Financial Inclusion improves Policy Transmission

Financial Inclusion improves Policy Transmission

Subject – Economy

Context – Reserve Bank of India (RBI) Deputy Governor Michael Patra on Thursday said financial inclusion results in better monetary policy transmission.

Concept –

• Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.
• As per census 2011, only 58.7% of households are availing banking services in the country.

Financial Inclusion Initiatives

• Jan Dhan-Aadhar-Mobile (JAM) Trinity – The combination of Aadhaar, PMJDY, and a surge in mobile communication has reshaped the way citizens access government services.
• The government has also launched many flagship schemes to promote financial inclusion and provide financial security to empower the poor and unbanked in the country.
  • These include the Pradhan Mantri Mudra Yojana, Stand-Up India Scheme, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and Atal Pension Yojana.
• Promotion of Digital Payments – With the strengthening of the Unified Payment Interface (UPI) by NPCI, digital payments have been made secure, compared to the past.
• Initiatives by RBI and NABARD –
  • Opening of bank branches in remote areas.
  • Issuing Kisan Credit Cards (KCC)
  • Linkage of self-help groups (SHGs) with banks.
  • Increasing the number of automated teller machines (ATMs)
  • Business correspondents model of Banking, etc.