MODULE 3

Banker-Customer relationship

The relationship between banker and his customer depends upon the nature of
service provided by a banker. Accepting deposits and lending and/ or investing
are the core banking business of the bank. In addition to its primary functions it
deals with various customers by providing other services like safe custody
services, safe deposit lockers and assisting the clients by collecting their
cheques and other instruments as an agent and trustees for them.

In general, bank or banker means a financial institution that accepts deposits

and lends money to the needy people. It deals in money. A banker is one who in
the ordinary course of his business, honors cheques drawn upon him by persons
from and for whom he receives money on their account.

A person who has an account with a bank is a customer. Customer can be any
person for whom the bank agrees to conduct an account. The relation of a
banker and customer begins as soon as the first cheque is paid in and accepted.

Definition of Banker
A person who is doing the banking business is called a banker. But it is not
easy to define the term ‘Banker’ because a banker performs multifarious
functions.

First: a banker must be a man of wisdom, he deals with others money but,
with his own mental faculties.

Second: a banker is not only acting as a depositor, agent but also as a

financial advice.

The bill of exchange Act of 1882 defines the banker “Banker includes a
body of persons whether incorporated or not who carry on the business of
banking”.

According to section-3 of the Negotiable instruments act state that “The

term banker includes a person or a corporation or a company acting as a
banker”.
 Definition of Bank
According section-5(B) of Banking Regulation Act banking has been
defined as “Accepting for the purpose of lending and investment of deposits
of money from the public, repayable on demand order or otherwise and with
drawable by cheque, draft order or otherwise”.

Features of Banking

1. The definition of banking describes the following features of banking.

 A banking company must perform both of the essential functions.

 Accepting of deposit.

2. Lending or investing the same: The phrase deposit of money from the public is
significant. The bankers accept a deposit of money and not of anything else.
The world public implies that a banker accepts a deposit from anyone who
offers his/her money from such purpose.

3. The definition also implies the time and made to withdraw the deposit. The
deposit money should be repayable to the depositor on demand made by the
letter or according to the agreement reached between the two parties.

Customer

A person who has a bank account in his name and for whom the banker
undertakes to provide the facilities as a banker is considered to be a customer. It
is not possible to make a person a customer of a bank if he has made a single
banking transaction. A person to become a customer must satisfy two conditions
one, that there must be regular transactions or that the customer must have the
habit of dealing with the bank and the other, that the transaction between them
must be of banking nature.

A person can become a customer of a bank as soon as he opens

an account in a bank and starts the transaction i.e. the first transaction takes
place. If a person doesn’t have a bank account and he makes casual transactions
through a bank, he will not be regarded as a customer of the bank, even if
transactions are carried by him for a long duration.

To constitute a customer the following requirements must be fulfilled;

1. The bank account may be savings, current or fixed deposit must be operated in
his name by making a necessary deposit of money.
2. The dealing between the banker and customer must be of the nature of the
banking business. The general relationship between banker and customer:

Definition of Customer
According to Sir John Paget’s view “To constitute a customer there must be
some recognizable course or habit of dealing in the nature of regular
banking business”.

According to him a person a customer of a bank have to satisfy the two

conditions.

First condition: (Duration theory)

“There must be some recognizable course or habit of dealing
between the person and the banker” means that there must be some
duration of dealings between the person and the banker. In other
words, a single banking transaction will not make a person a
customer of a bank. He must maintain his account with the bank for
a reasonable duration or period. This condition is commonly known
as the duration of dealing or duration theory”.

Second condition:

“The transaction or dealing between the person and the bank must be in the
nature of regular banking business” mean that the dealings or transaction
must be regular banking business and not casual transaction.

Types of Bank deposit customers

Banks open accounts for various types of customers like individuals,

partnership firm, Trusts, companies, etc. While opening the accounts, the
banker has to keep in mind the various legal aspects involved in opening and
conducting those accounts, as also the practices followed in conducting those
accounts. Normally, the banks have to deal with following types of deposit
customers.

1. Individuals
2. Joint Hindu Families
 3. Partnership Firms
4. Limited Liability Companies
5. Clubs and Associations
6. Trusts

1. Individuals
The depositor should be properly introduced to the bank and KYC norms are to
be observed. Introduction is necessary in terms of banking practice and also for
the purpose of protection under section 131 of the Negotiable Instruments Act.
Usually, banks accept introductions from the existing customers, employee of
the bank, a locally well-known person or another bank.
A joint account may be opened by two or more persons and the account opening
form etc., should be signed by all the joint account holders. When a joint
account is opened in the name of two persons, the account operations may done
by

a. Either or survivor
b. Both jointly
c. Both jointly or by the survivor
d. Former or survivor
When the Joint account is in the names of more than two person, then the
following operations are made:

a. all of them jointly or by survivors

b. any one of them or by more than one of them jointly

An individual can be a person holding a bank account for personal use.

Such customers must comply with existing regulations and bankers must
ensure that they do not open and use bank accounts for illegal purposes.
The customer should be properly introduced to the bank. The introduction
is necessary for terms of banking practice and also for the purpose of
protection.

2.Non-resident individuals (NRIs)

Non-Resident Indian means, a person, being a citizen of India or a person of
Indian origin residing outside India. A person is considered Indian Origin when
he or his parents or any of his grand parents were Indian National. If at any time
held an Indian passport, (nationals of Bangladesh and Pakistan are not deemed
to be of Indian origin), a spouse (who is not a Bangladeshi or Pakistan national),
of a person of Indian origin shall also be deemed to be of Indian origin. Non-
resident falls generally into the following two categories:
 a. A person who stay abroad for the purpose of employment or to carry on
business activities or vocation or for any other purpose for an indefinite
period of stay outside India and
b. Indian National working abroad for a specific period.
Facilities for maintaining bank accounts are available in India to Indian
National or origin, living abroad. The exchange control procedures relating to
these facilities have been simplified. The details of various deposit schemes
available to NRI’s are as follows:

Various Types of NRI Accounts

 Ordinary Non-resident Rupee Accounts (NRO Accounts);
 Non-Resident (External) Rupee Accounts (NRE Accounts);
 Non-resident (Non-Repatriable) Rupee Deposits (NRNR Accounts); and
 Foreign Currency (Non-Resident) Accounts (Banks) Scheme (FCNR (B)
Accounts).
While NRO and NRE accounts can be kept in the form of current, savings bank,
recurring deposit or term deposit accounts, deposits under NRNR and FCNR
(B) schemes can be kept only in the form of term deposits for periods ranging
from six months to three years.

3.Minors:
A minor is a person who has not completed eighteen years of age. Any contract
entered by minor is void and is not enforceable by law. This prevents minor to
acquire property, dispose property or enter into any type of agreement.

Guardian means a person having the care of the person of a minor or of his
property or both person and property. Guardians may be categorised into
following three types:

o Natural guardian
o Testamentary Guardian
o Legal Guardian appointed by a court
Joint account:
A joint account is an account which is opened by two or more persons jointly.
It’s simply a joint debt such an account is opened by them for the convenience
of the operation of the account as well as for the withdrawal of money after the
death of any one of them.
Married Woman:
A married woman is competent to enter a valid contract. Therefore banker
opens an account in the name of a married woman. In the case of a debt taken
by a married woman her husband shall not be liable except in the following
circumstances:

o If she borrows money for the necessities of her life

o If she borrows for the necessaries of her household
o If she acts as an agent of her husband.
Pardanasheen Women:
A paid ana sheen woman observes complete seclusion in accordance with the
custom of her own community. She does not deal with the person other than the
members of her own family. As she remains completely secluded as the
presumption in law. The banker should take due precaution in opening an
account in the name of a park ana sheen woman. As the identity of such a
woman cannot be ascertained, the banker generally refuses to open an account
in her name.

Illiterate Person:
Illiterate persons cannot sign their names and hence the bankers take their
thumb impression as a substitute for signature and a copy of their recent
photograph. The application form and photograph should be attested by an
approved witness. For withdrawing money he must attend personally and affix
his thumb impression in the presence of an official of the bank for
identification.

2. Joint Hindu Family (JHF):

Joint Hindu Family (JHF) (also known as Hindu Undivided family) is a legal
entity and is unique for Hindus. It has perpetual succession like companies; but
it does not require any registration. The head of JHF is the Karta and members
of the family are called co-parceners. The JHF business is managed by Karta.
3. Partnership firms
A partnership is not a legal entity independent of partners. It is an association of
persons. Registration of a partnership is not compulsory under Partnership Act.
However, many banks insist on registration of a partnership. In any case, ie
stamped partnership deed or Partnership letter should be taken when an account
is opened for a partnership. The partnership deed will contain names of the
partners, objective of the partnership, and other operational details, which
should be taken note of by the bank in its dealings.
4. Joint stock companies (Limited Liability Companies)
A company is registered under companies Act has a legal status independent of
that of the share-holders. A company is an artificial person which has perpetual
existence with limited liability and common seal. Memorandum and Articles of
Association, Certificate of Incorporation, Resolution passed by the Board to
open account, name and designations of persons who will operate the account
with details of restriction placed on them are the essentials documents required
to open an account.
5. Clubs, Societies and Associations
The clubs, societies, association etc., may be unregistered or registered.
Account may be opened only if persons of high standing and reliability are in
the managing committee or governing body. Copy of certificate of registration
and Copy of bye-law, certified to be the latest, by the Secretary/President are
required to be obtained and also a certified copy of the resolution of the
Managing Committee/Governing body to open the bank account and giving
details of office bearers etc., to operate the account.

