The document evaluates financial inclusion in India by analyzing metrics like the spatial distribution of banking services, number of deposit and credit accounts, population coverage by region, agricultural credit coverage, and coverage of farmer households by social group and land holding. It finds that while the number of bank branches has increased across India, the rise in credit accounts per population has not been significant. Coverage of small and marginal farmers also remains low, though the proportion of non-indebted households is highest among marginal farmers. The study recommends expanding access to banking services for the poor through cooperation between banks, government, and other institutions.
1. Financial Inclusion in India: An
Evaluation of the Coverage, Progress
and Trends
UNDER THE GUIDANCE OF : PRESENTED BY :
PROF. NANDITA MISHRA VINEET KUMAR DUBEY
(Faculty Finance) BM-010165
2. INTRODUCTION
Financial inclusion has indeed far reaching positive consequences,
which can facilitate many people to come out of the abject poverty
conditions.
OBJECTIVES OF THE STUDY
•To appreciate the significance of financial inclusion in terms of inclusive
growth for sustainable economic development;
•To appreciate the trends of financial inclusion in other select countries.
•To evaluate the extent of financial exclusion in India in terms of:
oSpatial distribution of banking services;
oNumber of deposit and credit accounts in scheduled commercial banks;
oPopulation coverage per office region-wise;
oRatio of direct agricultural credit to agricultural GDP, total GDP and total
credit;
oCoverage of farmer households as per social groups; and
oNon-indebted farmer households as per different land holdings.
3. METHODOLOGY
The study attempts to realize the objectives by employing a well-
structured and more appropriate methodology. The approach and
data collection methods are explained below.
THE APPROACH
Based on the well-accepted approaches for evaluation of the
coverage of financial inclusion, the study employs the following
criteria for understanding the extent of financial inclusion:
4. Analysis of the spatial distribution of banking services;
5. Analysis on the basis of the performance of rural credit;
6. Analysis on the basis of coverage of farmer households; and
7. Analysis on the basis of coverage of farmer households based on
land holdings.
4. Further, on the basis of the above-mentioned criteria the study has
endeavored to analyze the following:
3. Spatial distribution of banking services;
4. Number of bank accounts (deposit and credit accounts) of
households;
5. Regional distribution of banking services;
6. Contribution of agriculture to GDP;
7. Coverage of farmer households; and
8. Coverage of small and marginal farmers.
5. DATA COLLECTION
The study is based on the secondary data available from the various
sources at the international and national level.
INTERNATIONAL SOURCES :
World Bank, DFID, Commonwealth institutes .
NATIONAL SOURCES :
RBI, NABARD, reports of various committees, National Sample
Survey Organization (NSSO), National Accounts Statistics of Central
Statistical Organization (CSO) and other apex level organizations.
9. FINANCIAL INCLUSION – PRESENT SCENARIO IN
INDIA: AN ANALYSIS MEASURES OF THE EXTENT OF
FINANCIAL INCLUSION
F
Table 2: illustrates that rural and semi-urban offices constitute a
majority of the commercial bank offices in India. Rural bank offices
as a percent of total have increased from 22 in 1969 to 45 in 2005.
11. TABLE 4: ILLUSTRATES THE LEVEL OF FINANCIAL
INCLUSION IN INDIA THROUGH REGION-WISE
STATISTICS.
S
12. S
Further, the rise in the number of credit accounts per population has not
been significant despite the fact that there has been increase in the
number of bank branches right across all the regions of the country.
14. C
Even though the share of agriculture in overall GDP has declined
from around 33.1% in 1980s to 20.8% during 2000-06, the fall in
the proportion of population dependent on this sector has been
restricted.
17. ANALYSIS ON THE BASIS OF COVERAGE OF FARMER
H
HOUSEHOLDS BASED ON LAND HOLDINGS
18. H
While the extent of non-indebtedness is highest in the case of
marginal farmers (70.6%), it is lowest in the case of large farmers
(0.6%). In the case of medium farmers it is 3.2% and 8.5% in the
case of semi-medium farmers. However, in the case of small farmers
it is 17.1% .
19. FINDINGS OF THE STUDY
• Distribution of Banking Services
• Number of Bank Accounts (Deposit and Credit) of Households
• Distribution of Banking Services
• Ratio of Direct Agricultural Credit to Agricultural GDP, Total GDP
and Total Credit
• Contribution of Agriculture in GDP
• Coverage of Farmer Households
• Coverage of Small and Marginal Farmers
20. RECOMMENDATIONS
• Financial Inclusion as a Policy Priority
• Strategize the Provision of Bank Credit
• Cover the Poor
• Extensive Use of Cooperatives
• Procedural/Documentation Changes
• Proactive Role of Government
• Role for Rural Post Offices
• Effective Use of IT Solutions
• Adequate Publicity for the Project of Financial Inclusion
• Financial Inclusion: Latest Developments in India
21. CONCLUSION
• The importance of financial inclusion arises from the problem of
financial exclusion of nearly 3 billion people from the formal
financial services across the world. India, with only 34% of
population engaged in formal banking and 135 million financially
excluded households, is in the second highest after China.
Further, the real rate of financial inclusion in India is also very low
and about 40% of the bank account holders use their accounts not
even once a month.
• Financial inclusion has, in reality, far reaching positive
consequences, which can help resource poor people to access the
formal financial services in order to pull themselves out of abject
poverty. The focus on the common man is particularly imperative
in India as he is the more often ignored one in the process of
economic development. Indeed, with the process of financial
inclusion, the attempt should be to lift the resource poor from
poverty through coordinated action amongst the banks, the
government and other related institutions in order to facilitate
access to bank accounts and other related services.
