Financial Inclusion in India: A case-study of West Bengal

Author: Chattopadhyay, Sadhan Kumar
Publication: RBI Working Paper Series WPS (DEPR) (2011)

Abstract: The basic objective of the study is to examine the extent of financial inclusion in India, in general and West Bengal, in particular. There are two parts in the study. In the first part, index of financial inclusion (IFI) has been computed for 23 states of India and 18 districts of West Bengal following the methodology of Sarma (2008). The second part is based on primary survey, which was conducted in three important districts of West Bengal in order to gauge the financial inclusion in the State. The study finds that state-wise Kerala tops the list in financial inclusion followed by Maharashtra and Karnataka. In West Bengal, although there has been an improvement in outreach activity in the banking sector, the achievement is not significant. From the survey results it is revealed that around 38 per cent of the respondents feel that they do not have sufficient income to open an account in the bank. It is also observed that moneylenders are still a dominant source of rural finance despite wide presence of banks in rural areas. In a nutshell, it can be stated that although various measures have been taken for financial inclusion, the success is not found to be considerable. However, only supply side factor is not responsible for the financial exclusion. Demand side factors are also equally responsible for this exclusion.

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