6. Trust Account:
Trusts are created by the settler by executing a Trust Deed. A trust account can
be opened only after obtaining and scrutinizing the trust deed. The Trust
account has to be operated by all the trustees jointly unless provided otherwise
in the trust deed. A trustee cannot delegate the powers to other Trustees except
as provided for in the Trust Deed. A cheque favoring the Trust shall not be
credited to the personal account of the Trustee.
 Termination of relationship between a banker and a customer:
As a rule, as long as an account (either deposit or loan) exists, the relationship
between a banker and a customer would continue. The relationship would come
to an end under the following circumstances or conditions.

The relationship between a bank and a customer ceases on:

 The death, insolvency, lunacy of the customer.
 The customer closing the account i.e. Voluntary termination
 Liquidation of the company
 The closing of the account by the bank after giving due notice.
 The completion of the contract or the specific transaction

BANKING PRODUCTS AND SERVICES

At its most basic level, a bank is a place to safely keep your money. But beyond
the basics, banks usually offer a wide range of products and services designed to
make managing your money a bit easier.

Bank Products means any facilities or services related to cash management,

including treasury, depository, overdraft, credit or debit card, purchase card,
electronic funds transfer and other cash management arrangements.

Banking services use banking products and/or products and services of

otherbanks. Banking Product would be a tangible or an intangible in nature
Eg: InBanking, A loan would be a product. In Banking Service: It is part of
a product, (may be sold for some consideration or may not) that is Intangible.

From car loans to credit cards, there are plenty of banking services you may
need at different stages of life. And with digital options, you can access many of
them right from your phone or laptop.

The different products in a bank can be broadly classified into:

 Retail Banking.
 Trade Finance.
 Treasury Operations.
 Retail Banking and Trade finance operations are conducted at the branch level
while the wholesale banking operations, which cover treasury operations, are at
the head office or a designated branch.
Retail Banking:

 Deposits
 Loans, Cash Credit and Overdraft
 Negotiating for Loans and advances
 Remittances
 Book-Keeping (maintaining all accounting records)
 Receiving all kinds of bonds valuable for safe keeping

Trade Finance:

 Issuing and confirming of letter of credit.

 Drawing, accepting, discounting, buying, selling, collecting of bills of
exchange, promissory notes, drafts, bill of lading and other securities.

Treasury Operations:

 Buying and selling of bullion, Foreign exchange.

 Acquiring, holding, underwriting and dealing in shares, debentures, etc.
 Purchasing and selling of bonds and securities on behalf of constituents.

The banks can also act as an agent of the Government or local authority. They
insure, guarantee, underwrite, participate in managing and carrying out issue of
shares, debentures, etc.
Apart from the above-mentioned functions of the bank, the bank provides a
whole lot of other services like investment counseling for individuals, short-
term funds management and portfolio management for individuals and
companies. It undertakes the inward and outward remittances with reference to
foreign exchange and collection of varied types for the Government.
Common Banking Products Available

Some of common available banking products are explained below:

1) Credit Card: Credit Card is “post paid” or “pay later” card that draws from
a credit line-money made available by the card issuer (bank) and gives one a
grace period to pay. If the amount is not paid full by the end of the period, one
is charged interest. A credit card is nothing but a very small card containing a
means of identification, such as a signature and a small photo. It authorizes the
holder to change goods or services to his account, on which he is billed. The
bank receives the bills from the merchants and pays on behalf of the card
holder. These bills are assembled in the bank and the amount is paid to the bank
by the card holder totally or by installments. The bank charges the customer a
small amount for these services. The card holder need not have to carry
money/cash with him when he travels or goes for purchasing. Credit cards have
found wide spread acceptance in the ‘metros’ and big cities. Credit cards are
joining popularity for online payments. The major players in the Credit Card
market are the foreign banks and some big public sector banks like SBI and
Bank of Baroda. India at present has about 10 million credit cards in circulation.
2) Debit Cards: Debit Card is a “prepaid” or “pay now” card with some stored
value. Debit Cards quickly debit or subtract money from one’s savings account,
or if one were taking out cash. Every time a person uses the card, the merchant
who in turn can get the money transferred to his account from the bank of the
buyers, by debiting an exact amount of purchase from the card.we get a debit
card along with a Personal Identification Number (PIN). When he makes a
purchase, he enters this number on the shop’s PIN pad. When the card is swiped
through the electronic terminal, it dials the acquiring bank system —
either Master Card or Visa that validates the PIN and finds out from the issuing
bank whether to accept or decline the transaction. The customer never
overspread because the amount spent is debited immediately from the customers
account. So, for the debit card to work, one must already have the money in the
account to cover the transaction. There is no grace period for a debit card
purchase. Some debit cards have monthly or per transaction fees. Debit Card
holder need not carry a bulky checkbook or large sums of cash when he/she
goes at for shopping. This is a fast and easy way of payment one can get debit
card facility as debit cards use one’s own money at the time of sale, so they are
often easier than credit cards to obtain. The major limitation of Debit Card is
that currently only some shops in urban areas accepts it. Also, a person can’t
operate it in case the telephone lines are down.
Difference between debit card and Credit card

Basis Credit card Debit card

You borrow money from
Money comes directly
a lending institution and
Origin of funds out of your checking
pay back some or all of it
account.
each month.
How funds are When your card is used, When your card is used,
deducted the credit card company the funds are transferred
 pays the vendor for the
from your account.
purchase.
You have a limit on how You can access only the
much you can borrow, money available in your
Access to funds typically based on your account or you may face
creditworthiness. potential fees.
You can make a
purchase even if you Spending limits are even
don’t have available more concrete, which
Spending
funds at the time of may help you to keep
purchase, so it can be your budget.
easy to go over budget.
Interest is charged if you There are no interest
don’t pay your balance in charges. But you may be
Potential charges full. You may also be charged fees for
charged for making late withdrawing more than
payments. what’s in your account.
Many cards offer
rewards such as frequent You can often get cash
Perks
flyer miles, cash back or back at points of sale.
gift cards.
Doesn’t affect your
On-time payments
credit history. So use
Credit score could bolster your credit
won’t help – or hurt –
score.
your credit score.
You may be asked to
Since funds aren’t
enter a Personal
withdrawn immediately,
Identification Number
you may be protected
(PIN) to authorize
from fraud or theft. If
purchases. If you
Fraud protection you misplace your card,
misplace your card, you
you may be able to
may also be able to
temporarily lock it via
temporarily lock it via
mobile or online
mobile or online
banking.
banking.

Credit card Debit Card

 Credit Cards or Debit Cards: The comparison

 Credit Limit

Credit Cards have monthly credit limits, which will depend on the kind of card
you have, your relationship with the bank and your credit-worthiness.
Debit Cards can be used only up to the amount that is present in your bank
account. However, the bank may have a daily purchase limit on your card.
 ATM withdrawals

Cash withdrawals on a Credit Card attract a withdrawal fee and interest

Debit Cards generally do not levy a cash withdrawal fee, especially if you
transact at your bank’s ATM.
Both Debit Cards and Credit Cards have a daily cash withdrawal limit. In
addition, Credit Cards may have a monthly withdrawal limit.
 Interest

Credit Cards come with up to 50-days of interest free credit. To avoid interest,
you must pay your outstanding amount by the due date.
Since the amount is paid directly out of your account in the case of a Debit
Card, you need not pay any interest.
 Annual fees

Many Credit Cards have no annual fee. Some do charge an annual fee, which is
waived off on achieving a certain amount of spends on the card. A few
specialised cards charge an annual fee.
Banks usually do not charge annual or renewal fees on Debit Cards.
 Benefits

Credit Cards offer you a wide range of benefits and perks including cashbacks,
discounts and, most important, rewards that you can convert into free flights and
exciting gifts.
Debit Cards also offers benefits such as discounts and cashbacks.
 Usage

In terms of usage, there is generally no difference between Debit Cards and

Credit Cards. Both can be used at merchant outlets and online.
However, there may be certain types of transactions or websites which only
allow the use of Credit Cards.
 Eligibility

Most Credit Cards have basic eligibility criteria, based on income, existing
relationship and credit-worthiness
You can get a Debit Card easily if you have a savings or current account.
 Security features

Both Credit Cards and Debit Cards have similar security features, such as SMS
notifications, PIN and OTP.
Many Credit Cards come with zero liability insurance* for stolen and lost cards,
which Debit Cards don’t offer.

3) Automated Teller Machine:

An automated teller machine (ATM) is an electronic banking outlet that allows
customers to complete basic transactions without the aid of a branch
representative or teller. Anyone with a credit card or debit card can access cash
at most ATMs.
ATMs are convenient, allowing consumers to perform quick self-service
transactions such as deposits, cash withdrawals, bill payments, and transfers
between accounts. Fees are commonly charged for cash withdrawals by the
bank where the account is located, by the operator of the ATM, or by both.
Some or all of these fees can be avoided by using an ATM operated directly by
the bank that holds the account.

ATMs are known in different parts of the world as automated bank machines
(ABM) or cash machines.

