What is financial inclusion? 

Financial inclusion is accessing essential financial products and services to all sections of society. In areas where banks cannot reach, banks get banking facilities through their KIOSK banking or retail banking. It deals with connecting the citizens of the country to the banking system.

For the all-around development of any country, it is very important to strengthen the financial system of that country and the financial system will be strong only when every citizen of the country joins the financial system. 

Connecting rural areas, where more than half of our country's population lives, to the banking system. Pm Jan Dhan Yojana (PMJDY) was launched in the year 2014 under financial inclusion, which is a splendid example of financial inclusion.

Objectives of Financial Inclusion

Financial inclusion helps to take society and the economy forward. This increases savings, and investment, which speeds up the economic development of our country.

With this, people get used to saving money for the weaker sections, so that their economic condition gradually improves.

The presence of banking services and products is aimed at providing benefits to banks by inculcating the habit of saving. It also creates formal loan avenues for places where banks cannot reach, which depend on family, friends, and moneylenders.

With the help of this, people living in rural areas got a lot of benefits in sending money from one place to another, which had to send money from one place to another in the ways of being very much earlier.

Through this, instead of giving subsidies on the products by the government and making cash payments, there should be government benefits through direct benefit transfer (DBT) in the bank accounts of the account holder and the subsidy money should be delivered to their accounts.

Advantages of Financial Inclusion

Under this, more accounts are opened, due to which more money is deposited and the person who wants to take a loan is given a loan at higher interest rates, due to which the bank gets profits.

Under this, more and more customers are created so that they take advantage of banking facilities as well as consume the financial products of the bank and the banks get profits.

To add people left out of the financial system who were not connected to the banking system, For whom the banking system is just an entry. They put money in places like the capital market, and the money market which strengthens the economy of our country.

Disadvantages of Financial Inclusion

• The maintenance of accounts opened under this is very expensive because 58% of the accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY) do not have any transactions, but banks have to spend to run it.

• Including more customers increases competition in the market. For this reason, all the banks open accounts to increase their customers, and many of these accounts are such that there are not enough documents available.

• Moneylenders have always been defamed for money transactions at onion rates, but the thing to note is that they stand to help them by taking money when there is sudden help, but this is not the case with the bank.

What is KIOSK Banking? 

KIOSK is a type of banking model. Which provides special types of banking services without a bank. Providing special types of banking services to banking customers from a laptop through common service centres and business correspondents.

In order to expand financial inclusion, the Finance Ministry has directed banks to establish the kiosk model of banking through Common Service Centres (CSCs).

"Our financial inclusion extends to the first 4 states Kerala, Tamil Nadu, Andhra Pradesh, and Chhattisgarh. South Indian Bank is in 115 villages as of 31/12/2014 under the Financial Inclusion Scheme, with KIOSK Banking being the major destination. ”

Key Features of the KIOSK Model

• The KIOSK application platform and database is free.

• Opening an account online with bank authorization.

• Online transactions with no human intervention in bank CBS.

• Support AEPS transactions (on-us and off-us)

• UID enables card-less transactions using biometric authentication for customers.

Branchless Banking

• Service provided at their doorstep.

• Availability of basic banking services

• No voucher is required for villagers.

• Small-value loans easily available (Overdraft facility)

• Acceptance of small-value deposits.

Services offered under Financial Inclusion:

• Cash Deposit

• Cash Withdrawal

• Balance Enquiry

• Mini Statement

• Transfer of funds between accounts

• Self-Help Group Accounts

• Aadhaar-enabled payment system

Suggestions for Committees on Financial Inclusion

Rbi and the Government of India have been trying to achieve this goal of financial inclusion since independence. So far, the following steps have been taken to achieve this goal:

(i) The process of nationalisation of banks continued continuously from 1955 to 1980. This was done mainly to make the banking system safe and to expand the banks to rural areas as well.

(ii) The concept of Lead Bank was introduced in 1969 under which the bank will have the highest number of branches in any district. He has to adopt it for district financial inclusion.

(iii) Regional Rural Banks were established in 1975 with the main aim of providing loans for agriculture and for setting up cottage industries in rural areas.

(iv) NABARD was established in 1982, as a financial institution that provides loans to banks and financial institutions that provide further credit for agriculture and rural development.

(v) Priority sector lending was mandatorily applied to Indian and foreign banks to enable institutional credit to the section of the society to which banks rarely wish to lend.

(vi) In 1998, the concept of the Kisan Credit Card was introduced through which farmers are provided loans for agriculture at low-interest rates.

(vii) No Frills AC/AC to provide bank accounts to the lower strata of society. Bank account/ Savings account banks started opening. Under this, the account can be got only on zero deposit.

(viii) The concept of Bank Mitra/Bank Saathi was implemented through which banks and banking services were taken to the homes of the people.

(ix) Mines Committee, Rangarajan Committee, and Nachiket Mor Committee were set up. Who gave from time to time to speed up this entire process.

(x) Pradhan Mantri Jan Dhan Yojana launched on 28th August 2014. With an aim to achieve the goal of financial inclusion, RBI made up a committee under the leadership of Nachiket Mor. The committee submitted its suggestions in 2014. According to this committee, aadhaar should be made the main identity card to provide a bank account. In the next 12 months, 50% of the country's population should be connected to the banking system and in the subsequent 12 months, efforts should be made to connect 100 percent of the population to the banking system.

The committee suggested setting up payment banks and banks classified as small finance and small finance banks. The committee also revealed that bank branches should be set up at a 15-minute walk in rural areas. But according to the Committee, no such step should be taken for financial inclusion which is a threat to the financial stability of the country.