Micro Finance a Financial Inclusion - Insights into Indian Condition

Building financially inclusive system is, therefore, an integral and core pillar of financial sector reforms. India has made steady progress towards financial inclusion. However, large numbers of the population are still excluded from the formal banking system. Furthermore, the financially included people may not get all or right kind of the products which they require. While there is no “one-size-fits-all� financial inclusion strategy or approach, it is important to recognize few core or necessary and sufficient conditions that are needed to maximize the benefits derived from such a strategy. In a nutshell, evidence suggests that poverty reduction strategies are successful in countries which adopt inclusive policies. In the Indian context, Reserve Bank has always sought to balance the risk of partnerships and product innovations with the ability to achieve greater penetration in a safe, secured and prudentially sound manner. Financial Services for the poor people like primarily credit, Insurance services, and Small savings are termed as Microfinance. This Microfinance can help in put resources and power into the hands of low-income peoples, but they cannot solve all the problems caused by poverty. The underlying belief is that only sound and strong institutions can promote financial inclusion in a sustainable manner and, towards this end, prudent regulations have to be in place to achieve inclusion while protecting financial stability and consumer interest. The institutional vehicles help to improve the efficiency and productivity of all credit institution. Microfinance institutions are taking various efforts to economic development. They mainly contribute to solve the problem in inadequate housing and urban services as part of rural development. The main challenge is to find the credit level which matches their requirements. If the solution for the multipurpose credit has identified there will be the success of rural development by alleviating poverty. This paper offers insights about importance of financial inclusion, causes of financial exclusion; its implications and adoption of remedial strategic initiatives to ensure basic banking facilities to the underprivileged Indians.