India needs strong measures for the financial inclusion of the poor and the marginalised, said Reserve Bank of India Deputy Governor Dr. K. C. Chakrabarty here on Friday. He was speaking at the national consultation on “Community Consultation and Dialogue with Policy Makers on Mainstreaming Financial Inclusion for Urban Poor”.
Accepting that the country has not scored well on financial inclusion parameters, Dr. Chakrabarty, who is also the Chairperson of the RBI High-Power Committee on Financial Inclusion, expressed a greater need for mainstreaming financial inclusion to facilitate access of the poor to financial services.
Addressing the gathering after hearing the testimonies of activists and workers about their problems in delivering credit, safeguarding savings, ensuring insurance and pension and the issues of savings, loan and remittances, the RBI Deputy Governor described the process of financial exclusion as lack of access by citizens to appropriate low cost, fair and safe financial products and services from mainstream providers.
He also accepted that the prolonged and persistent financial exclusion to a large segment of population would lead to a decline in investments and can also result in fuelling social tensions causing social exclusion.
Addressing the gathering Arbind Singh of NIDAN argued that an inclusive society ensures financial inclusion of self-employed micro-entrepreneurs like street vendors, construction workers, domestic workers, waste pickers as they remain vulnerable to social and economic insecurities due to lack of livelihood security and financial support.
“Even today the fact remains that nearly half of the Indian population doesn’t have access to formal financial services and are largely dependent on money lenders. Mere opening of no-frill bank accounts is not the purpose or the end of financial inclusion,” added Mr. Singh, while demanding that formal financial institutions must gain the trust and goodwill of the poor through developing strong linkages with community-based financial ventures and cooperatives.
The consultation called upon the Union Ministries of Finance, Labour and Employment, Housing and Urban Poverty Alleviation and the RBI to ensure that “financial literacy drives are undertaken, tailor made schemes are framed, need-based product and services along with innovative delivery mechanisms are developed and strong linkages are made between formal banking institutions and community-based financial ventures”.