IN THIS BOOK, THE AUTHOR SHOWS HOW FINANCIAL INCLUSION HAS ACQUIRED A POLICY PRIORITY EVEN IN DEVELOPED COUNTRIES - THE BOOK DISCUSSES THE CRUCIAL ROLE PLAYED BY BANKS AND THEIR LINKAGES WITH MICROFINANCE INSTITUTIONS AND SELF HELP GROUPS. THESE MADE AVAILABLE SUCCOUR TO THE POOREST OF THE POOR
- Book Review by P.P.Ramachandran
Kofi Annan, the former Secretary General of UN declared, " The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is saving, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation of the financial sector." Three billion people are excluded from access to financial services. In Less Developed Countries more than 90 percent are outside the pale.Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission got himself embroiled in a fierce controversy due to his submission in the Supreme Court that those who earn Rs 32 a day are below the poverty line. A storm of protest followed and the Planning Commission has adopted a revised norm for BPL. To get a clarification of the two points spelt out above and understand what is poverty and its ramifications one has only to carefully read the latest book of Dr.Deepali Pant Joshi. We had reviewed her earlier book ' Microfinance for Macro change challenges' in these columns. Joshi is one of the Chief General Mangers of the RBI, acting as Head of the RPCD. She is a Fellow of the Asia Centre of the University of Harvard. Her professional experience has endowed her with a keen ability to interpret problems of financial inclusion. Financial inclusion is the process of ensuring access to financial services and provision of timely and sufficient credit to weaker sections and low income groups at a cost they can bear. While liberalisation has led to enhanced financial products and services for some, there has been a denial of services for a large majority. High costs make banking services beyond the ken of the poor. Nonprice barriers also act as a deterrent to migratory populations.
The author shows how financial inclusion has acquired a policy priority even in developed countries. The impressive examples are ' The Financial Inclusion Task Force' of the UK and the ' Community Investment Act' of the USA. In India too initiatives for financial inclusion have been taken by Government and Reserve Bank at micro policy levels. The book discusses the crucial role played by banks and their linkages with microfinance institutions and Self Help Groups. These made available succour to the poorest of the poor. The author suggests some methods to enhance the demand for productive credit from the neglected sections for sustaining financial inclusion in the long run. Emphasis has been laid on priority to agriculture, poverty alleviation, infrastructure development and human resource development. Financial inclusion has emerged as a crucial parameter for ensuring rapid economic progress. Potential entrepreneurs and small enterprises fail due to denial of opportunities. Financial inclusion has to be pursued as a strategy for fostering economic growth. We find banks have taken positive action in this regard. According to Dr. Manmohan Singh, " The goal of development process must be to include every last member of our society, particularly those who are at the margins. This not only broadens the support base for development; it also strengthens government's ability to perform its core developmental role." The author has analysed succinctly all aspects of poverty. Banks should not merely provide credit but generate capacity within the population to prepare themselves for development. RBI has played a unique role of development in agriculture and rural areas. It has ensured that credit has gone to unbanked geographical regions and influenced sectoral orientation of bank lending. RBI monitors schemes such as SGS/ SJSM/ PMR/ DRI Schemes. It has created enabling regulatory environment to foster innovation and increase the outreach of the banking system. Commercial banks have also contributed and a few banks have introduced Smart Card Accounts in several districts. The Report of the ' Committee on Financial Inclusion' under the Chairmanship of Dr. C Rangarajan has been analysed in one chapter. The international experience has been recounted at length of UK, USA, Brazil, Europe and South Africa. An impressive bibliography and a large number of tables enhance the value of this resource book, which will be useful for planners, development economists, bankers and students.
FPJ
