journals, Articles, reports of RBI, reports of NABARD and online resources. C Rangarajan, Report of the committee on Financial Inclusion, ,1- [3]. 18 Nov Home · Special Report · Financial Inclusion. C Rangarajan: The Two Pillars of Financial Inclusion. Banks are in the best position to lead. Rangarajan () defines financial inclusion as “the process of ensuring access of RBI and also taken from various committee reports on financial inclusion.

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Therefore the banks will have to decide as to how to bear these additional costs. Access to safe, easy and affordable credit and other financial services by the poor and vulnerable groupsdisadvantaged areas and lagging sectors is recognized as a precondition for accelerating growth and reducing income disparities and poverty.

The objective of financial inclusion is to extend the scope of activities of the organized financial system to include within its ambit people with low incomes. Micro-insurance is a key element eangarajan the financial services package for people at the bottom of the pyramid. Access to finance by the poor and vulnerable groups is a prerequisite for poverty reduction and social cohesion.

It was felt that the nationalised banks can make a big push into the rural areas. These costs may not be very high — they would be much lower than what the banks will have to bear if they were doing the business directly — but nevertheless there is an additional cost. Extending outreach on a scale envisaged under NRFIP would be possible only by leveraging technology to open up channels beyond branch network.

There is, therefore, a need to evolve an incentive package which should motivate these NGOs to diversify into other backward areas.

Their area rangarajxn operation may also be extended to cover the 87 districts, presently not covered by them. The Committee has recommended that adoption of the JLGs concept could be another effective method for purveying credit to mid-segment clients such as small farmers, marginal farmers, tenant farmers, etc. Such MF-NBFCs may also be recognized as Business Correspondents of banks for providing only savings and remittance services imclusion also act as micro insurance agents.


Many States with high incidence of poverty have shown poor performance under the programme. The Committee feels that the task of financial inclusion must be taken up in a mission mode as a financial inclusion plan at the national level.

This has to become an integral part of our efforts to promote inclusive growth. The committee on financial inclusion, appointed by the government under my chairmanship, had indicated that at least 50 percent of the financially excluded households must be covered by through rural and semi-urban branches. This may be attributed, in commjttee at least, to the migratory nature of the urban poor, comprising mostly of migrants from the rural areas.

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Recommendations of the Committee on Financial Inclusion. To some extent, this has happened. The SHG – Bank Linkage Programme can be regarded as the most potent initiative since Independence for delivering financial services to the poor in a sustainable manner. Development and Technology Funds.

Is there any Universal definition of FI? A biosimilar shot in the arm. Joint Liability Groups SHG-bank linkage has emerged as an effective credit delivery channel to the poor clients.

An important development in the last odd years has been the organisation of Self-Help Groups SHGs or small reoprt of people who could borrow from the banking system. The Committee has recommended that adoption of the JLGs concept could be another effective method for purveying credit to mid-segment clients such as small farmers, marginal farmers, tenant farmers, etc.

C Rangarajan: The Two Pillars of Financial Inclusion | Forbes India

There are no clear estimates of the number of people in urban areas with vinancial access to organized financial services. This, however, is in addition to extending traditional mode of banking by targeted branch expansion in identified districts. Micro Insurance Micro-insurance is a key element in the financial services package for people at the bottom of the pyramid.


However, the health of a very large proportion of these rural credit cooperatives has deteriorated significantly. In fact, providing inxlusion to finance is a form of empowerment of the vulnerable groups. The programme has been growing rapidly and the number of SHGs financed increased to Rangarajan to study the pattern of exclusion from access to financial services across region, gender and occupational structure and to identify the barriers confronted by vulnerable groups in accessing credit and financial services inclusiob recommend the steps needed for financial inclusion.

Government of India had constituted oon committee in under the chairmanship of Dr. But the fact remains that despite a very focussed expansion of branches in the rural and semi-urban areas, we have not been able to reach out to the poor farm households and therefore a re-think has started now as to what more can be done.

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Federations, if they emerge voluntarily from amongst SHGs, can be encouraged. You can buy our tablet version from Magzter. However, the Committee feels that they cannot be entrusted with the financial intermediation function.

However, in the initial stages some funding support is required for promotional and developmental initiatives that will lead to better credit absorption capacity among the poor and vulnerable sections and for application of technology for facilitating the mandated levels of inclusion. A National Mission on Financial Inclusion NaMFI comprising representatives from all stakeholders may be constituted iinclusion aim at achieving universal financial inclusion within a specific time frame.

NGOs, being local initiators with their low resources, are finding it difficult to expand in other areas and regions. Fill in your details below or click an icon to log fknancial