Innovation for Financial Inclusion – Sashank and Dhivakar

Financial Inclusion is a term that is used very loosely. In India the term has almost become synonymous with opening of bank accounts for the under privileged. But the question is “is this financial inclusion?” Financial Inclusion means that everyone, including the underprivileged, get the access to a range of financial services at reasonable costs. Wikipedia says that “according to the United Nations the main goals of Inclusive Finance are as follows:

1. Access at a reasonable cost of all households and enterprises to the range of financial services for which they are “bankable,” including savings, short and long-term credit, leasing and factoring, mortgages, insurance, pensions, payments, local money transfers and international remittances
2. Sound institutions, guided by appropriate internal management systems, industry performance standards, and performance monitoring by the market, as well as by sound prudential regulation where required
3. Financial and institutional sustainability as a means of providing access to financial services over time
4. Multiple providers of financial services, wherever feasible, so as to bring cost-effective and a wide variety of alternatives to customers (which could include any number of combinations of sound private, non-profit and public providers).”

India has been proactive in taking up financial inclusion. Indian banks have pioneered in this regard by allowing no frills bank account, a bank account that provides basic saving facility that allows zero bank balance and some overdraft facility. Micro Finance was also taken up in a big way but has recently faced some trouble. Certain innovative measures such as relaxing the Know Your Customers (KYC) norms, the business correspondent model are currently being taken up but the question is how long it will take to achieve the desired results.

We are currently trying to answer these questions 

• What exactly constitutes true financial inclusion in India? Is it just a bank account? If not, what other kind of financial services should be provided
• Innovative steps that RBI has been taking towards financial inclusion
• International models that have contributed to financial inclusion

Any pointers or help would be appreciated