Transitioning from Financial Services towards Financial Inclusion

Richard Canday, Associate VP- Marketing & PR, EPS
Wednesday, March 30, 2016
Richard Canday, Associate VP- Marketing & PR, EPS
Headquartered in Mumbai, EPS specializes in the retail banking & technology domain and offers end-to-end ATM Operations & Outsourcing Services, ATM Managed Services Centre (24x7x365), Transaction Processing Services and Card Management Services

Strong financial institutions contribute to fostering economic growth, and build success in modern economies. There has always been a deficiency of accessible and affordable financial services across nations in the world. Therefore, the need for an inclusive, organised financial system is widely required in all major economies of the world.

It is vital to improve financial access in order to boost the productivity and standard of living. According to the United Nations, the size of the unbanked population in the world is large, comprising approximately 2.5 billion people around the globe. This unbanked population does not receive any formal means of financial services, out of which some are, owning a bank account, credit, insurance, secure savings account, and also a secure and efficient means to receive social benefit payments through a registered financial institution.

Almost half of India's population accounts as unbanked. India has the highest number of households (145 million) that is prohibited from participating inbanking services. There is only one bank branch per 14,000 people. Just 18 percent have debit cards and less than two percent have credit cards. The penetration of financial services in the rural areas is very low. It was only observed, lately, that underfinancial inclusion initiative Pradhan Mantri Jan-Dhan Yojana (PMJDY),more than 180 million people in India entered the financial mainstream in August last year, according to a report prepared by PricewaterhouseCoopers India for the Internet and Mobile Association of India (IAMAI) and Payments Council of India (PCI).

Nearly 72 percent of the Indian population lives in villages, highlighting the stark reality that a substantial proportion of about 6,50,000 odd villages do not have access to financial services due to unavailability of a bank, thereby leaving them financially excluded. The fundamental objective of financial inclusion is to encompass the unbanked population with financial services to ensure it reaches its ultimate growth potential. From financial literacy to financial inclusiveness and education for women, to installation of more free ATMs in post offices, and banks incentivising electronic transactions, financial inclusion aims to enable better sustainable economic and social development of the country. The plan aims to take into account the underprivileged parts of the society. The income group is determined by the level of their access to financial services such as a savings and payment account, credit insurance, pensions etc.

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