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Financial Inclusion

 1. Financial inclusion should be at the core of any economic strategy to meet the aspirations of citizens.

2. Various steps taken by the Government in recent years are helping in improving financial inclusion in India.

What are the benefits of financial inclusion?

Financial inclusion benefits the financially vulnerable segments of the society

1. It gives them access to microcredit to generate additional income streams.

2. It allows them to channel their savings into investments and create assets.

3. They can buy insurance products.

4. It helps them to fund their children’s education.

How Government initiatives are promoting financial inclusion?

1. Use of Aadhar provides a unique identity to each Indian citizen.

2. No-frills saving bank accounts called Jan-Dhan are created.

3. Direct Transfer of social benefit payments into the Jan-Dhan accounts.

4. Digital payment infrastructure called BHIM (Bharat Interface for Money) is introduced.

PM Jan-Dhan Yojana

1. It was launched in 2014 as a national mission on financial inclusion to provide banking services to all households of the country.

2. It ensures access to a range of financial services like availability of basic savings bank account, credit facility, remittance facility, insurance and pension.

3. It covers both urban and rural areas.

4. Account-holders are provided with indigenous debit cards (RuPay card).

5. It envisages the extension of Direct Benefit Transfer (DBT) under various government schemes through bank accounts of the recipients.

6. Kisan Credit cards have been linked with the RuPay platform.

7. Microinsurance and unorganized sector pension schemes have also been included for the second phase of the program.

8. A structured monitoring mechanism from Central to District level has been instituted for effective monitoring of the program.  

Atal Pension Yojana

1. Any Indian citizen between 18-40 years can join it through their Savings Bank account.

2. It provides a guaranteed pension scheme by the Government of India to the subscribers.

PM Vayavanda Yojana (PMVVY)

1. It is an assured pension scheme of 8%.

2. It is being implemented through Life Insurance Corporation of India.

3. Eligibility: Minimum age = 60 years.

PM Suraksha Bima Yojana

1. It is a Government-backed accident insurance scheme in India.

2. Eligibility: 18-70 years age group with bank account.

3. Annual premium = Rs.12

4. Payment to the nominee = Rs.2 lakh (in case of accidental death or full disability) and Rs.1 lakh (in case of partial permanent disability).

Stand Up India Scheme

1. It aims to provide easy loans to the vulnerable sections of the society for setting up their enterprises.

2. It was launched in 2016.

3. It aims to facilitate bank loans between 10 lakh and 1 crore to at least 1 SC/ST borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise.

Sukanya Samridhi Yojana

1. As a part of the ‘Beti Bachao Beti Padhaao’ scheme, Sukanya Samridhi Yojana was started in 2015.

2. It enables parents to meet the major future expanses of their girl children plus offering tax benefits as well.

MUDRA scheme

1. It aims to bring small business entities involved in trading, manufacturing and service sectors in the ambit of formal banking.

2. Various public sector banks, microfinance institutions, NBFCs and co-operative banks are participants in the scheme.

Which are the key elements of true financial inclusion?

1. Financial firms must understand the market and structure products accordingly.

2. Financial service firms need to be present in local markets to serve the exact needs.

3. Setting up of Financial Literacy Centers, developing mobile apps, mobile ATMs, awareness creation programs, etc. help in improving financial literacy.

4. Partnership between the Government and providers of various financial products should improve through steps like Public-Private partnership.

5. Ensuring secured technology-driven environment.