The Impact of Financial Inclusion on Poverty Reduction

The Impact of Financial Inclusion on Poverty Reduction

Safieya Amir Hussain , Naveen Kumar K S

Abstract

A key objective in the poverty reduction strategy therefore hinges on accessibility to funds and credit in a context where a relatively huge population in the developing world remains socially excluded from the banking system. While governments and institutions have undertaken measures to enhance the financially excluded ’s access to capital or credit, hurdles such as, knowledge gap, culture, or costs including ongoing maintenance of products that the financially excluded own and use regularly, remain a hurdle to progress for the financially excluded especially from the BPC and informal sector. This paper aims to involve the current state of financial inclusion in Indian scenario by especially exploring its impact on poverty reduction concerning its restrictions and government efforts. Hence we establish the existing difficulties inherent in the study of factors and tasks dependent on the significance of financial literacy and suggest the practices for extending the access and effectiveness of an inclusive financial system. Finally, this research aims at filling the gap in the current body of knowledge on how financial inclusion can act as an escape from poverty and can contribute to the economic development of India in particular.

Key words: Financial Inclusion, Poverty, Financial Literacy