Financial Inclusion in Developing Countries: Evidences from an Indian State

Financial Inclusion poses policy challenges on a scale and with an urgency that is unique for developing countries which house more than 90% of the world’s unbanked population. Developed countries policy makers have recognised that there are complex and multi-dimensional factors that contribute to financial exclusion and therefore require a comprehensive variety of providers, products and technologies that best suits the socio-economic, political, cultural and geographical conditions in these countries. India’s experience as a developing country towards ensuring financial inclusion and weeding out financial exclusion has been unique. Indian economy has achieved a phenomenal economic growth during the last decade or so. But this growth has not been inclusive. Mobile phones, E-Mail, E-Commerce, Swanky Cars, trendy dresses, plastic money and 24-hour banking through ATMs have all become a reality in the country but only in the cities and towns. One of the reasons for this exclusive growth witnessed in the country has been attributed to the failure of the second generation reforms which were broadly related with financial sector reforms aimed to achieve greater financial inclusion. The problem of ‘Financial Exclusion’ is severe in the country. The State of Jammu & Kashmir is no exception to this socio-economic problem. An effort has been made in this paper to assess how serious the problem of financial exclusion is in the state? What has been the impact of the initiatives taken by RBI towards greater ‘Financial Inclusion’ & what more needs to be done to achieve full & meaningful financial inclusion?