CandleFocus

Financial Inclusion

Candlefocus Editor
Financial inclusion is a crucial element of economic growth and stability, enabling economies to become more responsive and resilient to economic shocks and global downturns. It is also an essential part of social inclusion and fairness, allowing people to access financial products and services that are critical for protecting themselves against poverty and building resiliencies against future shocks. Governments around the world are increasingly prioritizing and investing in financial inclusion initiatives to expand access to basic financial services and bridge the gap between the financially included and excluded.

Financial inclusion can be achieved in several ways. Governments and local bodies can design policies and regulations that expand access to financial products and services, reduce cost and create financial literacy among vulnerable or excluded sections of society. Similarly, banks and other financial institutions such as MFIs, credit unions and cooperatives can collaborate with technology partners to develop digital solutions that increase access to, and reduce cost of, financial products and services. For example, in India, financial inclusion has been achieved through the Aadhaar enabled payment system that allows customer to make cashless transactions for a nominal commission.

In addition to access to financial products and services, financial inclusion also requires education and awareness on financial literacy. Financial literacy is key to ensuring that people understand basic financial concepts, use products effectively and make informed decisions around debt, savings, investments and insurance. Financial literacy education should be tailored to the local context and culture, and the message should be communicated in a commonly understood language that can be easily accessed by those who are not fluent in English.

Building infrastructure and digital implementations is critical for financial inclusion. However, it is also important to ensure that economic, social and political context are taken into account for sustainability. As such, financial inclusion should be part of an integrated approach to development and poverty elimination aimed at tackling the root causes of exclusion such as illiteracy and gender inequalities. Global initiatives such as the United Nations Sustainable Development Goals (SDGs) and G20 Financial Inclusion Action Plans provide a united approach and guidance in this direction.

Overall, global initiatives have successfully made substantial progress in financial inclusion and the gap between the financially included and excluded has narrowed in recent times. However, there is still much to be done, and concerted efforts are needed from government, regulators, financial institutions and tech companies to create a financially inclusive environment and help bridge the global financial divide.

Glossary Index