The World Bank defines the term as the following:
“Financial Inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.”
Aspirants can find information on the structure and other important details related to the IAS Exam,in the linked article.
|Aspirants should begin their preparation by solving UPSC Previous Year Question Papers now!!
To complement your preparation for the upcoming exam, check the following links:
In India, the government too has tried to financially include its citizens through initiatives like Pradhan Manri Jan Dhan Yojana (PMJDY), aadhar etc. The topic, ‘Financial Inclusion’ is important for Civil Service Exam from the perspective of GS-III (Economics.)
National Strategy for Financial Inclusion (2019-2024) This article will provide relevant facts about Financial Inclusion and the government’s National Strategy for Financial Inclusion.
The key facts about the National Strategy for Financial Inclusion are mentioned in the table below:
|National Strategy for Financial Inclusion|
|Who has brought out the National Strategy for Financial Inclusion?||Reserve Bank of India (RBI) introduced this strategy|
|What is the timeline of this strategy?||2019-2024|
|What is the objective of the National Strategy for Financial Inclusion?||To accelerate financial inclusion to promote economic well being, prosperity and sustainable development|
|What is the strategy of the National Strategy for Financial Inclusion?||It aims to provide access to formal financial services in an affordable manner, broadening & deepening financial inclusion and promoting financial literacy & consumer protection|
|What is the vision of the National Strategy for financial inclusion?|
|Which centres are included in this strategy?||All Tier-II to Tier-VI centres|
|Key-highlight of the strategy?||
|Who are the stakeholders of the National Financial Inclusion Strategy?|
|What are tier-I to tier-VI cities?||According to 2011 census, they are categorized as per population:
Tier-I: 1 lakh and above
Tier-III: 20000 – 49999
Tier-IV: 10000 – 19999
Tier-V: 50000 – 9999
Tier-VI: Less than 5000
Relevant Facts about Financial Inclusion for UPSC
- The main concept of financial inclusion is to ensure delivery of financial services :
- bank accounts for savings and transactional purposes,
- low-cost credit for productive, personal and other purposes,
- financial advisory services,
- Insurance facilities (life and non-life) etc.
- The report on the committee of financial inclusion reforms mentioned the household access to financial services, depicted in the diagram below:
- There are three challenges to financial inclusion and those can be termed to be:
- The high cost of the plan
- Lack of technological advances
- Lack of awareness among masses
Financial Inclusion and India
Despite various governmental initiatives, the state of financial inclusion is not very bright:
- Only about 5% of India’s 6 lakh villages have bank branches. There are 296 under-banked districts in states with below-par banking services
- A very large segment of the agricultural sector is starved of formal credit, forcing the farmers to borrow from the informal moneylenders at usurious interest rates.
Micro, Small and Medium Enterprises (MSME) sector, which provides 90 per cent of non-farming employment, could access only 4 per cent of institutionalized finance, leaving the rest to usurious money lenders
Multiple Choice Question
Consider the following Statements
- The foreign exchange market is a global decentralized or over-the-counter market for the trading of currencies. This market determines foreign exchange rates for every currency.
- The bond market is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities
- A stock market, equity market or share market is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses
- The primary market is the part of the capital market that deals with the issuance and sale of securities to investors directly by the issuer.
Choose the correct answer from the below given options
A) All the above given Statements are false
B) All the above given Statements are true
C) Only Statements 1, 2 and 4 are true
D) Only Statements 1,2 and 4 are false
Which of the following is the objective of financial inclusion?
A) Providing robust credit line to the lower sections of the society
B) Enhancing banking infrastructure
C) Universal access to financial services
D) Strengthening currency
Answer C: Universal access to financial services
Candidates can find the general pattern of the UPSC Civil Service Exam by visiting the IAS Syllabus page.