Financial Inclusion: Lessons from Rural South India

Studying financial inclusion innorth-east IndiaAuthor:Disha Bhanot, Varadraj Bapat and Sasadhar BeraShailesh J. Mehta School of Management (SJMSOM), IIT Bombay, Mumbai, India

Journal : International Journal of Bank Marketing Emerald Group Publishing Limited

Objectives of the paper To deepen the understanding of the factors which are crucial in determining the extent of financial inclusion in geographically remote areas; To explore statistically significant interaction effects between explanatory variables; To study efforts to expedite financial inclusion from the lens of social banking; and To suggest measures for banks to tap unexplored markets.Research methodologyData sources:The paper used primary data from remote areas in two of the north-eastern states i.e. Assam and Meghalaya. sample size423 households with 1790 individuals (In Assam data were collected from 238 respondents from three districts i.e. Baksa, Nalbari and Barpeta. In Meghalaya, data were collected from 185 respondents in Tura district).Sampling methodRespondents were randomly selected from these areasPrimary data collection methodA structured questionnaire was used for data collection (spread over four months from September 2010 to December 2010) and local NGOs, students etc. volunteered for getting it filled. After cleaning the data for missing entries, the new sample size is 411.

Sample profile snapshot

Sample profileIn the given sample size of 411 households, with 1,790 individuals, there are 328 bank accounts. Hence, only 18.32 percent persons are financially included. At the household level, 63.5 percent respondents are financially included (i.e. they possess bank/Post Office bank account). The poor state of financial inclusion is further exposed as merely 5.94 percent respondents report availing bank credit. With regards to education the highest (most) educated member of the household was considered. Majority of respondents (48.42 percent) had not continued education beyond class 10, and 31.14 percent were illiterate and only 20.44 percent continued higher education. Data on annual income is representative of the aggregate household income. The low-income households (annual income , Rs 50K) were in majority and only 27.25 percent respondents reported annual income greater than Rs. 50,000. Financial information from Government Sources was received by majority (45.25 percent). Friends (34.55 percent) and Mass Media and Agents (20.20 percent) also acted as important source of financial information (by agents we refer to the Post Office bank agents). Only one household reported receiving financial information from bank. Banking facilities were available at distances greater than 3 km for 66.67 percent of respondents and 49.40 percent respondents availed postal services at distance less than 3 km. The households showed significant awareness (60.82 percent) towards SHG activities. There was balanced representation of respondents residing in plain (58.63 percent) and hilly (41.37 percent) terrain. Close to 40 percent of respondents were in receipt of government benefits and more than 80 percent of respondents were in ownership of bicycle.Logistic regression modelThe nature of this study is such that the dependant variable (having a bank account or not) is categorical. Multiple Regression model using Ordinary Least Squares (OLS) technique is not suitable in such a setting as it violates the model linearity assumption, assumption of interval/ratio scale of measurement and also leads to heteroscedasticity of residualsLogistic regression is a statistical technique which aids in identification of explanatory variables that are significantly related to the dependant variable where the latter is expressed in discrete number of levels/categories for categorical variable Y, which is scored as 1 and 0, The crucial step of model building lies in identifying the set of explanatory variables to be used in the model.Interaction means: Interaction effect occurs when the effect of explanatory variable (Xj) on response variable (Y) differs with the value of another explanatory variable (Xk)or moderate variable.Interaction terms in regression models capture the conditional relationships between two or more variablesConditional relationship is not confined to exploring if a relationship exists between X and Y, instead it aims at uncovering the conditions and manner in which a relationship exists between X and Y and in doing so provides an accurate description of social realityAs part of efforts to promote financial inclusion, in 2009 the GOI mandated the payment of wages under the employment guarantee scheme (such as MNREGA) through Post Offices/banks. One of the explanatory variables for our study is Receipt of Government benefits and a sizeable portion of the sample (31.03%) positively reports availing MNREGA benefits. While we are certainly interested in knowing if such efforts from Government significantly contributes towards inclusion instances, our interest also lies in exploring if inclusion in hilly areas is strengthened by presence of Government benefits. As the residents of hilly and remote areas are more likely to be excluded. It would be particularly encouraging to know if such efforts significantly improve inclusion for residents from these areas. Such conditional effect of X7 (remote area) on Y, at varying levels of X8 (government benefits) is captured by including an interaction term (X7 *X8) in the model.The Cochran-Mantel-Haenzel (CMH) statistic follows Chi-square distribution under the hypothesis of no association between explanatory variable, and , after controlling for the stratification variable,Based on Chi-square statistics, it was inferred that there exists a significant association between remote area and inclusion for varying levels of government benefits.

