Report of the Committee on Financial Inclusion

Extending reach of organized financial system to include low-income households
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This report, by the Committee on Financial Inclusion constituted by the Government of India in June 2006, makes recommendations for financial inclusion in India.

The committee studied financial exclusion patterns and identified barriers confronted by vulnerable groups in accessing financial services. It reviewed international experience in implementing policies for financial inclusion and examined their relevance to India. The report states that financial inclusion can be enhanced by improving delivery systems. It also notes that many regions, population segments and sub-sectors of the economy have weak demand for financial services.

In order to improve the level of inclusion, demand side efforts such as improving human and physical resource endowments, enhancing productivity, mitigating risk and strengthening market linkages need to be taken. The report:

  • Recommends adoption of a National Rural Financial Inclusion Plan;
  • Makes suggestions for facilitating better credit flow for inclusive growth by adopting the Business Facilitator/ Business Correspondent Models;
  • Deals with the SHG – Bank Linkage Program, MFIs, role of remittances in financial inclusion and issues concerning microinsurance.