Financial Inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs such as transactions, payments, savings, credit, and insurance, is more important than ever before. So let’s see the importance of Financial Inclusion.
Why is Financial Inclusion Important
In an increasingly connected world, having financial services readily available is absolutely key to businesses being able to innovate, grow and sustain themselves in an entrepreneurial environment. The benefits of financial inclusion.
- Access to financial services opens doors for families, allowing them to smooth out consumption and invest in their futures through education and health.
- access to credit enables businesses to expand, creating jobs and reducing inequality.
- the bridge between economic opportunity and outcome.
- recognized as one of the most important engines of economic development.
- it is not just necessary for growth, but to avoid financial collapses within families.
- Money that literally sits in drawers at houses ends up missing out on high-interest rates offered in developing countries, and hence has a lower worth or net present value when used in the future.
- A large proportion of people lack financial literacy and are not interested in the benefits they may receive from banking services. At the same time, regulatory issues around pricing, capacity, and KYC requirements have limited the ability of banks to scale.
- Add to this the fact that there exists a severe lack of connectivity in several rural areas around the world or a lack of collaboration with governments; all these factors compound and limit the ability of banks to drive increases in inclusion.
- It helps in the overall economic development of the underprivileged population.
- financial inclusion is needed for the upliftment of the poor and disadvantaged people by providing them the modified financial products and services.
- It is expected to unleash the huge untapped potential of the bottom-of-pyramid section of the economy.
- The rural masses will get access to banking like cash receipts, cash payments, balance inquiry and statement of account can be completed using fingerprint authentication. The confidence of fulfillment is provided by issuing an online receipt to the customer.
- Reduction in the cash economy as more money is brought into the banking ecosystem
- It inculcates the habit to save, thus increasing capital formation in the country and giving it an economic boost.
- Direct cash transfers to beneficiary bank accounts, instead of physical cash payments against subsidies will become possible. This also ensures that the funds actually reach the intended recipients instead of being siphoned off along the way.
- Availability of adequate and transparent credit from formal banking channels will foster the entrepreneurial spirit of the masses to increase output and prosperity in the countryside.