Advantages of Financial Inclusion

Financial inclusion is a term which is used in the context of banking; it refers to providing financial and banking services to those sections of society which are still deprived of basic banking services. These people belong to low income group and they are based in rural areas. Given below are some of the advantages of financial inclusion –

  1. In villages where there are no banks available poor people take loans from moneylenders and rich people who tend to exploit these people by charging higher interest ranging from 15 to 30 percent per year and thus it becomes a vicious circle where the poor keep paying interest whole life and in some cases even his or her children also have to repay the debt of their parents. With financial inclusion these people can take loan from banks which are well regulated and also government through banking medium give various subsidies to poor people and thus will be saved from clutches of greedy moneylenders.
  2. It will also develop a habit of saving among poor people, because people in far flung rural areas either spend their money or keep their money at their homes which is very unsafe, but if they have banks or financial institution at nearby place then they can save their money in banks and can rely on that money in time of emergency.
  3. It will also be helpful for the country as a whole also because these small savings by rural people can be channelized and can help in capital formation and growth of the country as a whole because in developing countries majority of rural population is not covered by banking system.
  4. It will also be beneficial for the government because various schemes meant for poor does not reach the poor because of middle men and moneylenders present in these areas, but with the banks being present in these areas these limitations can be eliminated.


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