Role of financial institutions on "Inclusive growth"
Role of financial institutions on inclusive growth
Financial markets in India have acquired greater depth and liquidity over the years. Steady reforms since 1991 have led to greater integration of India’s economy with the world economy. Consequently, the global economic crisis has impacted India’s growth as well.
Banks and financial institutions, acting as intermediaries and channelizing the savings into productive assets, have a very important role to play in reversing this slowdown.
The study of “role of financial institutions on inclusive growth”, focuses on an issue having a great significance not only for a country like ours but the entire world.
Inclusive growth as the literal meaning of the two words refer to both the pace and the pattern of the economic growth. Inclusive growth allows people to “contribute to and benefit from economic growth”. Growth is inclusive when it creates economic opportunities along with ensuring equal access to them. The concept “inclusion” should be seen as a process of including the excluded sectors for eg., The rural and the under privileged population of India, in the development process of the economic growth.
Banking is a key driver for inclusive growth. However, apart from the supply side factors, demand side factors, such as lower income and asset holdings also have a significant bearing on inclusive growth. Owing to difficulties in accessing formal sources of credit, poor individuals and small and macro enterprise usually rely on their personal savings or internal sources to invest in health, education, housing, and entrepreneurial activities to make use of growth opportunities.
In this paper we will review the role being played by the “Banking and financial institutions of India” in explicitly creating productive economic opportunities for the poor and the vulnerable sections of the society. Thus, aiding Inclusive growth.
Financial markets in India have acquired greater depth and liquidity over the years. Steady reforms since 1991 have led to greater integration of India’s economy with the world economy. Consequently, the global economic crisis has impacted India’s growth as well.
Banks and financial institutions, acting as intermediaries and channelizing the savings into productive assets, have a very important role to play in reversing this slowdown.
The study of “role of financial institutions on inclusive growth”, focuses on an issue having a great significance not only for a country like ours but the entire world.
Inclusive growth as the literal meaning of the two words refer to both the pace and the pattern of the economic growth. Inclusive growth allows people to “contribute to and benefit from economic growth”. Growth is inclusive when it creates economic opportunities along with ensuring equal access to them. The concept “inclusion” should be seen as a process of including the excluded sectors for eg., The rural and the under privileged population of India, in the development process of the economic growth.
Banking is a key driver for inclusive growth. However, apart from the supply side factors, demand side factors, such as lower income and asset holdings also have a significant bearing on inclusive growth. Owing to difficulties in accessing formal sources of credit, poor individuals and small and macro enterprise usually rely on their personal savings or internal sources to invest in health, education, housing, and entrepreneurial activities to make use of growth opportunities.
In this paper we will review the role being played by the “Banking and financial institutions of India” in explicitly creating productive economic opportunities for the poor and the vulnerable sections of the society. Thus, aiding Inclusive growth.