Financial Inclusion – Some important questions

Does it mean that every individual should use the above services?

No. Financial Inclusion does mean that every eligible person uses these services but they should be able to choose to use them if they desire so. This requires the strategies which create a flexible, appropriate to the national situation and nationally owned (if required) infrastructure.

What is Difference between Financial Exclusion and Social Exclusion?

By Financial Inclusion, we refer to addressing the exclusion of people who desire the use of financial services but are denied access to the same. However, social Inclusion is a bigger face of the exclusion where, people don’t get fair share in the normal facilities available to the common people thorough out their lives and often the disadvantage they face at their birth get transmitted from generation to generation. It includes the unemployment, discrimination, poor skills, low incomes, poor housing and poor healthcare.

  • ONLY access to credit or banking is NOT financial Inclusion.
  • Financial Inclusion includes the
    • Bank accounts
    • Financial Advice
    • Insurance
    • Payment and Remittance
    • Affordable Credit
    • Savings

Does it mean that Bankers extend credit to all those who approach to them?

No. It does not mean that banks are advised to extend credit to everyone who approached them. It means that all cases of genuine credit requirement are not excluded. The approach of the financial inclusion has to be make the “institutionally excluded” the bankable and credit worthy. However, there is also a need to the “Once Included” segment which was excluded because of a reason or another.

Is Financial Exclusion a problem of India only?

Financial exclusion is a worldwide problem today. In 2006, United Nations had released a book titled “Building Inclusion Financial Sectors for Development”. This book is called “Blue Book” The Blue book raised a simple but comprehensive question. “Why so many bankable people are left unbanked?”

Financial Inclusion is relevant in all of developed, developing & underdeveloped economies of the world today.

Access to Credit: Some important Data

  • As per a report of NSSO 48.60 % of India’s farmer households were indebted which includes 27% from formal sources and 22% from informal sources.
  • Out of the remaining 51.4% households, 78% are very small and marginal farmer families, who would definitely welcome access to credit if it is offered on reasonable terms.
  • The minimum indebtedness in India is in North Eastern part where only 19.90% farmer households have access to credit.
  • Maximum indebtedness is in South India where 72.70% farmer households have access to formal or informal credit.

The following table shows this scenario: (Number in Lakhs)


 Total Households


% to Indebted  

 North India




 North Eastern India



19.90 (Minimum)

Eastern India




Central India




Western India




Southern India



72.70 (Maximum)





All India  



48.60 (Average)


Derived data from the NSSO Study shows that 64.95 million cultivator households and 46.6 million non-cultivator households respectively do not have access to formal financial services. While banks could target 100% coverage in respect of a No Frills basic bank account, a more realistic and clear target at the national level would be to provide access to comprehensive financial services, including credit, to at least 50% of such households, say 55.77 million by 2012 thru ‘rural/ semi-urban branches of Commercial Banks and Regional Rural Banks. The remaining households, with such shifts as may occur in the rural/urban population, have to be covered by 2015.

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