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1

Reach the Unreached – Status of Financial Inclusion in India
1. Introduction
The focus of financial inclusion is on promoting sustainable development and generating employment for a vast majority of the population especially in the rural areas. In the first-ever
Index of Financial Inclusion to find out the extent of reach of banking services among 100 countries, India has been ranked 50. Out of 19.9 crore households in India, only 6.82 crore households have access to banking services. As far as rural areas are concerned, out of 13.83 crore rural households in India, only 4.16 crore rural households have access to basic banking services. In respect of urban areas, only 49.52 per cent of urban households have access to banking services and 34 per cent of the India’s urban population with annual income less than `
50,000 have access to banking services. The latest National Sample Survey Organisation survey reports that there are over 80 million poor people living in the cities and towns of India and they lack access to the most basic banking services such as savings accounts, credit, remittances and payment services, financial advisory services, etc. Low-income groups do not have access to the formal banking systems, as they usually do not have the documents needed to open a bank account. As a result, they depend on the informal sector for their savings and loan requirements.
Thus, financial inclusion is considered to be critical for achieving inclusive growth, which itself is required for ensuring overall sustainable growth. Recognising the importance of inclusive growth in India, efforts are being taken to make the financial system more inclusive. The present paper is an attempt to examine the present status of Financial Inclusion in India and issues involved in extending banking services to weaker sections of the society.
2. Causes of Financial Exclusion in India
Access to formal banking system is affected by several barriers such as



References: 1. Government of India (2008), “Report of the Committee (Chairman: C.Rangarajan) on the Financial Inclusion”, January 2008. 2. Report on Trend and Progress of Banking in India, RBI, 2010-11 3 5. Pratima Trivedi, “Financial Inclusion: A Must for Financial Stability”, Vinimaya, Vol.XXIX (2), 2008-09, Pp.59-64 7. Gadewar, A.U , “Financial Inclusion: Issues and Challenges”, Vinimaya, Vol.XXVII (4), 2006-07, Pp.49-56 8. Leeladhar, V (2005), “Taking Banking Services to the Common Man: Financial Inclusion”, Commemorative Lecture by Shri V.Leeladhar, Deputy Governor, RBI, Fedbank Hormis Memorial Foundation, Ernakulam, December 2, 2005. 9. Mahendra Dev.S.(2006), “Financial Inclusion – Issues and Challenges”, Economic and Political Weekly, Vol.41 (41), October 14-October 20, 2006. 10. Mathew Joseph, “Financial Inclusion for Inclusive Growth”, Vinimaya, Vol.XXVIII, No.2, 2007-08, pp.13. 12. Dr.K.Srinivasa Rao (2009), “Micro –credit Engine for Inclusive Growth”, The Indian Banker, Sep 13. A.N.Sarkar and Jagjit Singh (2006), “Savings – Led Micro Finance to Bank the 14. Laxminarayanan Ramanathan (2011), “Socio-Economic impact of SHG-Bank Linkage on Members: An Assessment”, Southern Economist, March 2011, Pp.13-16

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