Thus, having statistically validated the interaction between X7 and X8, the model will be fit to the data using ten explanatory variables nine explanatory variables and the additional interaction term (X7 * X8).Analysis of the modelLogistic regression model was run using statistical package SAS. A total of 411 responses were included in the analysis.The dependant variable, representing, having a bank/Post Office account versus not having an account, was regressed on ten variables.

Above table shows that income (X2), sources of financial information (X3), distance from Post Office (X5), awareness to SHG (X6) and interaction effect of Government Benefits and Area Terrain (X7 *X8) are statistically significant factors of inclusion. It is also observed that education (X1) is another important factor for inclusion. The remaining variables are not potential predictors for inclusion.

Table V shows that high annual income (.50K) appears as the most significant predictor for inclusion.Financial information from mass media and agents proves to be far more important in comparison to similar information from friends/Government, with p-value of ,0.0001.Awareness to SHG is also a significant contributor in predicting inclusion as depicted by a significant p-value and positive effect on inclusion.Distance from Post Office (X5) is next in importance with p-value of 0.0149. The negative parameter estimate for this variable suggests that with increasing distances from Post Office (beyond 3 km) chances of inclusion also decline.The significant interaction term suggests that respondents in plain area receiving Government benefits are more likely to be financially included (with positive parameter estimate of 2.9437).ODD RATIOThe advantage of logistic regression is that it models the actual probability for an observation that belongs to one or the other category of the dependant variable (Mennard, 2010). To know if the probability of being financially included is same (or varies) over different levels of each explanatory variable, we interpret the Odd Ratio. Odds Ratio tells how much more (less) likely it is that the event will occur (not occur) for the first group in comparison with the second (reference) group.a value of odds ratio greater than 1 means that event is more likely for the first group.

FindingsSuggests that most of the respondents in plain terrain show significant increase in inclusion statistics on receiving Government benefits. All the included respondents (97.22 percent) reported receiving the benefit of Government housing scheme (such as Indira Awaas Yojana). Thus it is likely that even other Government sponsored benefit schemes (apart from MNREGA) have a role to play in promoting inclusion in plain areas.The model output shows education is a factor for inclusion. This determines the importance of education and data reports that all highly educated respondents (who were post graduates/undergoing post graduation) had a bank account.only 18.32 percent of individuals have bank/Post Office accounts so the poor state of financial inclusion in north-east India remains a cause of concern.As a predictor variable, distance from Post Office interestingly emerges to be far significant than distance from bank. With increasing distance from Post Office the chances of inclusion also decline. This implies that even though Post Offices may not be providing advanced facilities like ATM, Credit Cards, e-banking etc. but the basic banking services provided by Post Offices suffices the needs of rural households of north-east India.Indias postal network has remarkable outreach in rural areas with 89 percent of the 1.55 lakh Post Offices in rural regions.It is encouraging to see a statistically significant association between SHG awareness and financial inclusion. However, spread of SHGs in north-east is very poor.Financial information(either from Government/massmedia/agents/friends) plays a crucial role in imparting financial literacy. In particular, financial information received from mass media / agents is a strong motivating factor for people to open bank accounts.Government should lay more stress on spreading financial information through various channels as such efforts can significantly contribute to reducing the knowledge barriers in the minds of people and bring them closer to banksThe interaction term in this model was explicitly included to explore if Government benefits (crediting MNREGA wages to bank account of beneficiaries) helped to promote financial inclusion in hilly areas.

