In the issue of financial inclusion, there are research evidences that show the reasons behind financial exclusion which are highlighted below.
i) Gender Issues: Gender issue is an important factor in access to different types of financial services in spite of women empowerment being in the agenda of the policy-makers across the world. There are worldwide surveys which point to a lower inclusion among the female gender.
ii) Age Factor: Financial service providers usually target the middle-aged group of the populace and less concentration is provided towards the older or younger potential customers. Thus, the product line of such providers is biased towards a particular class of customers.
iii) Legal Identity: It is seen that in order to gain access to basic services, there is a requirement to fulfill certain documentary needs. But, it is very commonly seen that the poor or those at the lower of the pyramid lack such documents that are a proof of their identity, date of birth, address of residence etc. Hence, such people are not entertained by the banks and other institutions.
iv) Low education: The literacy level of people and households also affects the level of access to financial services. This is because their understanding of the needs for availing banking services is quite low. Moreover, such illiterate people do not understand the benefit of being a part of the formal financial system.
v) Place of Living: At times, it is seen that the location also plays a role in inclusiveness. Some factors like physical distance, remoteness of location, mobility of the population etc. also affect access to financial services.
vi) Psychological and Cultural Barriers: It is also observed that psychological and cultural factors act as detriment to inclusion. For example, people have a mentality that banking is for the rich or they lack the confidence to access banking personnel for their needs. Moreover, cultural and religious barriers to banking have also been observed in some of the country’s social security payments.
vii) Cost involvement: The rural population considers banking to be a costly one. This is not just about keeping the minimum balance in the account but also include factors like cost involved in going to the bank, waiting time involved in getting the service, losing the pay of that particular day etc.
ix) Level of Income: The level of income along with its stability also has an impact on the access to financial services. In case, the source of income of an individual remains fluctuating with a lack of stability, s/he does not find any interest in entering into banking transactions.
Thus, there are certain very important factors that act as a detriment to the improvement in the Access to financial services. It is necessary to ensure through policies and programmes that these do not continue to remain as obstacles in the financial inclusion process.
For Citing this article use:
- Debabrata, J. (2017). Financial Literacy and Access to Financial Services in the Unorganized Sector in West Bengal A Study of Purba Medinipur and Paschim Medinipur Districts.