Impact of Financial Literacy on Financial Inclusion and...

Abstract: Financial inclusion has recently become the buzzword among the policymakers and bankers and in academic research. It is considered as an integral part of the efforts to promote inclusive economic growth. Financial inclusion has been the utmost priority for the government of India as well as the Reserve Bank of India. One of the executive at a prominent Public Sector Bank says, Financial Inclusion is a social obligation for the government, and social obligation, mandatory obligation as well as Business opportunity for the banks and financial institutions. Financial inclusion represents the access to safe, easy and affordable financial services for poor, vulnerable groups, disadvantaged areas for accelerated growth and for†¦show more content†¦Financial inclusion and financial literacy: Having understood the simple meaning of financial literacy, now its time to get an understanding of financial literacy and its impact on financial inclusion. Financial inclusion: Before entering the concept of financial inclusion, let’s have a look at some statistics: †¢ There are 403 million mobile users in India and out of them 46% does not have bank accounts. †¢ Nearly 400 million Indians have bank accounts and that is less than 40% of country’s population. †¢ Account holding pattern of India, 39% of rural population have bank accounts and while 60% of urban population have accounts. †¢ Only 5.2% of India’s 6,50,000 villages have bank branches. †¢ Nearly 80% of the Indian population is without life, health and non-life insurance coverage while whole life insurance coverage is 4%, and 0.6% have non-life cover. †¢ Rural India accounts for just 9% of total deposits, 7% of total credit and 10% of life insurance and 0.6% of non-life insurance. On one hand we talk about the increasingly aware Indian Middle classes who have access to disposable income and we also talk about how banks are providing them with various innovative new and attractive schemes and products and thereby are offering them with a safe and secure future. With all these and much more, by keeping in mind the recent statistics, can India really march ahead while the