The banking industry in In- dia has grown steadily over the past few decades. However, in spite of achieving noteworthy success in some performance parameters such as profitability, viability and competitiveness, it has not been able to deliver the same kind of success in financial inclusion. Still, there exist some large vacuums in banking services to the common mass. It is a sad truth that even after four decades of nationalization, banks in India have not been able to broadbase their services and failed grossly to cover vast segments of the population, especially the underprivileged sections of the society. The poor performance of Indian banks in this regard is reflected by a research finding by Delhi-based research organization Indian Council for Research on International Economic Relations (ICRIER). In the first-ever Index of Financial Inclusion (IFI), prepared by ICRIER, it has ranked India very poorly. The ICRIER findings, which covered 100 countries across the globe to find out the reach of banking services to the people, ranks India at the 50th position. Unfortunately, India ranks even below some African countries such as Morocco (rank 37) and Kenya (rank 40) and South American nation Guyana (rank 45). The ICRIER findings underscore the necessity of spreading banking services to the reach of the weaker sections of the society.
The growing usage of technology has transformed the banking space in India from traditional brick-and-mortar institutions to niche tech-savvy new-age banks supplemented by Automated Teller Machines (ATMs), debit/credit cards, Internet banking and phone banking. However, despite this rapid spurt in the adoption of technology, the contentious issue is that it is limited to certain privileged classes of the society and it has neglected the wide spectrum of mass populace. The current technology, which allows for more accurate targeting of particular sections of the customers, has resulted in limited access to financial services for some particular segments. There has been a growing divide with an increased array of personal finance options for a segment of high and upper middle income population and lack of even the most basic banking services to a significantly large section of the population. This socioeconomic phenomenon is called `financial exclusion'. These financially-excluded people, generally with low incomes, are not in a position to access basic financial products such as bank accounts, credit, financial advisory services, insurance facilities, etc. However, a more suitable definition of financial inclusion should look at people who are willing to access financial services but are denied the same. If actual claimants for financial services are denied the same, then that is a perfect case of exclusion. |