The automated teller machine (ATM) is an automatic banking machine (ABM)

that allows the customer to complete basic transactions without any help from
bank representatives. There are two types of automated teller machines (ATMs).
The basic one allows the customer to only draw cash and receive a report of the
account balance. Another one is a more complex machine that accepts the
deposit, provides credit card payment facilities and reports account information
The introduction of ATM’s has given the customers the facility of round the
clock banking. The ATM’s are used by banks for making the customers dealing
easier. ATM card is a device that allows customer who has an ATM card to
perform routine banking transaction at any time without interacting with human
teller. It provides exchange services. This service helps the customer to
withdraw money even when the banks are closed. This can be done by inserting
 the card in the ATM and entering the Personal Identification Number and secret
Password.
ATM’s are currently becoming popular in India that enables the customer to
withdraw their money 24 hours a day and 365 days. It provides the customers
with the ability to withdraw or deposit funds, check account balances, transfer
funds and check statement information. The advantages of ATM’s are many. It
increases existing business and generates new business. It allows the customers.

 To transfer money to and from accounts.

 To view account information.
 To order cash.
 To receive cash.

Advantages of ATM’s:
To the Customers

 ATM’s provide 24 hrs., 7 days and 365 days a year service.

 Service is quick and efficient
 Privacy in transaction
 Wider flexibility in place and time of withdrawals.
 The transaction is completely secure — you need to key in Personal
Identification Number (Unique number for every customer).

To Banks

 Alternative to extend banking hours.

 Crowding at bank counters considerably reduced.
 Alternative to new branches and to reduce operating expenses.
 Relieves bank employees to focus on more analytical and innovative work.
 Increased market penetration.

ATM’s can be installed anywhere like Airports, Railway Stations, Petrol

Pumps, Big Business arcades, markets, etc. Hence, it gives easy access to the
customers, for obtaining cash.
The ATM services provided first by the foreign banks like Citibank, Grind lays
bank and now by many private and public sector banks in India like ICICI
Bank, HDFC Bank, SBI, UTI Bank etc. The ICICI has launched ATM Services
to its customers in all the Metropolitan Cities in India. By the end of 1990
Indian Private Banks and public sector banks have come up with their own
ATM Network in the form of “SWADHAN”. Over the past year upto 44 banks
in Mumbai, Vashi and Thane, have became a part of “SWADHAN” a system of
shared payments networks, introduced by the Indian Bank Association (IBA).
Advantages of ATM
Provide Convenience To Customers
Customers are able to do financial transactions conveniently with the use of
ATMs. They can avail various banking services and can do payments seating at
their home comfort. Various payments for online shopping, at restaurants and
various other places payment can be made using ATM. Nowadays ATM are
installed at all important places like railway station, airports, hospitals etc.
which facilitate the people in withdrawing their money whenever they want.

Offer 24×7 Service

ATMs provides 24 hours a day, 7 days a week and 365 days a year to all its
customers. Unlike bank branches, it does not have any time schedule for its
operations. Customers can access their bank accounts and withdraw their money
at any time of day or night as per their convenience.

Reduce Banks Workload

ATMs have an efficient role in reducing the workload of the banking industry.
It has relieved customers as they can avail various banking services by using
ATM without visiting the bank branches. Customers are not required to stand in
long queues and fill up various forms for availing basic withdrawal and deposit
facilities. It helps in reducing the work pressure on bank staff and provides
flexibility to its operations.

Access To Bank Account From Anywhere

Account can be accessed by customer using ATM from any part of the country
or even worldwide. ATM machines are installed in different parts of the country
at all convenient places. Customers don’t need to carry cash while travelling
and they can easily withdraw money any place they are travelling.

Minimizes Transactions Cost

ATM has reduced the manpower need as all transactions are processed and
monitored using automated computerized systems. There is less human
intervention in work operations which reduce overall cost.

Disadvantages of ATM

Charges Fees
Usage of ATMs by customers invites charging various fees for using it. Bank
charges routines charges as per their standard rates for providing them ATM
facility. Customers are also required to pay various tax while doing transactions
online using the ATM.
 Limitation On Cash Withdrawal
Bank imposes restrictions on withdrawal limit of their customers using ATM.
There are limitations on both no. of free transactions and the amount of money
that can be withdrawn per transactions. Banks set withdrawal amount limit for
their customers. Most of the banks do not allow withdrawal of more than 25,000
at a time.

Possibility Of Frauds
Customers performing online transactions using ATM are likely to be affected
by various frauds. There is a chance of stealing various account information by
online hackers while doing online transactions. These online hackers through
various suspicious activities can get access to your account and loot your
money.

Non-Reachable In Rural Areas

Banks in rural areas of our country have limited computerized branches and
depends mainly on manpower for its various operations. There are limited ATM
machines installed in rural areas which also do not operate properly. Therefore
ATM services are not properly available in rural areas.

4) E-Cheques: The e-cheques consists five primary facts. They are the
consumers, the merchant, consumer’s bank the merchant’s bank and the e-mint
and the clearing process. This cheqing system uses the network services to issue
and process payment that emulates real world chaquing. The payer issue a
digital cheques to the payee and the entire transactions are done through
internet. Electronic version of cheques are issued, received and processed. A
typical electronic cheque transaction takes place in the following manner:

 The customer accesses the merchant server and the merchant server presents its
goods to the customer.
 The consumer selects the goods and purchases them by sending an e-cheque to
the merchant.
 The merchant validates the e-cheque with its bank for payment authorization.
 The merchant electronically forwards the e-cheque to its bank.
 The merchant’s bank forwards the e-cheque to the clearing house for cashing.
 The clearing house jointly works with the consumer’s bank clears the cheque
and transfers the money to the merchant’s banks.
 The merchant’s bank updates the merchant’s account.
 The consumer’s bank updates the consumer’s account with the withdrawal
information.
 The e-chequing is a great boon to big corporate as well as small retailers. Most
major banks accept e-cheques. Thus this system offers secure means of
collecting payments, transferring value and managing cash flows.
5) Electronic Funds Transfer (EFT): Many modern banks have computerized
their cheque handling process with computer networks and other electronic
equipment’s. These banks are dispensing with the use of paper cheques. The
system called electronic fund transfer (EFT) automatically transfers money
from one account to another. This system facilitates speedier transfer of funds
electronically from any branch to any other branch. In this system the sender
and the receiver of funds may be located in different cities and may even bank
with different banks. Funds transfer within the same city is also permitted. The
scheme has been in operation since February 7, 1996, in India. The other
important type of facility in the EFT system is automated clearing houses.
These are the computer centers that handle the bills meant for deposits and the
bills meant for payment. In big companies pay is not disbursed by issued
cheques or issuing cash. The payment office directs the computer to credit an
employee’s account with the person’s pay.
6) Telebanking: Telebanking refers to banking on phone services.. a customer
can access information about his/her account through a telephone call and by
giving the coded Personal Identification Number (PIN) to the bank.
Telebanking is extensively user friendly and effective in nature.

 To get a particular work done through the bank, the users may leave his
instructions in the form of message with bank.
 Facility to stop payment on request. One can easily know about the cheque
status.
 Information on the current interest rates.
 Information with regard to foreign exchange rates.
 Request for a DD or pay order.
 DeMat Account related services.
 And other similar services.

5) Mobile Banking: A new revolution in the realm of e-banking is the

emergence of mobile banking. On-line banking is now moving to the mobile
world, giving everybody with a mobile phone access to real-time banking
services, regardless of their location. But there is much more to mobile banking
from just on-lie banking. It provides a new way to pick up information and
interact with the banks to carry out the relevant banking business. The potential
of mobile banking is limitless and is expected to be a big success. Booking and
paying for travel and even tickets is also expected to be a growth area.
According to this system, customer can access account details on mobile using
the Short Messaging System (SMS) technology where select data is pushed to
 the mobile device. The wireless application protocol (WAP) technology, which
will allow user to surf the net on their mobiles to access anything and
everything. This is a very flexible way of transacting banking business. Already
ICICI and HDFC banks have tied up cellular service provides such as Airtel,
Orange, Sky Cell, etc. in Delhi and Mumbai to offer these mobile
banking services to their customers.

6) Internet Banking:
Online banking allows a user to conduct financial transactions via the Internet.
Online banking is also known as Internet banking or web banking.

Online banking offers customers almost every service traditionally available

through a local branch including deposits, transfers, and online bill payments.
Virtually every banking institution has some form of online banking, available
both on desktop versions and through mobile apps.

Internet banking involves use of internet for delivery of banking products and
services. With internet banking is now no longer confirmed to the branches
where one has to approach the branch in person, to withdraw cash or deposits a
cheque or request a statement of accounts. In internet banking, any inquiry or
transaction is processed online without any reference to the branch (anywhere
banking) at any time. The Internet Banking now is more of a normal rather than
an exception due to the fact that it is the cheapest way of providing banking
services. As indicated by McKinsey Quarterly research, presently traditional
banking costs the banks, more than a dollar per person, ATM banking costs 27
cents and internet banking costs below 4 cents approximately. ICICI bank was
the first one to offer Internet Banking in India.
Benefits of Internet Banking:

 Reduce the transaction costs of offering several banking services and diminishes
the need for longer numbers of expensive brick and mortar branches and staff.
 Increase convenience for customers, since they can conduct many banking
transaction 24 hours a day.
 Increase customer loyalty.
 Improve customer access.
 Attract new customers.
 Easy online application for all accounts, including personal loans and mortgages

Financial Transaction on the Internet:

