Contemporary Financial Inclusiveness Of The Minorities
Financial inclusion can be construed in two ways; first is countering the exclusion from the payment system that is not having an access to a bank account. The second is countering the exclusion from financial services. The Government of India (GoI) and the Reserve Bank of India (RBI) have traditionally played a large role in establishing banks and other financial infrastructure in order to increase the poor’s access to quality financial products. Banks and other apex financial institutions such as National Bank for Agriculture and Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI) have supported and aided the government in a variety of ways towards this end.
What government is doing, spreading the banking network across the country for allowing people to have access that results into the spread of credit, bringing people into the financial system but it is perhaps only one sided as financial inclusion is just not rather it needs financial literacy and also to break down many traditional structures of money lending and entire credit culture is there in the rural areas.
It is of the belief that sustainable financial inclusion is achievable only through mainstream financial institutions i.e. banks, as the penetrative reach of banks is low and have still not been able to reach a large number of villages in the country, other intermediaries, which have the ability to reach the excluded segments of the society are required. Microfinance institutions fill this niche space and to that extent, play a critical role in the financial inclusion. Microfinance programs have a potentially significant contribution to economic, social, political and psychological empowerment of the poor in general, women in particular. Through access to timely credit, savings, insurance and entrepreneurial training, women have become successful entrepreneurs, increased their household income and well-being. Regardless of their scale, outreach, location and the type of clients, all microfinance program interventions target one thing in common – human development that is geared towards both the economic and social uplift of the people that they cater for. The unique aspect of micro finance in India is that it is delivered through a variety of channels. These include branches of commercial banks and RRBs directly dispensing micro credit and through their business correspondents (BCs), Self-help groups (SHGs) linked to bank branches, cooperative banks and primary cooperative societies, micro finance institutions (MFIs) as NBFCs and in other forms, obtaining funds from a variety of sources, domestic and external. Union Budget (2011-2012) has proposed to set up a “Women’s SHG’s Development Fund” with a corpus of Rs. 5000 million. The GoI created this fund to empower women and promote their SHGs and it is operated by NABARD through its two major microfinance funds- Financial Inclusion Fund (FIF) and the Financial Inclusion Technology Fund (FITF).
As discussed above that there has been a constant effort of the government of India to focus on the section of the society that is deprived of benefitting from financial services and not able to participate in the financial system even getting a small loan as it involves very high interest.
Financially excluded people, consistently, depend, on money lenders even for their day to day needs, borrowing at excessive rates to finally get caught in a debt trap. In addition, people in far off villages are completely unaware of financial products like insurance, which could protect them in adverse situation. Therefore, financial inclusion is a big necessity for our country as a large chunk of the world’s poor resides here. Access to finance by the poor and vulnerable groups is a prerequisite for poverty reduction and social cohesion.
One can witness a lot has been done so far, in some recent years, Indian government has extensively focused on financial inclusion through SMEs (Small and Medium Enterprises), Micro Insurance, micro finance, etc. In fact, financial inclusion has emerged as a policy imperative for inclusive growth in several countries across the globe. Welfare of minority has high on the agenda of the government ever since it adopted ‘inclusive growth’ as its guiding principle of the governance in the democratic country like India. It’s the duty of the state and as a corollary, responsibility of the majority community to ensure the welfare of minorities so that all sections of the society feel proud to be part of the democratic setup and thus contribute their best to the development of the nation. In 1983, the prime minister’s 15-point program was launched to provide a sense of security to minorities communities and ensure their rapid socio-economic development. The program was based on a three-pronged approach (1) to tackle the situation arising out of communal riots. (2) to ensure adequate representation of the minority communities in employment under central and state governments as well public-sector undertakings (3) other measures, such as ensuring flow of benefits to the minority communities under various development programs, maintenance and development of religious places, Waqf properties and redressal of grievances of the minorities. However, as per the 2008 Report on Financial Inclusion by Dr. C. Rangarajan, over 73 percent of farmer households currently do not have access to formal sources of credit. In certain geographies, this ratio is much worse. Therefore, this paper aims to delve into financial services at large and financial inclusion of minorities in particular, which actively contribute to the humane & economic development of the society.