Financial Inclusion – Micro Finance a Sustainable Model

Ramesh Subramanian


Reserve Bank of India(RBI) has  defined Financial Inclusion as the “process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable groups such as weaker sections and low income groups in particular, at an affordable cost in a fair and transparent manner by regulated, mainstream institutional players.” Financial Inclusion has been in the top of the agenda of the Central Government and RBI. Financial inclusion is a flagship programme of the Reserve Bank. Its objective is to bring people, hitherto excluded, under the ambit of formal financial institutions. The article examines whether it would be feasible for banks to achieve the objective of financial inclusion. The low penetration level of bank branches in rural India, the high cost of operations/transactions of rural bank, product design and suitability etc are the challenges for the task. Among the alternative models Non-Banking Finance Company-Micro Finance Institutions seem to suit the most suitable. Financial inclusion will lead to economic development and NBFC-MFIs can play an important role in developmental agenda of the central government and RBI.


Financial Inclusion, micro finance, self-help group, Non-Banking Finance Company-Micro Finance Institutions, down trodden, banking products

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