 Electronic Cash: Companies are developing electronic replicas of all existing
payment system: cash, cheque, credit cards and coins.
 Automatic Payments: Utility companies, loans payments, and other businesses
use on automatic payment system with bills paid through direct withdrawal
from a bank account.
 Direct Deposits: Earnings (or Government payments) automatically deposited
into bank accounts, saving time, effort and money.
 Stored Value Cards: Prepaid cards for telephone service, transit fares, highway
tolls, laundry service, library fees and school lunches.
 Point of Sale transactions: Acceptance of ATM/Cheque at retail stores and
restaurants for payment of goods and services. This system has made
functioning of the stock Market very smooth and efficient.
 Cyber Banking: It refers to banking through online services. Banks with web
site “Cyber” branches allowed customers to check balances, pay bills, transfer
funds, and apply for loans on the Internet.
 Advantages of Online Banking
 Convenience is a major advantage of online banking. Basic banking
transactions such as paying bills and transferring funds between accounts
can easily be done 24 hours a day, seven days a week, wherever a
consumer wishes.
 Online banking is fast and efficient. Funds can be transferred between
accounts almost instantly, especially if the two accounts are held at the
same institution. Consumers can open and close a number of different
accounts online, from fixed deposits to recurring deposit accounts that
typically offer higher rates of interest.
 Consumers can also monitor their accounts regularly closely, allowing
them to keep their accounts safe. Around-the-clock access to banking
information provides early detection of fraudulent activity, thereby acting
as a guardrail against financial damage or loss.
 Disadvantages of Online Banking
 For a novice online banking customer, using systems for the first time
may present challenges that prevent transactions from being processed,
which is why some consumers prefer face-to-face transactions with a
teller.
 Online banking doesn't help if a customer needs access to large amounts
of cash. While he may be able to take a certain amount at the ATM—
most cards come with a limit—he will still have to visit a branch to get
the rest.
 Although online banking security is continually improving, such accounts
are still vulnerable when it comes to hacking. Consumers are advised to
use their own data plans, rather than public Wi-Fi networks when using
online banking, to prevent unauthorized access.
Difference between Mobile Banking and Internet Banking
Mobile Banking Internet Banking

It can be done through any electronic

It Requires smartphone
device which support internet.

It can be done with and without

It requires Internet.
internet

It can be access through basic mobile

It requires a smart phone.
phone.

It provide more transactional

Banking services are limited when facilities i.e. checking account
you are using mobile banking from a statement, transferring funds,
basic phone. ordering a new cheque book, to
opening new FD,

It requires the respective banking app

It does not required to download any
to be downloaded to perform the
particular software or program.
banking function.

9) Demat:
Demat Account is an account that is used to hold shares and securities in
electronic format. The full form of Demat account is a dematerialised account.
The purpose of opening a Demat account is to hold shares that have been
bought or dematerialised (converted from physical to electronic shares), thus
making share trading easy for the users during online trading.
Demat is short for de-materialisation of shares. In short, Demat is a process
where at the customer’s request the physical stock is converted into electronic
entries in the depository system. In January 1998 SEBI (Securities and
Exchange Board of India) initiated DEMAT ACCOUNT System to regulate and
to improve stock investing. As on date, to trade on shares it has become
compulsory to have a share demat account and all trades take place through
demat.

What is dematerialisation?

Dematerialisation is the process of converting the physical share certificates into

electronic form, which is a lot easier to maintain and is accessible from
anywhere throughout the world. An investor who wants to trade online needs to
open a Demat with a Depository Participant (DP). The purpose
of dematerialisation is to eliminate the need for the investor to hold physical
share certificates and facilitating a seamless tracking and monitoring of
holdings.

Though the purpose of the demat remains same for all investors, there are
different types of demat account for different investors.
How many types of demat accounts are there?
There are 3 main types of demat accounts:
Regular Demat Account:
A regular demat account used by investors residing in India.
Repatriable Demat Account:
A demat account used by NRIs under which funds can be transferred abroad.
This type of demat account requires an NRE bank account associated with it.
Non-Repatriable Demat Account:
A demat account used by NRIs under which funds cannot be transferred abroad.
This type of demat account requires an NRO bank account associated with it.

How to Operate DEMAT ACCOUNT?

One needs to open a Demat Account with any of the branches of the bank. After
opening an account with any bank, by filling the demat request form one can
handover the securities. The rest will be taken care by the bank and the
customer will receive credit of shares as soon as it is confirmed by the
Company/Register and Transfer Agent. There is no physical movement of share
certification any more. Any buying or selling of shares is done via electronic
transfers.
 If the investor wants to sell his shares, he has to place an order with his broker
and give a “Delivery Instruction” to his DP (Depository Participant). The DP
will debit hi s account with the number of shares sold by him.
 If one wants to buy shares, he has to inform his broker about his Depository
Account Number so that the shares bought by him are credited in to his account.
 Payment for the electronic shares bought or sold is to be made in the same way
as in the case of physical securities.

Banking Services

In the modern world, banks offer a variety of services to attract customers,

However, some basic modern services offered by the banks are discussed
below:

1. Advancing of Loans.

2. Overdraft.

3. Discounting of Bills of Exchange.

4. Check/Cheque Payment

5. Collection and Payment Of Credit Instruments

6. Foreign Currency Exchange.

7. Consultancy.

8. Bank Guarantee.

9. Remittance of Funds.

10.Credit cards.

11.ATMs Services.

12.Debit cards.

13.Home banking.

14.Online banking.

15.Mobile Banking.
16.Accepting Deposit.

17.Priority banking.

18.Private banking.

1. Advancing of Loans

Banks are profit-oriented business organizations.

So they have to advance a loan to the public and generate interest from them as
profit.

After keeping certain cash reserves, banks provide short-term, medium-term

and long-term loans to needy borrowers.

2. Overdraft

Sometimes, the bank provides overdraft facilities to its customers through

which they are allowed to withdraw more than their deposits.

Interest is charged from the customers on the overdrawn amount.

3. Discounting of Bills of Exchange

This is another popular type of lending by modern banks. Through this method,
a holder of a bill of exchange can get it discounted by the bank, in a bill of
exchange, the debtor accepts the bill drawn upon him by the
creditor (i.e., holder of the bill) and agrees to pay the amount mentioned on
maturity.

After making some marginal deductions (in the form of commission), the bank
pays the value of the bill to the holder.

When the bill of exchange matures, the bank gets its payment from the party,
which had accepted the bill.

4. Check/Cheque Payment

Banks provide cheque pads to the account holders. Account holders can draw
cheque upon the bank to pay money. Banks pay for cheques of customers after
formal verification and official procedures.

5. Collection and Payment Of Credit Instruments

 In modern business, different types of credit instruments such as the bill of
exchange, promissory notes, cheques etc. are used.

Banks deal with such instruments. Modern banks collect and pay different types
of credit instruments as the representative of the customers.

6. Foreign Currency Exchange

Banks deal with foreign currencies. As the requirement of customers, banks

exchange foreign currencies with local currencies, which is essential to settle
down the dues in the international trade.

7. Consultancy

Modern commercial banks are large organizations.

They can expand their function to a consultancy business. In this function,

banks hire financial, legal and market experts who provide advice to customers
regarding investment, industry, trade, income, tax etc.

8. Bank Guarantee

Customers are provided the facility of bank guarantee by modern commercial

banks.When customers have to deposit certain fund in governmental offices or
courts for a specific purpose, a bank can present itself as the guarantee for the
customer, instead of depositing fund by customers.

9. Remittance of Funds

Banks help their customers in transferring funds from one place to another
through cheques, drafts, etc.

10. Credit cards

A credit card is cards that allow their holders to make purchases of goods and
services in exchange for the credit card’s provider immediately paying for the
goods or service, and the cardholder promising to pay back the amount of the
purchase to the card provider over a period of time, and with interest.

11. ATMs Services

ATMs replace human bank tellers in performing giving banking functions such
as deposits, withdrawals, account inquiries. Key advantages of ATMs include:

 24-hour availability
 Elimination of labor cost

 Convenience of location

12. Debit cards

Debit cards are used to electronically withdraw funds directly from the
cardholders’ accounts.

Most debit cards require a Personal Identification Number (PIN) to be used to

verify the transaction.

13. Home banking

Home banking is the process of completing the financial transaction from one’s
own home as opposed to utilizing a branch of a bank.

It includes actions such as making account inquiries, transferring money, paying

bills, applying for loans, directing deposits.

14. Online banking

Online banking is a service offered by banks that allows account holders to

access their account data via the internet. Online banking is also known as
“Internet banking” or “Web banking.”

Online banking through traditional banks enable customers to perform all

routine transactions, such as account transfers, balance inquiries, bill payments,
and stop-payment requests, and some even offer online loan and credit card
applications.

Account information can be accessed anytime, day or night, and can be done
from anywhere.

15. Mobile Banking

Mobile banking (also known as M-Banking) is a term used for performing

balance checks, account transactions, payments, credit applications and other
banking transactions through a mobile device such as a mobile phone or
Personal Digital Assistant (PDA),

16. Accepting Deposit

Accepting deposit from savers or account holders is the primary function of a

bank. Banks accept deposit from those who can save money but cannot utilize
in profitable sectors.
People prefer to deposit their savings in a bank because by doing so, they earn
interest.

17. Priority banking

Priority banking can include a number of various services, but some of the
popular ones include free checking, online bill pay, financial consultation, and
information.

18. Private banking

Personalized financial and banking services that are traditionally offered to a

bank’s digital, high net worth individuals (HNWIs). For wealth management
purposes,

HNWIs have accrued far more wealth than the average person, and therefore
have the means to access a larger variety of conventional and alternative
investments.

Private Banks aim to match such individuals with the most appropriate options.

FINANCIAL INCLUSION & EXCLUSION

India is placed among the top nations with the most conducive environment for
financial inclusion in terms of allowing non-banks to issue e-money,
proportionate customer due diligence and effective consumer protection, a
report said on Thursday.

