Financial inclusion measures initiated in India to contain financial abandonment have hardly taken the demand side factors at grass roots level into consideration. The authorities of implementation, including the Reserve Bank of India, operate under the presumption that the financial inclusion initiatives have trickled down automatically to the lowest administrative unit at village level and have brought respite into the lives of the hitherto financially excluded sections. However, reality on the ground is entirely different and the situation remains unchanged. Since these measures have had hadly any impct on the financially excluded sections of society, the incidence of financial abandonment remains unchanged at the lowest administrative unit. Surprisingly, people at the grass root level are not familiar and have not even heard about the financial inclusion measures. Therefore, it is unrealistic to expect the necessary change to occur in the absence of any financial institution, like commercial bank or cooperative society at lowest administration unit level. Also, the conspicuous absence of rural credit cooperative societies and selfhelp group organizations has further worsened the situation in rural areas. This paper, besides identifying the failures of the financial inclusion measures from the perspective of the lowest administrative unit, attempts to bring the demand side factors to the forefront, including the business potential that exists for financial institutions, and effective administration of financial services by the formal financial system and other newly emerged institutions like self-help groups.

(2009). Understanding financial abandoning from a micro perspective: policy responses to promote inclusion in India [journal article - articolo]. In SAVINGS AND DEVELOPMENT. Retrieved from http://hdl.handle.net/10446/27446

Understanding financial abandoning from a micro perspective: policy responses to promote inclusion in India

2009-01-01

Abstract

Financial inclusion measures initiated in India to contain financial abandonment have hardly taken the demand side factors at grass roots level into consideration. The authorities of implementation, including the Reserve Bank of India, operate under the presumption that the financial inclusion initiatives have trickled down automatically to the lowest administrative unit at village level and have brought respite into the lives of the hitherto financially excluded sections. However, reality on the ground is entirely different and the situation remains unchanged. Since these measures have had hadly any impct on the financially excluded sections of society, the incidence of financial abandonment remains unchanged at the lowest administrative unit. Surprisingly, people at the grass root level are not familiar and have not even heard about the financial inclusion measures. Therefore, it is unrealistic to expect the necessary change to occur in the absence of any financial institution, like commercial bank or cooperative society at lowest administration unit level. Also, the conspicuous absence of rural credit cooperative societies and selfhelp group organizations has further worsened the situation in rural areas. This paper, besides identifying the failures of the financial inclusion measures from the perspective of the lowest administrative unit, attempts to bring the demand side factors to the forefront, including the business potential that exists for financial institutions, and effective administration of financial services by the formal financial system and other newly emerged institutions like self-help groups.
articolo
2009
Les mesures d’inclusion financière introduites en Inde pour contenir l’abandon financier ont rarement pris en considération les facteurs demand-side au niveau de base. Les autorités de mise en oeuvre, y compris the Reserve Bank of India, agissent en vertu de l’opinion que les initiatives d’inclusion financière ont descendues automatiquement jusqu’à la plus petite unité administrative au niveau du village et ont apporté un répit dans la vie des sections financièrement exclues jusque-là. Cependant, la réalité sur le terrain est différente et la situation reste inchangée. Puisque ces mesures n’ont pas influencé les sections financièrement exclues de la société, l’incidence d’abandon financier reste inchangée au niveau de la plus petite unité administrative. Étonnamment, les personnes au niveau de la base ne connaissent pas et n’ont pas entendu parler de mesures d’inclusion financière. Par conséquent; la possibilité d’avoir les changements nécessaires est irréaliste sans les institutions financières, comme la banque commerciale ou la société coopérative au plus bas niveau administratif. En outre, l’absence manifeste de sociétés coopératives de crédit rural et d’organisations de groupes d’autopromotion a aggravé la situation dans les zones rurales. Cette étude identifie les défaillances des mesures d’inclusion financière du point de vue de l’unité administrative de base et souligne l’importance des facteurs demandside, y compris le potentiel de business qui existe pour les institutions financières; et la gestion efficace des services financiers par le système financier formel et par les nouvelles institutions, comme des groupes d’autopromotion.
Mahadeva, M.
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