, the present government has saved more than Rs 57,000 crore in its subsidy bill.
The NDA government led by Prime Minister rendra Modi, since the beginning of its term, committed itself to give special emphasis on fincial inclusion of every person of the country. One of the most crucial of several steps taken by this government is JAM — Jan Dhan, Aadhar & Mobile.
Jan Dhan Yoj: With a view to increase the penetration of banking services and to ensure that all households have at least one bank account, a tiol Mission on Fincial Inclusion med as Pradhan Mantri Jan Dhan Yoj was announced by Prime Minister rendra Modi in his Independence Day speech on 15 August, 2014.
This scheme was formally launched on 28 August, 2014, and within a fortnight of its launch, the scheme entered into the Guinness Book of records for opening a record number of bank accounts.
The additiol benefits on opening an account under Jan Dhan scheme is the customer is issued a RuPay debit card having inbuilt insurance cover of Rs 1 lakh. Besides, an overdraft (OD) facility of Rs 5,000 is granted to the customer for satisfactory operation of account for 6 months. A life cover of Rs 30,000 has also been granted to customers for opening the accounts up to a certain time period.
The scheme has been a great success and 99.99% households out of the 21.22 crores households surveyed have been covered under this scheme by December 2016.
Insurance & Pension schemes: In order to provide social security system for all citizens and especially to the poor and under-privileged, the present government launched Pradhan Mantri Suraksha Bima Yoj and Pradhan Mantri Jeevan Jyoti Bima Yoj.
Atal Pension Yoj: A scheme launched in 2015 is open to all bank account holders in the age group of 18 to 40 years and they can choose different contributions based on the pension amount.
Varishita Pension Bima Yoja: All those who have subscribed to the VPBY from 15 August, 2014 to 14 August, 2015 will receive an assured guaranteed return of 9% under the policy.
Pradhan Mantri Mudra Yoj was launched in April, 2015 to provide formal access of fincial facilities to the non-corporate small business sector. The basic objective of the scheme is to promote and ensure bank fince to unfunded segments of the Indian economy. Other schemes include Jeevan Suraksha Bandhan Yoja, Sukanya Samriddhi Yoja, Kisan Credit Cards (KCC), General Credit Cards (GCC) and the BHIM App.
Fincial Literacy Centers were started by commercial banks at the request of RBI to give awareness and education to the public to access fincial products. The launch of direct benefit transfers through the support of Aadhaar and Bank account is one of the biggest developments that activated and retained people in the newly opened account.
Stand up India: This scheme was launched to extend bank loans between Rs 10 lakh to Rs 1 crore for Greenfield enterprises set up by SC, ST & women entrepreneurs and to provide them handholding support.
To further strengthen fincial inclusion in the country, the Government has advised banks to deploy micro ATMs in rural areas and consequently, 1,14,518 micro ATMs have been deployed by December 2016.
Venture Capital Scheme: In this scheme, SC/ST people were encouraged to be job providers instead of job seekers. Initially under this scheme, loans were provided from Rs 50 lakh to 15 crore which has now been changed from Rs 20 lakh to 15 crore. The NDA government is committed to its target of increasing the inclusion of every household in the fincial system so that the masses can get all the legitimate benefits arising out of the growth of the country. (PIB)
(The author is Union Minister of State, Water Resources, River Development & Ganga Rejuvetion, Parliamentary Affairs. He was earlier MoS for Fince and Corporate Affairs.)