According to The Economist Intelligence Unit's 2019 Global Microscope on

Financial Inclusion report, the overall environment for financial inclusion has
improved globally with India, Colombia, Peru, Uruguay and Mexico having the
most favourable . conditions for inclusive finance..

Within the overall framework for promoting digital financial inclusion, the
report identified four basic enablers - allowing non-banks to issue e-money,
presence of financial service agents, proportionate customer due diligence and
effective financial consumer protection.

Only four countries - Colombia, India, Jamaica and Uruguay - scored perfectly
across all four parameters.

In these countries, a range of providers are capable of providing digital financial

services to people on the margins of the formal financial system, regulations
control for some of the risks inherent in these services, and clear rules mark out
spaces appropriate for innovation to achieve greater financial inclusion, the
report said.

South Africa, India, Mexico, Tanzania and Uruguay were among the top
countries that safeguard e-money via some sort of deposit insurance or
protection.

 This type of protection provides security to users of these new

technologies, avoids creating regulatory imbalances between different
types of institution, and ensures that digital financial inclusion does not
place new consumers in the financial system at a disadvantage compared
to those transacting with more traditional institutions, the report noted.

Additionally, these countries require financial institutions to maintain

liability for the actions of their agents, ensuring that customers whose
nearest access point is an agent do not receive less protection than
customers who can visit a bank branch, it added.

In India, the Reserve Bank has prepared a draft National Strategy for
Financial Inclusion to deepen financial services' coverage in the country.
The long-awaited strategy is expected to be finalised in 2019 and will
cover a five-year period.

The RBI has set up a high-level committee to review the existing status of
digitisation and devise a medium-term strategy for increasing digital
payments, the report said.

In August 2019, the RBI released the Enabling Framework for

Regulatory Sandbox (RS), which creates the basis for a regulatory
sandbox that will allow fintech start-ups to live-test innovative products
and services ..

 Financial inclusion may be defined as the process of ensuring access to

financial services and timely and adequate credit where needed by
vulnerable groups such as weaker sections and low income groups at an
affordable cost (The Committee on Financial Inclusion, Chairman: Dr. C.
Rangarajan).
 Financial Inclusion, broadly defined, refers to universal access to a wide
range of financial services at a reasonable cost. These include not only
banking products but also other financial services such as insurance and
equity products
 The essence of financial inclusion is to ensure delivery of financial
services which include - bank accounts for savings and transactional
 purposes, low cost credit for productive, personal and other purposes,
financial advisory services, insurance facilities (life and non-life) etc.

Financial Inclusion is described as the method of offering banking and

financial solutions and services to every individual in the society without
any form of discrimination. It primarily aims to include everybody in the
society by giving them basic financial services without looking at a
person’s income or savings. Financial inclusion chiefly focuses on
providing reliable financial solutions to the economically underprivileged
sections of the society without having any unfair treatment. It intends to
provide financial solutions without any signs of inequality. It is also
committed to being transparent while offering financial assistance
without any hidden transactions or costs.

Financial inclusion wants everybody in the society to be involved and

participate in financial management judiciously. There are many poor
households in India that do not have any access to financial services in the
country. They are not aware of banks and their functions. Even if they are aware
of banks, many of the poor people do not have the access to get services from
banks.
They may not meet minimum eligibility criteria laid by banks and hence, they
will not be able to secure a bank’s services. Banks have requirements such as
minimum income, minimum credit score, age criteria, and minimum years of
work experience. A bank will provide a deposit or a loan to an applicant only if
he or she meets these criteria. Many of the poor people may be unemployed
without any previous employment record due to lack of education, lack of
resources, lack of money, etc.
These economically underprivileged people of the society may also not have
proper documents to provide to the banks for verification of identity or income.
Every bank has certain mandatory documents that need to be furnished during a
loan application process or during a bank account creation process. Many of
these people do not have knowledge about the importance of these documents.
They also do not have access to apply for government-sanctioned documents.
Financial inclusion aims to eliminate these barriers and provide economically
priced financial services to the less fortunate sections of the society so that they
can be financially independent without depending on charity or other means of
getting funds that are actually not sustainable. Financial inclusion also intends
to spread awareness about financial services and financial management among
people of the society. Moreover, it wants to develop formal and systematic
credit avenues for the poor people.
 For several years, only the middle and high classes of the society procured
formal types of credit. Poor people were forced to rely on unorganised and
informal forms of credit. Many of them were uneducated and did not have basic
knowledge about finance and hence, they got cheated by the greedy and rich
people of the society. Several poor people have been exploited for years in the
context of financial assistance.
Financial Inclusion Schemes in India
The Government of India has been introducing several exclusive schemes for
the purpose of financial inclusion. These schemes intend to provide social
security to the less fortunate sections of the society. After a lot of planning and
research by several financial experts and policymakers, the government
launched schemes keeping financial inclusion in mind. These schemes have
been launched over different years. Let us take a list of the financial inclusion
schemes in the country:
 Pradhan Mantri Jan Dhan Yojana (PMJDY)
 Atal Pension Yojana (APY)
 Pradhan Mantri Vaya Vandana Yojana (PMVVY)
 Stand Up India Scheme
 Pradhan Mantri Mudra Yojana (PMMY)
 Pradhan Mantri Suraksha Bima Yojana (PMSBY)
 Sukanya Samriddhi Yojana
 Jeevan Suraksha Bandhan Yojana
 Credit Enhancement Guarantee Scheme (CEGS) for Scheduled Castes (SCs)
 Venture Capital Fund for Scheduled Castes under the Social Sector Initiatives
 Varishtha Pension Bima Yojana (VPBY)
Objectives of Financial Inclusion
 Financial inclusion intends to help people secure financial services and
products at economical prices such as deposits, fund transfer services, loans,
insurance, payment services, etc.
 It aims to establish proper financial institutions to cater to the needs of the
poor people. These institutions should have clear-cut regulations and should
maintain high standards that are existent in the financial industry.
 Financial inclusion aims to build and maintain financial sustainability so that
the less fortunate people have a certainty of funds which they struggle to have.
 Financial inclusion also intends to have numerous institutions that offer
affordable financial assistance so that there is sufficient competition so that
clients have a lot of options to choose from. There are traditional banking
options in the market. However, the number of institutions that offer
inexpensive financial products and services is very minimal.
 Financial inclusion intends to increase awareness about the benefits of
financial services among the economically underprivileged sections of the
society.
 The process of financial inclusion works towards creating financial products
that are suitable for the less fortunate people of the society.
 Financial inclusion intends to improve financial literacy and financial
awareness in the nation.
 Financial inclusion aims to bring in digital financial solutions for the
economically underprivileged people of the nation.
 It also intends to bring in mobile banking or financial services in order to
reach the poorest people living in extremely remote areas of the country.
 It aims to provide tailor-made and custom-made financial solutions to poor
people as per their individual financial conditions, household needs,
preferences, and income levels.
 There are many governmental agencies and non-governmental organisations
that are dedicated to bringing in financial inclusion. These agencies are
focussed on improving the access to receiving government-approved
documents. Many poor people are unable to open bank accounts or apply for a
loan as they do not have any identity proof. There are so many people who
live in rural areas or tribal villages who do not have knowledge about
documents such as PAN, Aadhaar, Driver’s License, or Electoral ID. Hence,
they cannot avail many of the services offered by governmental or private
institutions. Due to lack of these documents, they are unable to avail any form
of subsidies offered by the government that they are actually entitled to.

