Financial Inclusion
Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way. It ensures timely and adequate credit for vulnerable groups at an affordable cost. It is a part of Sustainable Development Goals (SDGs).
Benefits of Financial Inclusion
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- Financial Discipline and financial safety
- Poverty alleviation
- Positive effects on economy
- Access to formal source of credit which are cheaper than informal sources of credit.
- Boosting employment and economic activity through entrepreneurship
- Achieving women’s economic empowerment
Various Government Initiatives
1. PM Jan Dhan Yojana: Basic financial services through bank account opening
2. PM Suraksha Bima Yojana: Accidental Insurance
3. PM Jeevan Jyoti Bima Yojana: Life Insurance
4. Atal Pension Yojana, PM Shram Yogi Maan-Dhan Yojana, PM Laghu Vyapari Maan-Dhan Yojana: Pension for unorganised sector
etc.
Priority Sector Lending (PSL)
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- It is mandated by RBI.
- To dedicate funds for specific sectors of the economy like agriculture and allied activities, education and housing and food for the poorer population.
- For Scheduled Commercial Banks (SCBs), Foreign banks with sizeable presence in India: 40% of adjusted net bank credit (ANBC)
- For RRBs, Cooperative Banks, Small Finance Banks: 75% of ANBC
- PSL certificates are given which are tradable. This means those who miss the target can purchase PSL certificates from the one who had exceeded the target.
Categories of PSL
(i) Agriculture
(ii) Micro, Small and Medium Enterprises
(iii) Export Credit
(iv) Education
(v) Housing
(vi) Social Infrastructure
(vii) Renewable Energy
(viii) Others
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