Financial Inclusion

According to one definition, “Financial inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low-income groups. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. As banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of the public policy.”

Financial inclusion agenda aims to provide savings, credit, money transfer, insurance, pension, and advisory services on money matters, etc. to those who currently don’t have access to these services.

In India, millions of financially excluded people exist despite a good dispersion of banking services; they rely on exploitative moneylenders and informal markets for obtaining credit and other services.

Most of the financially excluded belong to the unorganized sector or informal economy. So their inclusion into the formal financial system is a part of a larger agenda for inclusion in terms of their legal rights and the rights to participate in the market economy.

Governance Now gathered a young but very knowledgeable panel of experts—K. Natarajan, Manager- Member Affairs & Standards, Sa-Dhan, Radhika Agashe, Associate Director, ACCESS Development Services, Gunjan Grover, Senior Analysit, M-CRIL, Pushkal Gupta, Product Manager, Ujjivan—to discuss the issues some of which are listed below.

1. Public-sector banks’ outreach to the financially excluded. The merits and demerits of SHG-bank-linkage program. The difference in rural and urban markets for microfinance.

2. Is business correspondent model working? What are the constraints?

3. Why should there be a separate set of financial intermediaries (MFIs) for those who are currently excluded? How valid are concerns over interest rates charged by private MFIs?

4. Shouldn’t states try to make it easy for SHGs to federate into cooperatives?

5. How to extend money transfer, insurance and financial advisory services to the excluded?

6. Shouldn’t MFIs be also allowed to take deposits and provide other services? What about their regulation? Apart from NBFCs, what kind of legal structures should be permissible?

7. Shouldn’t government use its understanding of India’s vast informal economy to come us with a national policy on ‘economic inclusion’ of the workers in the unorganised sector?


  • Radhika Agashe
  • Pushkal Gupta
  • K. Natarajan
  • Gunjan Grover

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