Research Journal of Commerce & Behavioural Science - RJCBS

OBJECTIVES OF THE STUDY
This study has the main objectives:
To determine the level of awareness of people in
various financial products and services and more
importantly quality as a factor of financial
inclusion.
To study the impact of SHG bank linkage program
& low income people on promotion of financial
inclusion in rural and urban areas in term of access
to banks, saving and loan by the SHG members.
To make suggestions for improvement of the
present situation which will lead to sustainable
development?
STATEMENT OF THE PROBLEM
Financial exclusion is excluding people without of
affordable credit, savings, insurance assets and money and
bank advices. The financial excluded section largely
comprises marginal framers, landless laborers, self
employed and unorganized sector enterprises, urban slum
dwellers, migrants, ethnic minorities and socially excluded
groups, senior sector and women. To achieve greater
financial inclusion, financial services should reach the poor
of socially excluded group’s particularly poor people micro
finance banks and other financial institution has played a
vital role in filling up this gap. This study helps us to know
the financial inclusion position, awareness level, towards no
frills account and saving and credit behavior of the low
income groups.
RESEARCH DESIGN AND METHODOLOGY
The research shall focus on the problems they face with
regard to basic banking needs and identify a range of
particular difficulties likely to be faced relating to the use of
bank accounts, products and services. The study is analytical
and exploratory in nature and makes use of Secondary data.
The data of the study has been collected mostly from the
secondary sources. The secondary data have been collected
from various publications and different government and
non-governmental sources. The data collected from
secondary sources have been suitably edited, analyzed and
interpreted according to requirement of the study. The
purposes of the study are to provide a critical review of
evidence about low-income and at-risk people on how their
financial capability is measured, what programs are used to
promote their financial literacy, and what evaluations of the
programs uncover about them.
THE ROLE OF COMMERCIAL BANKS
‘Banking’’ activity involves acceptance of deposits and
lending for investment of money. It facilitates business
activities by providing money and certain services that help
in exchange of goods and services. Banks are such places
where people can deposit their savings with the assurance
that they will be able to withdraw money from the deposits
whenever required. Banks have an important role in helping
people to deal with financial distress. People earn money to
meet their day-to-day expenses on food, clothing, education
of children, housing etc. They also need money to meet
future expenses on marriage, higher education of children, a
building of their own and other social functions. These are
heavy expenses in the long run which can be met if some
money is saved out of the present income. Savings is also
necessary to meet the exigencies of old age and ill health
when it may not be possible for people to work and earn
their living. People who wish to borrow money for
business and other purposes can also get loans from the
banks at reasonable rates of interest. On the basis of their
deposit, the banks also grant loans and advances to farmers,
traders and business men for productive purposes. The rate
of interest is generally higher than the rate of interest
allowed on deposits. Fees are also levied for the various
other services rendered to the business community and
public in general. Therefore banks contribute to the
economic development of the country. In order to
understand the relationship of banks and the environment,
the basic role of a bank is to receive funds from customers
by way of deposits and allocate these funds where there is a
need or shortage of capital, which is called financial
intermediation. However through the evolution of financial
services, the role has a broader means so as to include
among others, consumer credit, mortgage leasing, treasury,
securities trading and insurance. Finance is universally
acknowledged as the most important contributor to growth
and empowerment in modern day context; financial
inclusion has emerged as a concept uppermost before
government, planners, financial sector players, socioeconomic
organizations etc. All across the globe, a
definition of financial inclusion, embracing all its essential
aspects could be like this. ‘‘It is the delivery of financial
services at an affordable cost to the vast sections of
disadvantaged and low income groups.’’ In the Indian
context, a specialty will be the coverage of rural areas as the
main target in view of the concentration of these vulnerable
groups in such areas. It is true that financial inclusion and
poverty alleviation cannot be separated but components like
saving, investment, credit, insurance and remittance should
be included in financial inclusion.
Moreover, financial inclusion emphasizes the need to
include maximum number of people under formal financial
systems. The most important part of financial services in a
region is typically measured by the number of people who
have access to bank accounts. The financial inclusion in the
forms of the growth in bank accounts of scheduled
commercial banks and the changes below poverty line
population. As a poverty education strategy, developing
inclusive financial systems should be given priority, which
is financially and socially sustainable.
The role of commercial banks for sustainable development
is linked to increased savings mobilization and credit
provision in rural areas which allows rural households to
better accumulate capital and to obtain loans for longer term
productive investments. Interest rates on loans and deposits
are attractive relative to those available in informal markets.
www.theinternationaljournal.org > RJCBS: Volume: 01, Number: 08, June-2012 Page 25