ConclusionBased on our sample, access to banking services in north-east India is very low with just 18.32 percent of the individuals being financially included and just 5.95 percent households availing bank credit. The vast unbanked population in these remote regions provides banks an opportunity to tap new markets. Though the paper uses data from north-east India the results can also be used for other remote areas. The findings of this research are helpful in understanding the influence of variety of factors on the access to banking services of north-east households. The findings are as follows: A natural spin-off of high income and high education profile of respondents is their financially included status. The significant contribution of SHG awareness in linking the marginalized with the formal banking institutions is revealed. Respondents are more likely to be financially included at closer distances from Post Office (as against banks). Financial information from various sources (which serves the role of financial education/advice and imparts financial literacy) has helped to increase inclusion. Thus banks and policy makers should work in close co-ordination to spread financial information as those efforts are seen to directly impact their business. Efforts from banks to spread financial information have made no headway, as only one respondent reported to receive financial information from the bank. In this regard we have two suggestions to offer:(1) banks should persuade policy makers and Government to spread financial information, as those efforts are seen to directly impact their business; and(2) banks should also take more interest in spreading financial information.The stand-alone effect of variables such as area terrain, receipt of government benefits and vehicle ownership is non-significant. The receipt of Government benefits has also not helped to promote inclusion in hilly areas. In this light, the Government guidelines on giving benefits through bank account have not been adhered to completely. Banks are suggested to put efforts to tap low-income households in hilly areas, as they are not just potential markets for banks, but catering to them is part of their social responsibility as well.ReviewPositive points Statistical model have been used to interpret the resultOdd ration is used to give the accurate interpretation They have concentrated to only area rather than any banksNAGATIVE POINTSThey didnt mention population sizeExplanatory variables are very less, they ignored important explanatory variables like payment system, online banking, banking coverage.Samples are not good represents of population because of less sizeThis study is limited in its scope by considering the household as financially included simply on the basis of having a bank/Post Office account. Area covered is limited They have ignored statistical data like Bank reports, NGO reports

100 Per cent financial inclusion: Improving access and usageA study report on Gulbarga district initiativeAuthor:Minakshi RamjiThe Centre for Microfinance (CMF) at the Institute for Financial Management and Research (IFMR) in Chennai Research MethodologyObjectives of the study: To assess the implementation of the inclusion drive and usage of banking services by households in Gulbarga district in Karnataka,Area covered: The data for this study was collected in twenty-five villages each in two blocks of Gulbarga district. Sample size: 999 respondentsSample unit : Individuals (household surveys and open-ended individual interviews)Research method: Household survey method Targeted Group: Poor households Based on BPL cardMethod of data collection: open-ended questions used to collect data form poor households. Interview conducted to each individual member of the family.

Financial Inclusion Drive: Some SalientPoints table 1 show some of the salient features of the households that were part of survey sample.

respondents were largely illiterate.A majority of the households are involved in agricultural activities and they typically receive wages on a daily or weekly basis.

table 2 shows the salient details of all the bank accounts which were opened during the financial inclusion drive.

No Frills Accounts have tended to be opened for those who already have other accounts through their post office, SHG or even another bank account. Even though the definition used in Table 2 ismore expansive than the definition used by banks to define excluded households.we find that after the drive, 36 per cent of our sample continue to remain excluded from some form of formal or semi-formal method to save.We examine some of the reasons behind why after such a large-scale effort to increase financial inclusion seems to have not affected access to savings accounts for unbanked individuals.

