Financial inclusion an important element in ensuring access and equity: Raghuram Rajan

The Reserve Bank of India (RBI) Governor Raghuram Rajan on Monday said that the financial inclusion will be an important element in ensuring access and equity. Rajan was speaking at the National Seminar on Equity, Access and Inclusion organised by National Institute of Rural Development and Panchayat Raj in Hyderabad.

Pitching for access of financial services to all, Rajan said that if everyone had the tools and resources to better themselves, it would increase output, growth, and economic prosperity.

Rajan also focussed on transforming institutions. "Microfinance institutions, small finance banks, credit information bureaus, Aadhaar for individuals and “Udhyog Aadhaar” for small businesses are other institutions that could bring significant changes in credit culture and thus ease flow of credit in underserved areas".

Further, Rajan said that the government and the RBI are encouraging easing of payments and remittances on expanding remunerative savings vehicles, or on providing easy-to-obtain insurance against crop failures.

He believes that though the country has come a long way in the process of financial inclusion, but "still a long way to go". 

"We are steadily moving from mandates, subsidies, and reliance on the public sector banks for inclusion to creating enabling frameworks that make it attractive for all financial institutions to target the excluded, even while the interests of the excluded are protected through education, competition and regulation", Rajan said.

Lastly, Rajan said that easy payments and cash out will also make formal savings more attractive. 

“Expanding cash-in-cash-out points through the soon-to-be-launched Postal Payment Bank and telecom affiliated payment banks and making transfers from bank account to bank account easier via mobile through the Unified Payment Interface, we are on the verge of solving the last mile problem,” Rajan added.