FINANCIAL INCLUSION IN INDIA - A STATEWISE ANALYSIS

Since the process of nationalization of banks in 1969, there has been a significant expansion both in the geographical as well as functional reach of the commercial banks, regional rural banks and co-operative credit institutions. However, a large section of Indian population remains outside the purview of the formal financial system. The present study is an attempt to analyze the extent of financial inclusion across the various states of India. It has been observed that although various initiatives have been undertaken to improve outreach activity in the banking sector, the achievement is not a remarkable one. An index of financial inclusion (IFI) has been constructed in the study on the basis of three dimensions of financial inclusion. The state-wise IFI has been constructed using principal component analysis done using SPSS for making a comparative study. This state-wise index constructed has actually brought into light the non-uniformity among the states with respect to access to financial services. Assam has shown a consistent poor performance in all the three dimensions of financial inclusion with the implication that the state has a long way to go in improving financial inclusion position. Thus, it has been observed that although various efforts have been made for improving financial inclusion, the result is not satisfactory. A whole-hearted effort is required from all the stakeholders for making the financial inclusion process more effective.