In Table 3, of the 11 per cent who knew that banks were opening zero minimum balance accounts for unbanked households,An overwhelmingly 75 per cent were receiving assistance under the NREGP. Similarly, the involvement of Village Panchayat officials and notably, the lack of NGO involvement, demonstrated that most of these accounts were opened in order to receive NREGP assistance, rather than under the financial inclusion drive.Only 4 per cent reported opening accounts for saving money. It comes as no surprise; therefore, that majority of these accounts were opened precisely in order to receive some form of government assistance.Findings of the study SHG obligates members to save on a weekly/monthly basis, which respondents mentioned as an important motivation to save. While a majority of the SHG accounts are over a year old, New accounts are used primarily for receiving government assistance and were opened by Village Panchayats. New bank accounts were opened under the NREGP or other programmes, rather than under the financial inclusion drive. Households understand the significance of saving to face future economic shocks, they clearly do not save in their bank accounts. Given the lack of usage and understanding of a bank account. Financial incluslion drive has not achieved its set goals which was to increase access to formal finance for excluded households. zero minimum balance accounts that are empty and show low usage are not beneficial to their account holders.NREGP assistance is distributed via post offices, the business correspondence model, amongst other methods.study found that knowledge regarding the financial inclusion drive was quite minimal on the ground, whereas the level of knowledge about the NREGP was higher. Thus, there is a clear need for greater marketing and education of the drive itself. Additionally, there is a need for greater education about the need for savings and alternative ways to save.

SuggestionsGulbarga's experience with the drive for financial inclusion suggests that savings accounts can be an important way to reach government programme beneficiaries.Government employment and social security programmes have the ability to reach the largest number of BPL householdsNREGP accounts became zero balance accounts precisely because the timing of the drive for financial inclusion. As such, extension of NREGP accounts has not resulted in increased savings in banks. In order to promote formal savings in previously unbanked households, it is not enough to provide a bank account. These efforts need to be supported by financial education campaigns as well. One other option is the promotion of Business Correspondents who can act as financial intermediaries between customers and banks.Indication of further research This study indicates that there is one critical area for further research. It would be helpful to get a sense of alternative channels by which access to formal finance can be improved, for example, through a business correspondent model. Due to the fact the BC model provides doorstep delivery of banking services, it may encourage non-sophisticated users of these accounts make greater use of their accounts.ConclusionThe drive for financial inclusion in Gulbarga district did not improve savings behaviour for most of the account holders. In fact, many of the individuals who qualified for a No Frills Account did not receive one. However, No Frills Accounts which were coupled with government assistance have provided an important facility for the beneficiaries and have shown usage. Thus, the drive for financial inclusion when coupled with other policy measures can be beneficial for disadvantaged communities. On the other hand, the provision of a bank account without an obvious utility can only mean greater costs for banks and will not translate into greater usage for end users.

Role of Banks in Financial Inclusion Author:Ms.G.S.NALINI, Mr.K.MARIAPPAN Asst professorsGovindammal Aditanar College for Women, and Theni College of Arts and Science, Veerapandi, Theni, Tamilnadu Journal:Research journal of commerce and behavioural scienceVolume: 01, Number: 04, Feb-2012

MethodologyOBJECTIVES OF THE PAPERTo study the measures taken by the banks for financial inclusion. To examine the difficulties involved in the adoption of financial inclusion. To enhance the extent of financial inclusion.METHODOLOGY OF THE STUDYSource of data : The data required for the study was collected from both primary and secondary sources. The primary data was collected from the banks using structured questionnaire. The secondary data was collected from the published journals, books and various websites.

Continued..Sample size: The samples were selected by administering convenience sampling technique. The total numbers of samples were 50.Area covered:The study was conducted among the banks in Tiruchendur area of Tamil Nadu. Statistical tools used:The various statistical tools used to analyse the primary data were percentage analysis, mean score analysis and correlation.

