Financial Inclusion in Rural India

In spite of the fact that India is one of fastest growing economies in the world and banks in Indai have made rapid head way on various fronts including expansion of branch network in rural areas Rural India is still laging behind in financial inclusion.Vast sections of underprivileged population still stand deprived of not merely formal sources of finance but also basic banking services.According to available data only 44 percent of Indian earners had bank accounts in 2007.Out of them only 38 percent of paid workers in rural India had bank accounts as agianst 62 percent of those in urban areas.
India has been ranked very low i.e 50th below even some African countries like Kenya and Morocco in terms of the index of financial inclusion prepared by Indian Council for Research on International Economic Relations.There is therefore an urgent need to expand basic banking and financial services in rural India.At present the number of branches of banks per one lakh adults is 9.4 as against 14.6 in Malaysia.Domestic bank deposits as a share in GDP is just 54.9 percent in India compared to 123.9 percent in Malaysia.Indian Banks must face the challenge of financial inclusion with new and innovative approaches.Low cost approaches must be explored for this purpose.Banks may adopt ''banknig correspondent'' approach to provide branchless banking facility in rural areas.