Goals of Financial Inclusion for Women Empowerment

Financial inclusion is very particular about including women in financial
management activities of a household. Financial inclusion believes that women
are more capable of handling finances efficiently when compared to men of a
house. Hence, financial inclusion activities target women by helping them get
started engaging in financial management. There are many houses where
women are not permitted to be involved in managing money. They are
controlled by the men of the house and are asked to take care of only the
domestic chores.
Many conservative people in India believe that women are not capable of
handling money. With the help of financial inclusion, the government, as well
as non-governmental agencies, intend to get rid of this mentality. Financial
inclusion is encouraging women to take up more employment opportunities and
be financially independent. It also explains that women will not have to rely on
men for money. They also do not have to wait for men’s permission to do
anything.
Financial inclusion intends to empower women belonging to low-income
groups by increasing financial awareness among them. Women are also taught
in simple ways to save their money for future purposes. They are provided with
exposure to multiple affordable savings instruments. They are also taught about
the various forms of credit available in the market. These forms of credit will
help them start up a new small business venture or take up a training course to
apply for a new occupation. This will also increase their monthly income.
Financial inclusion is also making many women get mobile phones for their
own usage. In several parts of the nation, only men had their own mobile
phones and women had to depend on these men. Over the past few years,
women have started to own mobile phones and have started to use them for
work purposes, business purposes, and financial requirements. Many of them
have started to utilise digital modes of payment and other financial operations
with the help of mobile phones. This has simplified and quickened their
transactions.
The idea of financial inclusion is encouraging banks and other financial
institutions to assist the unbanked sections of the society. Many of these
institutions are also focussing on making women financially independent by
providing special rates and exclusive discounts or other benefits. Many banks
charge subsidised or discounted interest rates to women for their loan products.
For savings accounts offered by certain banks and non-banking financial
corporations, women depositors gain more interest on their deposits when
compared to men.
Financial Inclusion with the Help of Financial Technology (Fintech)
Financial technology (fintech) refers to the utilisation of advanced technology in
the financial industry or the financial sector. With the introduction of financial
technology or fintech, financial inclusion is improving extensively across the
whole world. India also has many fintech companies that are constantly working
towards simplifying the process of providing financial services to prospective
clients. Fintech companies have also been successful in offering financial
services and products at minimal costs. This is very helpful to customers as their
expenses are low and they can distribute their savings to their other needs also.
Financial technology companies are enabling people in rural areas to apply for
loans or open bank accounts by using mobile phones. Several people in Indian
rural places have mobile phones and some of them have access to mobile
internet and hence, they can make use of fintech services to get reliable
financial services.
A few of the latest fintech options that are used by individuals include
crowdfunding, digital payment systems, peer-to-peer (P2P), electronic wallets,
etc. Many people in both rural and urban areas are utilising these advanced
options of banking. However, there are still many untouched people who have
not had any experience with a banking or any other financial institution. For
such people, it is tough to use any mobile-based financial service.
When many of these poor people engage in financial transactions via cheques or
cash, they tend to get cheated by financial scammers. Also, when they visit bank
branches or branches of NBFCs to open a deposit or to apply for a loan, they
may end up paying high fees at the branch. These fees or charges can be
processing fees, transaction fees, money order fees, etc. In order to save poor
people from such high expenses for availing financial services, banks, NBFCs,
and fin tech companies are collaborating together to come up with simpler and
quicker banking processes which will eliminate unnecessary fees and charges.
The evolvement of such processes will help in including the underbanked or
unbanked people of the society.
Financial Inclusion through Digital Payment Systems
They can also make payments for products and services in their residential
regions with the help of electronic payment wallet systems. The Government of
India has launched several electronic wallet systems through smartphone apps
such as Bharat Interface for Money (BHIM), Aadhaar Pay, and lots more!
Electronic wallets or e-wallets refer to wallets that can be used with the help of
electronic means such as mobile phones. These wallets replace physical wallets.
A user can make cashless payments through online as well as offline means. He
or she will need to download the e-wallet app on their mobile phone and utilise
it to make transactions. These e-wallets can be utilised for mobile recharges,
utility bill payments, grocery stores, e-commerce portals, etc.
Many digital financial tools offer attractive offers and discounts when people
make use of these tools. These are very helpful and new to the economically
underprivileged sections of the society. They can enjoy offers, receive cashback
options, and rewards. These incentives will help a user save a lot of money.
Impact of Demonetisation on Financial Inclusion
With the objective of making India completely cashless in a few years, the
government has introduced inexpensive e-wallet options so that the less
fortunate people of the nation are not excluded from going cashless. These e-
wallets have regional languages apart from English. The user can select the
language that he or she knows and make use of the app conveniently. Some of
these e-wallets not only allow a user to make payments, but also enable them to
make fund transfers from one bank account to another.
With the implementation of the demonetisation process in India in the year
2016, the need for digital financial services has risen. The ban on usage of the
notes of Rs.500 and Rs.1,000 led to the increasing demand for alternative
modes of payment for goods and services. Hence, the number of digital wallets
increased extensively in the country. The goal of the Indian government is to
make the nation cashless and hence, the high number of digital wallets is
excellently helping the government in attaining its goal. Moreover, there was a
rise in the transaction limit for electronic wallets to Rs.20,000. This is great
news for both users and e-wallet companies.
Many people belonging to low-income groups also started to utilise electronic
wallet options as they did not have any other choice. It is true that a lot of them
struggled initially due to the demonetisation process. Several middle-class and
low-class people were left stranded when the demonetisation process came into
effect suddenly. However, the introduction of multiple digital banking and
financial services served as a great boon to all economic classes of the society.
Several low-income people, unemployed people (including people who were
illiterates) living in both rural and urban areas started to learn about how to open
a bank account, how to apply for credit, how to use technology for banking
services, how to avail financial services without standing in long lines, and how
to carry out transactions without carrying cash in hand.
Financial Inclusion in India through Digitisation of Monetary Transactions
The government of India intends to carry out crores of digital financial
transactions for the present and upcoming years with the help of Unified
Payment Interface (UPI), Unstructured Supplementary Service Data (USSD)
banking methods, Immediate Payment Service (IMPS), National Electronic
Funds Transfer (NEFT), Aadhaar Pay, debit cards, BHIM, and credit cards.
Moreover, the government wants to make it compulsory for fertiliser depots,
block offices, petrol pumps, road transport offices, hospitals, colleges,
universities, etc. to make arrangements for accepting payments for services and
products through digital payment systems. It makes a lot of sense especially
when customers are required to make high-value payments at these institutions
or offices. The government intends to achieve this by issuing a mandate to the
above-mentioned institutions.
Apart from this, the government also wants to make it mandatory that every
government receipt is offered exclusively through any digital mode. Presently,
many government operations are carried out digitally and customers receive
receipts for payments in the digital form. However, this has not been completely
effective in every part of the nation. To attract more and more users for digital
modes of payment, the government is trying its best to remove or reduce service
charges that are levied by companies on the electronic transactions.
These digital financial apps will help in eliminating corruption apart from
achieving financial inclusion. These apps aim to attain financial inclusion by
offering interesting and attractive bonuses for both users and merchants.
Customers who make use of these cashless payment tools will be able to enjoy
referral bonus schemes and meanwhile, merchants will get cashback rewards
and points when they allow customers to transact through these cashless
systems.
Apart from introducing digital financial systems to the poor people, a few banks
have released mobile banking vans or trucks to reach the interior parts or
untouched parts of the country. In these parts, people do not have access to
transport, communication, or financial services.
Along with the government-owned payment apps, there are many private
mobile electronic wallet (e-wallet) systems created by private companies and
banks. Most of these apps allow bank fund transfers. All these e-wallets enable
users to make payments digitally in a convenient manner. Individuals will not
get stranded anywhere even if they are out of cash in hand. If they have money
in their electronic wallet, they are safe and can carry out financial transactions
successfully without having to rely on others for money. Most of these apps are
available on Android and iOS smartphones. There are also some apps that are
available on phones that operate through Windows.
One of the leading e-wallets in India is Paytm. It is available on Android,
Blackberry, iOS, Ovi, Windows, etc. Some of the other prominent e-wallet apps
include Freecharge, MobiKwik, Citrus Wallet, Oxigen Wallet, ItzCash, Axis
Bank Lime, Jio Money, ICICI Pockets, HDFC PayZapp, SBI Buddy, mRupee,
Vodafone M-Pesa, PayMate, PayUmoney, Juspay, Ezetap, Citi MasterPass,
MomoeXpress, Ola Money, Mswipe, etc.
What is the Need for Financial Inclusion?
Financial inclusion enhances the financial system of the country
comprehensively. It strengthens the availability of economic resources. Most
importantly, it toughens the concept of savings among poor people living in
both urban and rural areas. This way, it contributes towards the progress of the
economy in a consistent manner.
Many poor people tend to get cheated and sometimes even exploited by rich
landlords as well as unlicensed moneylenders due to the vulnerable condition of
the poor people. With the help of financial inclusion, this serious and hazardous
situation can be changed.
Financial inclusion engages in including poor people in the formal banking
industry with the intention of securing their minimal finances for future
purposes. There are many households with people who are farmers or artisans
 who do not have proper facilities to save the money that they earn after putting
in so much effort.
Financial Inclusion Programmes Organised by the Reserve Bank of India
(RBI)
The Reserve Bank of India works on exclusive programmes and plans in order
to have financial inclusion in the nation effectively. It applies a bank-led
strategy in order to attain financial inclusion smoothly. The central bank of
India also has firm regulations in place that need to be followed by every bank.
The RBI also is offering qualified assistance to every bank in the nation in order
to attain its financial inclusion objectives.
Let us take a look at some of the programmes introduced by the RBI in order to
achieve its goals:
 The RBI instructed every bank to have Basic Saving Bank Deposits (BDSD)
accounts for the economically weaker sections of the society. These are no-
frill accounts where account holders do not have to maintain any minimum
balance or minimum deposit. These account holders can withdraw cash at any
ATM or at the bank branch. They should also be given the opportunity to
make use of electronic payment channels for receiving and transferring money
to others.
 The RBI also asked banks to have simple Know Your Client (KYC)
regulations for the less fortunate people of the society. There are many people
in rural areas who are unable to open bank accounts due to strict KYC norms.
Hence, the RBI wants banks to have simplified KYC requirements particularly
if a low-income individual is interested in opening a bank account with an
amount not above Rs.50,000. It also wants minimal KYC norms if the overall
credit in the accounts does not go above Rs.1 lakh for 1 year. Recently, banks
have been asked to accept Aadhaar Card as identity proof as well as address
proof since most people belonging to low-income groups have made Aadhaar
card in their names.
 Keeping in mind about the lack of bank branches in rural areas, the RBI has
asked all banking institutions to open more and more branches in villages
across the nation in order to provide good banking services to the villagers.
There are many remote villages where there are no banks and also no good
transportation services. It is very difficult for residents of these areas to
commute to a far-off bank branch for availing banking services. Hence, with
the compulsory rule of the RBI, banks are distributing the ratio of banks in
villages and cities to have a balance.
Operations of Financial Inclusion
