An inclusive financial system not just helps in increasing economic growth but leads to better opportunities and reduction of poverty of the underprivileged sections of the society. A well developed financial system is essential for faster and broad-based economic growth. It is highly important for economic development and human wellbeing. It brings poor people into the mainstream of the economy and allows them to contribute more actively to their personal economic development (UN 2006[1]). A well developed financial system brings poor people into the mainstream of the economy and allows them to contribute more actively to economic development both individually and collectively (M.Ramaji, 2009[2]). Usha Thorat, Deputy Governor, RBI in her speech on financial inclusion as, “Financial Inclusion, broadly is constructed as the inability to access necessary financial services in the appropriate from due to problems associated with access , conditions, prices, marketing or self-exclusion”. (Usha Thorat, 2008[3].Studies have found that there is a positive correlation between access to finance and firm creation, economic growth, and poverty alleviation at the country level (World Bank,2008[4], Honohan, 2004[5]). Field research, especially, in the developing countries have explained that how poor households are managing their financial lives in order to achieve their multiple objectives (Collins, Murdoch, Rutherford, and Ruthven 2009[6]). Globally, about half of all working-age adults are excluded from formal financial services. For the lowest income quintile, 77 percent are excluded (Demirgüç- Kunt and Klapper 2012[7]). Studies suggest that financial services do have a positive impact on a variety of microeconomic indicators, including self-employment business activities, household consumption, and well- being (Bauchet et al. 2011[8]). There is evidence that microcredit both spurred new business creation and ISSN (Print) 2394-1529, (Online) 2394-1537 benefitted existing micro businesses in Mongolia and Bosnia (Attanasio et al. 2011[9]; Augsburg, de Haas, Harmgart, and Meghir 2012[10]). Study on the state-level panel data in India provides evidence that local differences in opening bank branches in rural unbanked locations were associated with a significant reduction in rural poverty (Burgess and Pande 2005[11]). Census 2011 estimated that out of 24.67 crore households in the country, 14.48 crore (58.7%) households had access to banking services. Of the 16.78 crore rural households, 9.14 crore (54.46%) were availing banking services. Of the 7.89 crore urban households, 5.34 crore (67.68%) households were availing banking services. In the year 2011, Banks covered 74,351 villages, with the population more than 2,000 (as per 2001 census), with banking facilities under the “Swabhimaan” campaign with Business Correspondents had a very limited reach and impact.
Keyword: Debit Card, Financial Inclusion, Insurance, and Inclusive Growth.
Rajeev Singh Bhandari