India’s policies on leveraging financial inclusion in the country

Exclusion of basic financial services acts as an obstacle in achieving economic development because financially excluded people are forced to take credit at exorbitant rates from informal sources which results in debt, unemployment and rise in crime rates (Sharma & Kaur 2012; Mathew & Kurian 2015). Moreover, lack of access to the financial services or the inability to use them leads to social exclusion (European social watch report 2010). Hence financial inclusion becomes a priority of every government. In India several policy initiatives have been taken by the Government of India (GOI) and Reserve Bank of India (RBI) to make banking services accessible to the masses; right from nationalization of banks to priority sector lending to launching of lead bank scheme to establishing Regional Rural Banks to initiating Self – Help group bank Linkage Programme. In spite of all the sincere efforts by Government of India (GOI) and by Reserve Bank of India (RBI), they are yet to overcome several hurdles as 10.91% of the entire population in the country state distance as a barrier, 10.92% of them state cost as a barrier, 9.71% report documentation as a barrier and 3.47% report trust as a barrier for opening a bank account (World Bank 2016). In this paper through expository research we have made an attempt to study the various initiatives taken by the authoritative bodies in India to achieve financial inclusion and its impact on the households. A thorough study has been done on the various policies undertaken and the participation of the various stakeholders of the Indian economy to help in the successful execution of these policies. Data has been gathered through official reports published by these authoritative bodies and an analysis of the parameters that indicate the spread of financial inclusion has been undertaken.