Promoting Financial Inclusion - United Nations Development ...

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What is Financial Inclusion?
The two committees defined financial
inclusion in the following ways:
FIGURE 2.1 Financial Inclusion.
Bank Accounts
Financial Counselling
BOX 1: Rangarajan Committee – Working
Definition of Financial Inclusion
Financial inclusion may be defined as the process
of ensuring access to financial services and timely
and adequate credit where needed by vulnerable
groups such as weaker sections and low income
groups at an affordable cost.
Credit
Savings
Financial Services to
Financially
excluded
population
Financial Services to
Insurance
Remittance
BOX 2: Raghuram Rajan Committee’s
Definition of Financial Inclusion
Financial inclusion, broadly defined, refers to
universal access to a wide range of financial
services at a reasonable cost. These include not
only banking products but also other financial
services such as insurance and equity products.
The provision of different types of
financial services to the excluded population,
for ensuring financial inclusion is depicted
in Figure 2.1.
Source: Adapted from the Rangarajan Committee
report.
VIEWS OF OTHER INSTITUTIONS/
SECTOR EXPERTS
A World Bank 2 report states, ‘Financial
inclusion, or broad access to financial
services, is defined as the absence of
price or non-price barriers in the use of
financial services.’ The report stresses the
distinction between ‘access to’ and ‘use of ’
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‘Finance for All? Policies and Pitfalls in
Expanding Access’, World Bank Report, 2008. The
report provides a survey of problems, measurement
problems and issues in financial inclusion in a cross
country framework.
2 PROMOTING FINANCIAL INCLUSION