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Creating a Financially Inclusive System in India amid Covid-19

As the year 2020 has been more troublesome for people all over the world, low-income and underserved people struggle much to cope up with the economy in India. The challenge of creating a financially inclusive system has never been more challenging or more significant. Financial inclusion has concerned both the government and economic development leaders. Although several policies and legislation have been implemented, they have only served to inspire historically under-banked communities to seek formal financial institutions. The Centre has proactively attempted to integrate the population into the broader financial system. A majority of the population has access to open a bank account, and a portion of them even know how to conduct cashless transactions using UPI. This is a positive trend in recent years, resulting in increased confidence in digital platforms.

To ensure inclusive economic development, significant investments in physical and social infrastructure and need-based goods, financial literacy, and creative delivery mechanisms are needed.

Microfinance and NBFC Loans will be helpful to the people who wish to start or invest in a small business today who are in the pandemic recovery phase from the backward population. However, the drawback is a quiet structure with only a few basic requirements, and there is also a lack of access to loans that are not conventional. The challenge that remains is, it is essential to structure financial services that are of interest to the underserved.

The first step toward financial inclusion is Identifying people's financial needs. Having access to a transaction account, which enables people to store money and send and receive payments, is the first step toward broader financial inclusion. A transaction account is a type of account that connects you to other financial services. Introducing Jan DhanAadhaarMobile by the government has positively affected the banking sector and financial inclusion in India. There has been a significant change in targeted and reliable payments since the introduction of JAM services. It has also aided in eliminating duplicate entries and the reduction of dependency on cash payments and has helped create a trust factor with the customers.

Although the cost of maintaining active accounts like transactions and transportation outweighs the benefits, which is one of the critical reasons for the low use of banking and payment services in rural areas. Also, the accessibility to the nearest banking point in rural and peri-urban areas. Innovative consumer interaction techniques are needed to increase the use of savings products to create safety nets. To ensure inclusive economic development, significant investments in physical and social infrastructure and need-based goods, financial literacy, and creative delivery mechanisms are needed. Furthermore, financial institutions must place a greater emphasis on customized services to have an efficient tool.

Financial inclusion is a long-term objective and a radical movement that will continue to grow. Each Indian citizen will have access to the required financial services to bridge the gap with the needs unmet in the ten years with a healthy mix of banks and fintech firms.

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