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These words of caution coming from the Prime Minister of the country are a sort of repeated reminder to India's corporate sector, especially the financial sector, as a vast section of our population is urban-rural, still being untouched even after over 15 years of reforms. With agriculture failing to keep pace with the growth in manufacturing and services sectors, the urban-rural rift has been widening, causing much discomfort to the policy-makers. The fast-paced growth of Information Technology (IT) industry in the country has further added to this divide, in the form of digital divide. The growing disparity between urban and rural India calls now for what is termed as `financial inclusion' if the country has to achieve and sustain a growth rate of over 8%.
Financial inclusion is defined as the delivery of banking services at an affordable cost to the vast sections of disadvantaged and low-income groups. The budget 2007-08, defines it as the process of ensuring access to timely and adequate credit and financial services, by vulnerable groups at an affordable cost. It is essential for any society or country to ensure access to banking services to one and all, without any discrimination. However, it is being felt that a large section of our society still has no access to these services, which otherwise would have added to the growth of the nation.
The term `financial inclusion' first came into limelight some years back, thanks to the Reserve Bank of India's (RBI's) annual policy report 2005-06, which emphasized for the need for country's banking sector to recognize and provide access to financial services to a large section of society which had lacked such services for long. The RBI's annual policy statement for 2005-06, as well as mid-term review in October 2005, exhort banks to bring people belonging to low-income group, into the banking net. Dr YV Reddy, RBI's Governor, said in his mid-term review of annual policy statement for 2005-06, "With a view to achieving greater financial inclusion, all banks need to make available a basic banking `no-frills' account either with `nil' or very low minimum balances as well as charges that will make such accounts accessible to vast sections of population. The nature and number of transactions in such accounts could be restricted, but made known to the customer in advance in a transparent manner." |
