Financial Inclusion Poised To Grow Exponentially In India

Shaktikanta Das, Governor of the Reserve Bank of India stated in a speech that financial inclusion in the country is poised to grow exponentially with digital savvy millennials joining the workforce, social media blurring the urban-rural divide and technology shaping the policy interventions. Going forward, harnessing the near universal reach of bank accounts across the length and breadth of the country, there needs to be greater focus on penetration of sustainable credit, investment, insurance and pension products by addressing demand side constraints with enhanced customer protection. The interventions in financial education would have to be customised (local language and local settings) keeping the different target audience in mind. The scaling up of CFL project across the country at the block level would be the cornerstone of community led participatory approaches in our journey towards greater financial literacy.

The RBI Governor stated that India, with a large section of population in the working age group, is already the third largest economy in the world in terms of purchasing power parity and is aiming to become a USD 5 trillion economy. The Government has been undertaking a series of calibrated macro measures through wide ranging structural reforms. We need to harness the demographic dividend by meeting the aspirations of a large young population. This necessitates creating an enabling environment and infrastructure in the form of education, training and opportunity. Among all the prerequisites for achieving demographic dividend and accelerated growth, quality of human resources, greater formalisation of economy, a higher credit to GDP ratio and greater financial inclusion are the differentiating factors that would elevate our economy to the desired level.

He noted that to improve the credit to GDP ratio, access to credit and cost of credit need to be addressed by lesser reliance on collateral security and greater cash-flow based lending. Credit bureaus and the proposed Public Credit Registry (PCR) framework are expected to improve the flow of credit as well as credit culture. As regards financial inclusion, a number of steps have been taken by the government and the RBI. As a result, large and hitherto excluded, sections of the population have been brought into the formal financial fold. In this context, promoting and deepening financial education would play a very important part in our endeavour to realise our collective potential.

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