The Hindu Business Line : Real financial inclusion

Financial inclusion is the mantra driving banks, especially public sector banks today. A firm votary of the concept that envisages bringing into the banking fold everyone irrespective of financial status, the Finance Minister, Mr P. Chidambaram, has been exhorting bankers to ensure that banking services no longer remain the privilege of the metro and urban dwellers but should also be made accessible to Indians in the remotest corners of the country.

The Finance Minister, whose plea to bankers to popularise educational loans with the objective that no deserving student would have to discontinue his studies for want of funds, has brought higher education within the reach of the poorest of the poor. He deserves kudos for this as well as his thrust on financial inclusion.

Little gain

A recent study by the Boston Consultancy Group has revealed that only one out of three Indians has a bank account which means that banks have a lot of catching up to do. Yet, if financial inclusion merely means the opening of no-frills accounts which, in simple parlance, implies that many of the conditions for opening accounts would be relaxed in these cases where the customers have no means as such, the beneficiaries would stand to gain little as the mere holding of a bank account would in no way enhance their status or add to their incomes.

Real financial inclusion would involve not just opening accounts but following up with the new clientele about their requirements for finance to set up small self-employment units which would go a long way in enabling them to find their feet and guarantee two square meals a day, apart from clothing and a roof over their heads.

The concept of self-help groups, which promotes savings and finds ways and means for its members to eke out a livelihood, has caught on in a big way, thanks largely to banks which have not merely taken the lead in setting up the groups but have endeavoured to credit link them, thereby providing a steady flow of finance for the group’s activities.

Lend a hand

It is heartening to note that SHGs managed by women have been doing very well in several parts of the country, a clear indication that the gender divide plays no role where entrepreneurship is concerned.

The Finance Minister who has always had great faith in the common man, the agriculturist and the low-income group, has already played his part and it is now up to banks to extend a helping hand in a big way to the BPL (Below the Poverty Line) categories by not merely opening accounts in their names but also making them self-sufficient.Banks certainly should consider this as part of their Corporate Social Responsibility Apart from government-owned banks, private and foreign banks too should chip in with heir mite in the sphere of financial inclusion which, needless to add, is a step in the right direction.

(The author is a Bangalore-based freelance writer.)