Under financial inclusion, the main aspect is access to financial sources. This
can be broadly divided into credit, wealth creation, and contingency planning.
 According to the concept of financial inclusion, under the credit aspect, a low-
income individual needs proper access to emergency loans, consumer loans,
housing loans, and business livelihood loans at affordable rates.
 Under the wealth creation aspect, a poor individual should be able to make
excellent savings and have access to reliable investment options that generate
good returns. Every low-income household should also have basic financial
literacy and understand the concept of risk in finance clearly.
 Under the contingency planning segment of the financial inclusion system, a
poor person should have access to funds that can be utilised exclusively in the
future. It is not enough if these people have only means to improve their
income and enhance their lifestyle. They should also have the right resources
to be prepared for the future, especially when they get old. Many of the poor
people may not be aware of retirement plans. They should be provided with
affordable retirement plans that will give them good returns in the later stages
of their lives.
They should also be given insurable contingencies to keep themselves safe and
secure. Many less fortunate people do not even think of taking a life insurance
policy or a vehicle insurance policy due to the high costs involved. Insurers
should offer insurance options at subsidised premiums to the economically
weaker sections. These insurance policies will give them coverage and prevent
them from paying exorbitant compensation costs when something unforeseen or
unfortunate happens to them or their family.
They should also be given buffer savings in order to be prepared and ready for
unforeseen or emergency expenses. This way, they would not have to go to their
relatives or friends or moneylenders for monetary support. They can be
financially ready always.
The Reserve Bank of India is promoting the establishment of Financial Literacy
Centres (FLCs). It has made many modifications and revisions regarding the
functioning of Financial Literacy Centres (FLCs). The rural branches of various
scheduled commercial banks and financial literacy centres are now required to
improve financial awareness on a larger scale and enhance their financial
literacy activities by organising catchy and simple financial literacy camps.
These camps can be held outdoors under a tree or in some other open space by
having financial awareness camps on a monthly basis or more frequently.
Financial literacy camps work towards imparting financial literacy and offering
convenient financial access to low-income people of the society.
With the objective of distributing the branches of scheduled commercial banks
(SCBs), the RBI has instructed banks to establish their branches in Tier 2 to
Tier 6 centres that have less than 1 lakh people. These branches can be opened
with a general permission from the RBI. In Sikkim and North-Eastern states,
scheduled commercial banks can set up branches without even getting any
approval from the RBI. They are free to open any branch in these states. The
RBI is also working to liberalise the functioning of commercial banks apart
from regional rural banks (RRBs) so they can open branches in Tier 1 centres
with a general permission.
The central bank of the nation also asked banks to discuss and create Financial
Inclusion Plans (FIPs). These plans will include details about staff employed,
branches opened, facilities offered in each of these branches, steps being taken
to convert the unbanked sections of the society to individuals with basic access
to banking services, etc. The plan will also include information about no-frills
accounts opened with each public or private bank. The RBI has been checking
each bank’s FIP with full dedication and providing them with constructive
feedback.
The RBI has also asked banks to set up intermediate brick and mortar structures
between the base branch of a bank and the other branch locations. This should
be done for the purpose of organising and administering cash, redressing
customers’ grievances, collecting and maintaining mandatory documents
systematically, monitoring of branch activities, etc. This particular intermediate
branch can be an inexpensive building with simple infrastructure, passbook
printers, banking terminal, cash retention machines or safes for storing large
amounts of cash.
The RBI also has invested huge amounts in technology for banking services so
that innovative techniques can be incorporated to making banking processes
simple, quick, and cost-effective. The scheduled commercial banks have been
asked to utilise information and communications technology (ICT) to offer
affordable digital banking services. Banks have also started to offer door-step
delivery of bank accounts, loans, and other financial services with the help of
technology. Moreover, with the introduction of technology in banking, it is okay
if customers are illiterates. They can make use of technological devices and
operate through biometrics. This also makes sure that customers have safe and
secure transactions without any scope for scams or frauds. This will also make
the unbanked sections of the society rely on the banking system.
The Reserve Bank of India enabled scheduled commercial banks to get business
correspondents (BCs) as well as business facilitators (BF). These BCs and BFs
will play the role of intermediaries for the purpose of offering banking services
to customers across the nation. The business correspondent strategy promotes
delivery of banking products at the doorstep of the customers. They also offer
cash transactions and hence, this makes it easier for people who live in rural
areas where there are not too many banking branches and not proper modes of
transport for them to commute to nearby towns or cities.
These business correspondents can be individuals as well as organisations or
entities that serve as intermediaries between banks and customers. There are
many people and entities that are ready to take up the role of a business
correspondent. Both non-profit organisations and for-profit companies are
allowed to serve as business correspondents. This is a great milestone in the
field of banking.
In the rural setting, business correspondents typically take assistance from the
Village Panchayat (the local governing body of a particular village) and develop
a strong system consisting of Common Service Centres (CSCs). A Common
Service Centre is an electronic hub that functions in rural areas. This centre will
have a computer and it will be connected to the internet. This system will offer
electronic business services as well as e-governance to people living in rural
areas. It also serves as an opportunity to rural people for being innovative and
smart. People can come up with unique ideas and technological solutions for the
purpose of creating and improving business operations, marketing activities,
and increasing sales on a regular basis.
Financial Inclusion in India
In the Indian subcontinent, the concept of financial inclusion was first
familiarised in the year 2005 by the Reserve Bank of India by releasing the
Annual Policy Statement. Soon, the concept started to spread in every part of
the nation. It was chiefly introduced to touch every corner of the country
without ignoring any remote area. The concept addressed the absence of a
formal financial system and banking system for catering to the monetary
requirements of the poor people.
In the year 2005, the Khan Committee Report was released which mainly
discussed rural credit and microfinance. It spoke about how many people in the
nation are missing out on the benefits of a professional and licensed banking
system.
The Khan Committee report laid an emphasis on providing access to essential
financial services by helping them to open a bank account that does not come
with any frills or complicated elements. All banks were asked to minimise
regulations regarding account creation processes for the economically weaker
sections of the society. Several banks were asked to work together towards
100% financial inclusion by taking part in campaigns started by the RBI.
The Indian government also initiated the ‘Pradhan Mantri Jan Dhan Yojna’ with
the sole purpose of motivating and encouraging poor individuals to open bank
accounts. This programme targeted at least 75 million individuals to open bank
accounts by the year 2015.
Chief Aspects of an Integral Financial Integral Strategy
Every country has a financial integral strategy in order to build its financial
sector comprehensively and sustain its condition consistently for several years.
 The strategy also works towards strengthening the financial system of the
economy whenever there are fluctuations in the financial market.
The 3 main elements of an integral financial strategy are financial literacy or
education, financial stability, and financial inclusion.
Financial literacy or education refers to spreading awareness and knowledge
about financial services that are given by banks and other financial institutions.
Financial inclusion refers to the provision of proper access to multiple financial
services equally to all economic classes of the society. Therefore, this indicates
that financial literacy takes care of the demand angle by increasing financial
knowledge among people. On the other hand, financial inclusion handles the
supply angle by making sure that financial services are supplied to end users.
These 2 elements help in building financial stability.
There is a financial tripod in financing terms where these 3 elements form a
triangle and this triangle shows how each element works towards toughening
the financial sector of an economy.
Special Financial Products Offered for Attaining Financial Inclusion
Keeping in mind that low-income people living in rural and urban areas have
very limited access to financial products and services, scheduled commercial
banks (SCBs) have been asked by the Reserve Bank of India to design and offer
exclusive financial products to the economically weaker sections of the society.
Many of them are only aware of basic financial services such as savings
schemes, savings accounts, personal loans, crop loans, microfinance, etc. They
do not know anything about credit cards or debit cards.
However, due to their lack of access to instant credit facilities, banks were
instructed to issue cost-efficient credit cards to the low-income groups of the
society. Some of the special financial products provided to them include:
 General Credit Cards (GCC): Banks were asked by the RBI to launch and
offer General Credit Card facilities with an amount of up to Rs.25,000 at their
branches located in semi-urban and rural areas.
 Kissan Credit Cards (KCC): The Reserve Bank of India also instructed
banks to provide Kissan Credit Cards exclusively to small farmers who earn
very low incomes and who have very limited funds due to which they cannot
invest in proper farming tools, fertilisers, pesticides, crop seeds, tractors, land
for farming, storage warehouses, etc. They are forced to rely on other wealthy
landlords for getting land to sow crops. These Kissan Credit Cards are
intended to help farmers make instant purchases whenever required. Many a
time, farmers give up on purchasing things required for their occupation due
to lack of funds.
 ICT-Based Accounts via BCs: The Reserve Bank also devised a plan to help
banks to reach out to the unbanked individuals of the society by offering
 information and communications technology (ICT)-based bank accounts with
the help of business correspondents (BCs). These accounts allow users to
make withdrawals of cash, create deposits, and apply for loans and other
forms of credit through electronic forms. This type of account makes banking
inexpensive and simple.
 Increase in ATMs: The Reserve Bank of India also reported that many rural
parts of the nation do not have enough automated teller machines (ATMs) and
this is hampering many buying and selling operations of the people residing in
those areas. In order to increase the availability of physical cash for these
people, the number of ATMs increased massively.
Financial Inclusion through Microfinance
Microfinance is a very effective way of offering funds to the economically
underprivileged sections of the society. Microfinance refers to giving micro
loans or micro credit to the less fortunate entrepreneurs and small-scale business
enterprises. This mode of financing has helped India extensively in achieving
financial inclusion in a cost-effective manner. It has impacted the lives of the
poorest people in the nation. It includes the provision of loans, savings
instruments, and other financial instruments for the purpose of making more
money and saving it proficiently for multiple purposes.
There are several impoverished people in the nation who do not have access to
financial sources and who have no idea how to get out of their hopeless
financial condition. With basic microfinance, they will be given opportunities to
start some form of business or get a better job and improve their lifestyles. They
do not have access to traditional banking options and hence, microfinance is a
great boon to them as it gives them a chance to borrow money, utilise it for
lucrative purposes, and repay it conveniently over a fixed period of time. They
will also learn to manage their hard-earned money meticulously.
Financial Inclusion with the Help of Private Companies
Private companies have also initiated programmes in order to contribute
towards achieving financial inclusion in the nation. These private companies
planned and implemented projects in order to make the low-income groups of
people be engaged in developmental projects.
Some of these programmes include Haryali Kisan Bazaar by DCM, EChoupal
or E- Sagar by ITC, Project Shakti by Hindustan Unilever, and many more.
Over the past few years, financial inclusion has become a very prominent public
policy aspect in order to develop the economy in a sustainable manner. It plays
a significant role in keeping institutions that provide finance in a very steady
and firm condition. Banks can enjoy excellent stability when financial inclusion
is attained.
It also helps in minimising the distance between financial institutions and
customers, and this, in turn, assists in maintaining a healthy relationship. With
financial inclusion, every economic agent in the nation will have the ability to
make use of formal financial services and move towards the overall
development of the economy.
Financial Exclusion