Analysis

Table 1 shows that out of 50 banks, 62% of the banks have offered no frills account, bancassurance, trading of shares and the remaining 38% of the banks have not offered such services. 84% of the banks are offering core banking service and the remaining 16% of the banks are not offering core banking service. 50% of the banks have offered e-banking, mobile banking service and the remaining 50% of the banks have not offered such services. 70% of the banks have not issued kisan credit card and the remaining 30% of the banks have issued kisan credit card to the farmers. No bank has offered Biometric ATM facility to the customers. 60% of the banks have offered microfinance and the remaining 40% of the banks have not offered microfinance to the vulnerable people. 66% of the banks have not tied up with NGOs and the remaining 34% of the banks have been tied up with NGOs to disseminate their service 60% of the banks have not given advertisement for financial inclusion and the left over 40% of the banks have given advertisement for financial inclusion. 68% of the banks have not preferred business correspondent and the rest 32% of the banks have preferred.

Table 3 exhibits that there was a correlation between the ranks given by the banks which had an experience up to 10 years and above 10 years on the benefits of financial inclusion. Because the spearmans rank correlation co-efficient 0.99 lies between -1 to +1. Hence, the two group of banks opinion is the same. RESULTS Profile of the Respondents: The respondents of 58% were public banks, majority (76%) of the banks were located in semi-urban area, 68% of the banks were operating for more than 10 years and 36% of the banks had over 30,000 customers. Target for Financial inclusion: Majority (84%) of the banks had target for financial inclusion. Getting refinance for financial inclusion: Majority (80%) of the banks had not received refinance for financial inclusion. Inducement for financial inclusion: All the banks had been induced by other institution to adopt financial inclusion. Majority (76%) of the banks were induced by the Reserve Bank of India to adopt financial inclusion. Conducting financial inclusion campaign: Majority (70%) of the banks had conducted financial inclusion campaigns to turn unbankable into bankable. Focused people for financial inclusion: 52% of the banks had focused rural people for financial inclusion. Benefits obtained from financial inclusion: The main benefit obtained by the banks from financial inclusion was enhancing the number of customers (4.74) than good reputation (3.4), widen market share (2.42) frequent money circulation (2.38) and sustainable income (2.16).Reason for financial exclusion: 56% of the banks had stated that the reason for financial exclusion was illiteracy. Perception towards financial inclusion: 64% of the banks felt that adoption of financial inclusion was neither easy nor difficult. Expected assistance from the government: 42% of the banks were expecting advertisement from the government for financial inclusion.

CONCLUSIONFinancial inclusion becomes a major pre-requisite to poverty alleviation. Reserve Bank of Indias vision for 2020 is to open nearly 600 million new customers' accounts and service them through a variety of channels by leveraging on information technology. However, improper repayment, need for additional workforce, time consumption, high cost and illiteracy are continued to be a road block to financial inclusion in many areas. Consequently, many banks are not adopting full fledged financial inclusion plan. The banks should step up to overwhelm all these problems and to disseminate its service to remote area. The banks should encourage the people to access banking services by ways of no frills account, financial inclusion campaign and business correspondent. The government should encourage the banks to adopt financial inclusion by means of financial assistance, advertisement and awareness programme etc. to achieve the aim of 11th plan of Inclusive Growth.

Financial Inclusion and Performance of Rural Co-operativeBanks in GujaratAuthor:Tejani RachanaSinghania University, Rajasthan, India

Journal:Research Journal of Finance and Accounting, Vol 2, No 6, 2011

Research methodologyOBJECTIVES OF THE STUDYTo study financial inclusion in rural areas.To find out the reasons for the low inclusion in rural areas.To find out the satisfaction level of the rural people toward banking services.To assess the performance of the banks which are working in the rural areas which mainly include the co operative banks and regional rural banks.METHODOLOGYSources of data:Primary data was collected through structured questionnaire survey of villagers. Secondary data was collected from internet, magazine, articles of RBI, Bank circulars.

