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Despite India boasting economic growth rates higher than most developed
countries in recent years, a majority of the country’s population still remains
unbanked. Financial Inclusion is a relatively new socio-economic concept in
India that aims to change this dynamic by providing financial services at
affordable costs to the underprivileged, who might not otherwise be aware of or
able to afford these services.


India is a
developing country. Out of the 1.2 billion people in India, 447.2 million
people are illiterate and 86.2 million people are in agricultural labor. This
means that there are about 447.2 million people who do not have a formal way of
managing money and about 86.2 million people live in the rural areas. Financial
inclusion will ensure more people will gain access to formal ways of managing
money, especially to those in the rural areas who do not have a bank account or
savings account. States like Manipur and Meghalaya are lagging in financial
progress while Arunachal Pradesh has a weaker presence of regional rural banks
and microfinance institutions along with Manipur. Other states like Punjab and
Kerala have a significant population of agricultural labourers but low supply
demand ratio. States as such require more access points through which the
undeserved and unbanked population can gain access to banks, savings account,
debit cards, etc. through which they will be financially supported. As per the report
of World Bank, in India, only 35.2 percent adults above the age of 15 years
have an account at formal financial institutions out of which only 9 percent
population have credit accounts with formal financial institutions.

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from Census, 2011 estimates that only 58.7 percent of the households have
access to banking services. The present banking network of the country (as on
31.03.2014) comprises of a bank branch network of 1,15,082 and an ATM network
of 1,60,055. Of these, 43,962 branches (38.2 percent) and 23,334 ATMs (14.58
percent) are in rural areas. According to World Bank Findex Survey (2012) only
35 percent of Indian adults had access to a formal bank account and 8 percent
borrowed from a formal financial institution in last 12 months. 


to formal financial institutions has improved gradually but thousands of
villages still lack a bank branch; less than 10 percent of all commercial bank
credit goes to rural areas, where around 70 per cent of the total population
lives. Data from the RBI show that only 46,126 out of 640,867 villages in India
were covered by banks in March 2014.


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