Hurdles in Financial Inclusion in India

Hurdles in Financial Inclusion in India

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• The failure of government programs - like the Jan Dhan Yojana is obvious. Only 33% of beneficiaries were prepared to make use of their Rupay cards. As a flag post of financial identity, opening physical accounts won't help unless people actively use them to manage their money.

• Financial literacy - Although India has 17.5% of the world's population, nearly 76% of its adult population does not comprehend fundamental financial concepts.

• Problems with insurance policies - People buy insurance policies without thinking about them and give up midway because they don't have enough money to pay the premiums because institutions don't help them.

• Admittance to Credit - However regardless of the solid development, just 200 million borrowers have approached credit from formal channels This is the motivation behind why the credit infiltration file of CRISIL Inclusix stayed low. Additionally, there is a significant amount of self-exclusion as a result of the availability of convenient informal credit sources.

• Digital connectivity issues - It is difficult to advocate for a cashless economy when the majority of rural areas continue to lack even a reliable internet connection. From the interest side, the reasons are low pay, neediness and ignorance and absence of mindfulness. From the supply side, they are the proximity of the branch, the timing, cumbersome paperwork, and the staff's attitude and language.

• Distance from financial institutions - Banks typically locate their branches in highly populated areas to cover their operating costs. In rural India, people are unfortunately dispersed.

The success of financial inclusion is also hindered by the low utilization of business correspondents and the low penetration of financial services. There are a lot of products available in the complex financial services market, but few people use them because they are not aware of them. India's greatest obstacle to true financial inclusion is adaptability in financial communication.