Continued..Sample size:Sample size is 200 people residing in Ambasan, Jotana and Khadalpur villages of Gujarat.Statistical tools used:Chi-square test, ANOVA and Tabulation are used to analyze the data and hypothesis testing.FINDINGS OF THE STUDY

There is no significance impact of the rural publics gender on their having the bank account.There is significance impact of occupation on having the bank account. It was observed that that farmers, those who are doing job and those who have own business they have bank account but those who are land labors and are doing lower level jobs do not have accounts.There is significance impact of the rural publics education on the having the bank account. All respondents with HSC and graduation degree had a bank account.There is significance impact of annual income of rural public on their having a bank account.From the sample 73% people have saving accounts and 5.5% have current account 21 % have fixed deposits. Thus rural people use more services of the saving account and fixed deposits but they dont prefer current account for their occupations.From the sample 83% have bank accounts and 17 % dont have account.

Initial deposit is the first step to attract the rural customers, so bank has to offer the bank account as per their needs and situations. From 83% having a bank account only 22.3% have a no frills account whereas the rest opened it with an initial deposit ranging from 50 to 500 and more.Farmers take loans from co operative societies or co operatives bank from the village. All the farmers have taken the loan from the banks as per their land and get the benefits of the government schemes. And people who are engaged in labour work rarely get loan because they have less income to repay loan so bank does not trust them, but they get the benefit of government scheme like poverty alleviation.There is significant impact of occupation of rural public on the amount of loan availed from the bank. The business men need the loan of higher amounts and the farmer need for the purpose of farming so the amount is comparatively low than businessmen.There is significance impact of annual income of rural people on the loan amount.62% of the respondents visit the bank branch just once in a month and only 2.4% visit it more than 5 times.People who have accounts mainly use the services of depositing money, withdrawing money and entry in passbook. Number of people visiting bank for depositing cheque, obtaining loans and repayments is quiet less.Out of the respondents who have taken a loan, 25% have availed it from money lenders.People avoid taking loan from banks because of lengthy legal procedure and insistence of collateral. The language is not a problem because nowadays the banks provide information in vernacular language also.The main reason for not opening an account initially is requirement of documents for opening account, the rural people do not have the any document proof and bank has to open the account on the basis of gram panchayat details. Banking procedure, illiteracy and language problem, knowledge of banking services, low income and assets, are other reasons.CONCLUSIONThere is lot of opportunity for the commercial banks to explore the rural unbanked areas. Though RRBs and PACS have good coverage but most of them are running into losses. Again, the number of kisan credit cards issued and the amount of credit granted under it is also showing a declining trend. Commercial banks should seize this opportunity rather than looking at it as a social obligation.Financial Inclusion: Lessons from Rural SouthIndiaAuthor(s):RAM A. CNAAN, M. S. MOODITHAYA and FEMIDA HANDY

Journal:Journal of Social Policy, Cambridge University. Volume 41 / Issue 01 / January 2012, pp 183 205

Research questions/Objectives of the studyHow many households in the studied villages are financially included and what financial services are available to them?From the perspective of rural villagers, what are the key perceived barriers that prevent financial inclusion?What are the personal characteristics that distinguish the banked from the unbanked?Is there a difference between villages and states or is the picture of financial inclusion in rural India quite uniform?What is the role of micro-credit organisations (self-help groups) in increasing financial inclusion? Do the banked belong to self-help groups?Are there people who are not interested in financial inclusion? What are their reasons?What are the financial unmet needs of rural households in India?Research methodologyArea covered Rural residents in four states in Southern India: Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.(Reason for selected these states: they have a relatively well developed banking system in comparison to northern India, Thingalaya 2009,and good concentration of micro-credit outreach, with an estimated two thirds of micro-credit clients living there, sinha 2007, )Samples size Sample size two villages in each states( total 8 villages from 4 states)Sampling method Resorted to selecting whole villages, randomly identified two villages All household studied in those villages Unit of analysis was householdData collectionQuestionnaire Method used for to collect the data on Households Questionnaire designed to collect data on family background; bank access information; income, assets and savings; loans; Data collected from each family memberAll questions were factual and the majority (over 90 per cent) were close-ended.Statistical tools usedUsed statistical tools were ANOVA, percentage, Correlation. bi-variate analyses