The World Bank Group has put forward an ambitious global goal to reach
Universal Financial Access (UFA) by 2020. This objective has become a key
mission for regulators, development agencies and governments as financial
access is now being perceived as key ingredient for inclusive growth.
1. Poor people often lack access to safe, affordable, convenient and reliable
ways to manage the meager resources they have under their control. As a
result, they face exclusion from the financial system that the rest of us
rely on. Access to finance is critical for a country’s development—it is as
much a part of a country’s basic infrastructure as access to roads, or
electricity or the internet. Financial Exclusion financial exclusion can be
defined as the unavailability of banking services to people with low or
non income. It is believed to be one factor preventing poor people leave
out poverty. Insurance services. The basic financial services mean:
The financing (credit),Financial consultancy services, Money transfers,
Savings accounts,Deposit accounts . The deposit account is the necessary
condition for obtaining the other financial services and products.
Another believe is that, the financial exclusion leads- in the long
run- to the social exclusion represented in the exclusion from enjoying
services affects the quality of living standard such as education, health
and residence.

The process by which the low income and financially excluded communities get
an access to the formal financial mainstream is known as financial inclusion.
Conversely absence of this access and the deprivation of financial services is
known as “financial exclusion”. Financial exclusion can be described as the
inability of individuals, households or groups to access the necessary financial
services in an affordable, convenient and hassle-free manner.

According to the European Commission, financial exclusion is “a process

whereby people encounter difficulties accessing or using financial services and
products in the mainstream market that are appropriate to their needs and enable
them to lead a normal social life in the society in which they belong.”
 financial exclusion forms are Banking Exclusion, Insurance exclusion, Credit
exclusion , Savings Exclusion,
Banking Exclusion- It is the inability to access banking services. The most
prominent aspect is the inability to obtain a deposit account (current account

This is reflected in the following negative aspects:

1. Inability to repay through checks.
2. Lack of access to financial transfers (salary, pension and transfers to
others)
3. Exclusion from loans and financing.
4. money loss.

Savings Exclusion- Lack of money for saving because of the income low-
standard Unfamiliarity with putting savings in the banks, Lack of dealing
with banks either because of bad experiences or wrong pre-judgments
towards banks,.

Credit exclusion-Credit or loans are important financial tools facilitating the

possibility of obtaining goods and services that cost more than the available
income such as, furniture, cars, buildings, machines and others . The credit
exclusion may cause social exclusion in one of the following forms:
a) Inferiority and self-underestimation feeling in comparison with other
society's individuals
b) Continuous failure to meet the family expenses through the income sources
then entering into over- indebtedness as a result of resorting to non official
financing sources and it over-charging the cost of funding leading its
customers to indebtedness debt's empty circle
Insurance exclusion: In the modern societies, some of insurance services have
to some extent become compulsory such as cars and retirement insurance while
there are other optional services such as health insurance. So the degree and
depth of the insurance exclusion is determined by the existence and expansion
of the official sector in the society.

There are three gradations of financial exclusion viz. core exclusion: those who
operate their financial affairs completely outside the regulated financial system;
limited access: those who may have a basic bank account but poor financial
habits and little advice; included but using inappropriate products: victims of
inappropriate products .
Financial exclusion has consequences such as dependency, inability to access
benefits due to living exclusively with cash, the impossibility of saving money
or access to credit and therefore to buying a house or starting a business, and
finally the inability to improve their situation via financial tools. It also has
regressive influence on women. Melinda Gates, co-Chairperson of the Gates
Foundation once said: “When women have money in their hands and the
authority to choose how to spend it, they grow in confidence and power by
taking control of their economic future.”
There is enormous evidence that shows that economies with deep financial
sectors and well-functioning financial systems perform better in all spheres.
Contrary to common impressions, poor people need and use the same variety of
financial services and for the same reasons as wealthier clients: to save securely,
to invest in business opportunities business opportunities, improve their homes,
to transform their lives and cope with emergencies caused by the vagaries of
nature.
Despite tremendous efforts and many successes, there still remain a variety of
barriers preventing the poor from accessing financial services, resulting in
financial exclusion. In remote, hilly and sparsely populated areas with poor
infrastructure, physical access itself acts as a deterrent. On the demand side,
lack of awareness, low income/assets, social exclusion, illiteracy are major
impediments.
On the supply side, distance from branch, complicated and annoying processes,
unsuitable products, arcane language in documents, staff attitudes are common
reasons for exclusion. All these result in higher transaction cost apart from other
issues. On the other hand, the ease of availability of informal credit sources
makes them popular even if they are costlier. A granular slicing will reveal
more micro reasons:
Self-exclusion Access does not equal inclusion. There has in recent times been
a significant increase in bank accounts, but consumers are not using them. This
underlines the importance of creating products and engagement strategies that
are better designed to meet the needs of consumers to ensure that consumers
adopt the new products and use them in their daily financial lives.
Exclusion by the group: ;in group-based microfinance programmes , members
who gradually improve their own economic situation t often avoid including
the poorest of the poor in their own group or Center On the pretext of retaining
group discipline. Staff must pay special attention to this and sensitise the
members to align their objective with the broader goal of alleviating poverty in
their community.
Exclusion by staff: Absence of quality last mile interface is another deterrent
for rural clients joining the banking mainstream .it is important that consumers
should not feel threatened by official processes. Loan officers may have explicit
or implicit incentives to exclude the poorest. This may be based on a perception
that the poor are problematic and will not be viable clients. This can be
exacerbated by an organisational culture in which the financial mission heavily
overrides the social mission.
This will encourage loan officers to focus on achieving greater productivity,
increasing portfolio outstanding, and reaching larger number of high revenue
yielding clients, rather than achieving greater poverty impact. Maximising the
customer time and effort required for the purpose may appear to be a deliberate
strategy to eventually discourage low-income
Exclusion by design: Many aspects of the methodology design of a financial
programme may deliberately or accidentally exclude the poorest. These may
include entry fees, rules that exclude those who do not have an existing
business, inflexible loan terms, compulsory savings, penalties for non-
adherence to group’s rules, group liability rules, providing services by financial
institutions from main offices rather than community locations, or locating the
program in difficultly accessible areas. Other aspects of program design may
not exclude the poorest, but may be biased towards the less-poor.
Non-viability for service providers: Financial inclusion is not about providing
subsidised financial services but one those are high quality but at the same time
self-sustaining. Rural markets need mass but customised products. There are
many layers even in the rural pyramid and each has its own unique profile.
Informal financial services are more convenient and affordable to the low-
income communities. But they lack the same level of reliability, security,
affordability, value and potential for scale that formal institutions offer.
Lack of proper ecosystem: Even though there is no shortage of financial
products and services that could help low-income workers, there is a lack of
efficient distribution channels for these market-based financial products, both
from traditional and non-traditional financial institutions. As institutions do not
know how to get to the sector of informal workers, inking some welfare benefits
to bank accounts, villagers have ended up stuck in long queues and struggling
with ATMs that often run out of cash or break down.
High costs: Many clients are not satisfied with the transaction fees associated
with the bank accounts. According to their calculation, they may lose more by
paying transaction fees than they would recoup in interest earned on their
deposits in a year. In such cases, the customers have to be made aware of the
safety of their savings and of the protection offered by the Government in case
the bank undergoes liquidation.
Poor Service: The primary interface for the consumers is the counter staff who
have been found to be hostile to those wanting to open these accounts. They
misrepresent both product availability and client eligibility, effectively denying
financial access to low-income customers solely upon their discretion.
Misalignment of products and services: Products that are misaligned and not
designed with the unique needs of users in mind are primary driver of low
penetration of financial services . There are so many technology-integrated
financial services that are cheap but are uncomfortable for the illiterate and neo-
literate as well as women. We need increased investments in products that are
well suited to the needs of poor consumers, and the infrastructure and capital to
get them to scale. These need to be supported with appropriate training and
education for adapting to these financial services. A lack of comfort with
technology or low literacy may discourage use.
Banks can deepen their financial inclusion initiatives by creating products that
are simple, intuitive and tailored to meet the needs of those at the bottom-of-the-
pyramid. Attention must be paid to human and institutional issues, such as
quality of access, affordability of products, sustainability for the provider of
these services and outreach to the most excluded populations.
Financial inclusion is important for any economy. The availability of banking
facilities and strong bank branch network are the major facilitators of
developmental activities. A strong and sturdy financial system is a pillar of
economic growth, development and progress of an economy. The problem of
financial exclusion needs to be tackled if we want our country to grow in an
equitable and sustainable manner.