Financial Inclusion and Bank Credit : Perspectives from Small BorrowersMay 23, 2023 2023-06-24 10:52
Financial Inclusion and Bank Credit : Perspectives from Small Borrowers
S. N. Tripathy
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Financial inclusion has emerged as a major developmental goal across the world, especially for emerging economies like India. It has been identified as a key enabler of eight sustainable development goals. A close examination of the current financial inclusion situation in India reveals that supply side measures have expanded the banking outreach in semi urban as well as rural spaces. Considerable progress has been made in terms of “bank account ownership” and “financial access”. However, there are persistent gaps in usage of financial services and many demand side barriers need greater attention of bankers and policy makers. Moreover, the journey towards full financial inclusion entails key dimensions like credit, insurance and technology adoption and it’s time to address issues in these critical areas. Literature reveals that the level of financial inclusion in a country is shaped up by supply side as well as demand side parameters. At this stage, a microscopic view of the demand side barriers pertaining to financial inclusion can be useful to decode the challenges of banking for small and marginal clientele groups, particularly borrowers.
The present study has been conducted with the help of primary survey using structured schedules to collect data from rural and marginal households in the villages of Pune District in the State of Maharashtra in India. Since the district already has a good level of banking outreach, exploring the operational challenges and deriving insights from small borrowers has led to many meaningful findings in terms of financial inclusion challenges. The study was carried out with respect to one of the most critical dimension of financial inclusion that is “Credit”. The data analysis has been done using multiple regression and tests of association to find out the biggest set of barriers under each of the above heads. These factors are relevant in shaping up the level of banking satisfaction and the borrowers’ overall experience. The findings can be useful for banks in order to craft financial inclusion plans and strategies to address the challenges for the clientele at the bottom of the pyramid.
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Financial Inclusion, Financial Access, Usage, Demand Side Barriers, Technology Adoption, Credit, Insurance, Small Borrowers