Financial Inclusion: Opportunities, Issues and Challenges

An all-inclusive financial system is essential for a nation as it augments efficiency and welfare by providing scope for secure and safe saving practices and by facilitating a wide range of improved financial services. The focus of the present study is on identifying the opportunities, issues, and challenges of financial inclusion in India.


Introduction
Financial inclusion is a fundamental keystone of socio-economic development.
It has been a policy goal of high priority in India for decades. It is an important policy option which aims at reducing poverty and minimizing social as well as financial exclusion, thereby enhancing the inclusive growth process. Though there has been considerable progress in the process of inclusion over the past few years, India remains along way from attaining universal financial inclusion.
The term financial inclusion is defined as the process of ensuring timely access to financial services and adequate credit where needed by vulnerable groups such as the weaker sections and low-income groups at an affordable cost [1].
However, it is perceived differently under different contexts. It can be viewed as a process of enabling access to credit, improving banking services or as a process of developing social and economic infrastructure available to the public. In short, financial inclusion is not only about money and savings but about directly eradicating the state of social exclusion existing in the economy. Theoretical Economics Letters cial inclusion through increasing financial literacy among the under privileged and by strengthening credit delivery mechanisms to targeted sections. To this end, the increase in financial literacy has not only increased the number of bank accounts, but also significantly reduced the account dormancy. Further, financial inclusion penetrated significantly into India's traditionally marginalized communities, reducing the gaps between rural and urban, below and above poverty populations and between men and women. Their concerted efforts over the last five decades include nationalization of banks, the creation of well-knit branch network of scheduled commercial banks, co-operatives and regional rural banks, promotion of priority sector lending, the introduction of lead bank scheme, the formation of self-help groups and provision of zero balance BSBD accounts.
The Pradhan Mantri Jan-DhanYojana (PMJDY), a people's welfare scheme launched by Prime Minister Narendra Modi in 2014 has a decisive impact on India's stride in achieving financial inclusion over the last few years and has been extremely effective in bringing the socially excluded within the preview of the banking system. The program is an initiative to ensure that at least one reg- Given the size and diverse nature of the financially excluded population in India, the responsibility of accelerating inclusive growth lies equally on each stakeholder: the government, private and public banks and the social sector. The process of inclusive growth is not free of issues and challenges. But it also opens new windows of opportunities for socio-economic development. The rest of the chapter is organized into 4 sections. Section II is about the opportunities for development. Section III describes issues and challenges related to the process of financial inclusion. Section IV suggests some ways to improve the process of inclusive growth and Section V consists of concluding remarks.

Opportunities
Financial inclusion provides a unique opportunity to construct a sustainable financial system. The opportunities for the government as well the financial service providers are plenty. It accelerates growth in the real sector and triggers overall economic development.
To begin with, the micro-insurance could be an important mechanism for mitigating risk. If the regulators are able to induce trust regarding the product and reduce liquidity constraints, this could help the rural population to ease their vulnerability to risk [2]. The micro-finance institutions and self-help group  [3]. The reduced poverty level will accelerate the rate of integration with the formal banking system. Access to finance will further attract global market players thereby increasing business and employment opportunities.
The introduction of remittance corridors for the migrant population is an enormous opportunity for the migrants from rural areas, to exercise easy and

Issues and Challenges
On addressing the issues related to financial inclusion, it is extremely important to take a holistic approach addressing both supply and demand-side factors. The ance is highest in the case of Regional Rural Banks (refer Table 1).
Another barrier to successful implementation of financial inclusion plan is the Although SHG-Bank linkage model was proclaimed successful in rural areas, its reach across the nation is highly uneven (refer Table 2). Additionally, it was observed that the SHGs were unable to procure loans from banks even after a year of formation and group activities (refer Figure 2). Figure 2 is an excerpt

Ways Ahead
Substantial investments in social and physical infrastructure as well as in financial literacy, need-based products, and services along with innovative delivery mechanism are essential to enable the economy in achieving inclusive growth.
Investment in physical infrastructure will lead to the generation of employment, improve efficiency, reduce cost and thus will improve the overall standard of living. Investment in financial literacy is considered as the most crucial step without which any policy action with regard to financial inclusion will remain futile. It is the need of the hour to educate the target section about the available services and to create an awareness about their rights.
Banks need to focus more on introducing tailor-made services and deliver it through a better and effective mechanism. The credit disbursement should be made more flexible in order to attract the consumers who are used to informal sources of credit. Encouraging NGOs and MFIs to participate in this process will help identify default risk as they work closely with the target population. Provision of general credit card (GCC) or a limited OD against no-frills account will increase the access of credit. It will be ideal if affordable insurance and remit- There is a strong need to restructure the financial system, particularly the services available for the rural population. A coordinated drive for financial inclusion involving educational institutions is necessary to promote financial literacy.
Regular surveys should be conducted in villages to understand financial needs of the people and to check whether the products available are actually utilized by them and meets their expectations. RBI should allow telecom service providers to provide enhanced banking products at affordable prices. Giving authorization to microfinance as well as non-banking financial organizations to perform limited mainstream financial services in remote areas can help improve the reach of the program. These measures, if effectively implemented guarantees to accelerate the process of inclusive growth.

Conclusion
Financial inclusion is not a short-term goal. It is a progressive initiative, which will evolve itself over a period of time. The short-term opportunities should be made use of and the shortcomings should be duly corrected in order to accelerate the process of inclusion. The opportunities and challenges provide useful insights regarding innovative ways of economic value addition, which help the Nation reach a growth trajectory that is sustainable. Therefore, policymakers should focus on developing policies considering a sustainable banking services delivery model and need-based products for rural and urban consumers.