Our Founders   /   Urban Financial Inclusion

In developing economies like India, formal financial services are utilised by only a certain section of the population. Studies indicate that 40% of urban Indian adults are un-banked, with the figure rising to 61% in rural areas. This excluded population, comprising socio-economically and geographically disadvantaged individuals, resorts to informal savings and credit systems. They largely depend on usurious financial sources to meet their personal, health, and livelihood-related needs. Unsurprisingly, they struggle to repay such borrowings, which further impede their ability to escape the cycle of poverty.

It was only recently that financial inclusion was recognized as an important factor for sustained growth and development in the Indian context, resulting in governmental intervention and initiatives.

Apart from a palpable focus on rural financial inclusion, there exists a need for a more focused approach towards urban financial inclusion. 590 million Indians would be living in cities by 2030 according to the McKinsey Global Institute India 2010 Report. SFA’s experience of working with low income urban communities in Mumbai suggests that almost 40% of women and 30% of the households in these communities do not have a bank account despite easy accessibility to bank branches and ATMs.

The IDBI Gilts 2007 Report states that, “Research in behavioural economics has shown that many people are not comfortable using formal financial services. The reasons are difficulty in understanding language, various documents and conditions that come with financial services, etc.” SFA’s experience suggests that the financially excluded population is accustomed to the informal sources to finance their needs, which to them are ‘flexible’ and ‘convenient’.

Financial education is an essential tool in changing financial behaviours, like lack of personal financial planning, impulsive and unproductive borrowing and a lack of regular savings. The economically disadvantaged persons require education on the various financial services in the formal system, which can aid their efforts towards regular savings, risk management and credit management.

Hence, SFA’s approach to financial inclusion of the urban economically disadvantaged persons through Financial Education coupled with facilitating access to a range of formal financial services makes financial inclusion meaningful and complete.

SFA’s experience with participants of its Financial Education Programme shows that post training, participants are better equipped to select and use financial products effectively, thereby making financial inclusion a reality.

@Copyright 2011 Swadhaar FinAccess                                              CIN: U91990MH2005NPL151790