Analysis

Average household size is 4 persons. Regarding religion significant differences existedRegarding caste there was great variability between statesSignificant differences between the sites regarding the presence of a husband/adult man in householdRegarding annual household income, significant differences is there

Findings1) How many households in the studied villages are financially included and what financial services are available to them?They found that the majority of households have access to banks and only 23 percent reported that no one in the household has a bank account. In 2007, it was estimated that 41 per cent of the population was unbanked (Ramesh and Sahai, 2007; Thorat, 2007), which is perhaps an indication of the success of the financial inclusion initiative.what financial services are available to them?The most accessible financial services are savings accounts (69 per cent) and loans (62 per cent). These are followed by life insurance (34 per cent) the least accessible financial services (less than 10%) are credit cards.SuggestionsRegardless of the wide coverage of bank accounts, real financial inclusion is far from being reached and is subject to geographical variability.2) From the perspective of rural villagers, what are the key perceived barriers that prevent financial inclusion?The most commonly reported reasons were: no security to offer (34 per cent), not aware of any bank (25 per cent), no need for bank services (23 per cent), bank is too far away (17 per cent) and not on my mind/did not consider (14 per cent).SuggestionsThose financially excluded suffer from accessibility barriers and financial illiteracy. Banks should be conduct financial literacy programs to popularise financial inclusion3) What are the personal characteristics that distinguish the banked from the unbanked?The presence of an adult male in the house makes little or no difference: among those who are excluded 24 per cent are without an adult male in the household as compared with 23 per cent of those included. Religion, however, was a significant variable in explaining variability in financial exclusion. More Hindus (26 per cent) were excluded as compared to Muslims (14 per cent) and Christians (11 per cent).Education was also found to explain variability in financial exclusion. Those households with at least one high school graduate (SSLC: Secondary School Leaving Certificate) and higher were significantly less likely to be excluded as compared with those without a member with a similar education (12 per cent and 37 per cent respectively

Having certain financial resources also explained variability in exclusion. Those who own land are less likely to be financially excluded(21%). as compared with those who do not have land (52%).From these analyses, we find that caste, religion, education, and command resources were significant in explaining financial inclusion.4)Is there a difference between villages and states or is the picture of financial inclusion in rural India quite uniform? All the three states having difference in household income, religion, caste, these differences indicate that the villages are not similar and hence differences in financial inclusion may be attributed to these characteristics rather than location.5) What is the role of micro-credit organisations (self-help groups) in increasing financial inclusion? Do the banked belong to self-help groups?While it is said that participation in micro-credit groups known as self-help groups (SHG) helps reduce financial exclusion, we found that there was no statistical difference between membership in SHG and banking,6) Are there people who are not interested in financial inclusion? What are their reasons?Only 52 interviewees (31 per cent) out of the 169 who were financially excluded stated they either do not need bank services and/or had never considered the possibility of banking. Among those not interested in banking, more of them are OBC(55%), among those interested in banking, more are SC (47%), however, this difference does not explain why one group is willingly excluded.7) What are the financial unmet needs of rural households in India?most households reported to not have debit or credit cards, money transfer services or credit counselling, and less than a third have access to insurance services. These financial options are clearly not available to the majority of studied households.

ConclusionWhile in many places people believe that micro-credit self-help groups will alleviate poverty, unfortunately the evidence is not conclusive. This may also be the case for financial inclusion. As the policy of financial inclusion in India is young, our attempt was to assess its implementation rather than to evaluate its longer-term consequences. We doubt if such interventions can modify years of social and economic exclusion and if the very poor can become well-to-do just through bank accounts. However, while we cannot attest to people moving out of poverty due to financial inclusion, it is clear that without bank access monetary services will be far more expensive and that the only beneficiaries are likely to belocal money-lenders.Thank you one and all