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The Growth of Financial Inclusion


Inclusive growth has become one of the world’s most important policy goals in recent times. Governments, economists, development partners have all give special attention to inclusion in social and economic life that includes factors like universal and easy access to education, clear water, sanitation, health care, social security and affordable electricity and transport. Financial inclusion is the most recent aspect to be openly added to the social inclusion agenda and endorses the need for access among all divisions of a society to a range of financial services that are at an affordable cost.

While the term financial inclusion is a fairly recent one, it is very clear form the country case studies conducted that for many years governments have been cognizant of the need to extend access to financial services. Governments have sought measures to promote this agenda through pubic sector banks, micro and small enterprise credit programs and agriculture credit programs. At the same time, microfinance revolutions focused on the reality that a formal financial system has not been successful in reaching the poor. Microfinance agencies have revealed that the poor are bankable and that pioneering models can allow finance to benefit the poor.

The narrow focus on credit has given way to a much broader and wider approach that includes micro-insurance, Micro-savings and remittance and payment transfers. The most recent of these innovations has been the related models of e-banking, branchless banking and business or agency correspondent banking to help overcome the obstacle of distance as well as the high cost of setting up conventional bank branches in remote areas.

In more recent years, governments have recognized that particular financial programs and agencies can only be successful in a suitable policy environment. The last few years have witnessed the ongoing progress of national financial inclusion master plans and strategies in a number of countries, along with efforts to standardize microfinance agencies to better protect the users of their services.

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