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Top1. Introduction
A majority of the world's population is still not adequately serviced by the formal financial system. Financial inclusion is an essential priority for the economic growth of a country. It turns down the gap between rich and poor and results in the advancement of society. Financial services to the poor do not necessarily result in removing poverty and solve all the problems relating to it but give them resources to create their path to come out of poverty. Financial inclusion, or broad access to financial services, is defined as an absence of price or non-price barriers in the use of financial services (World Bank Report,2014)
The financial sector in India acts as a bridge to provide financial services to the people. This finance industry is more inclined towards the rural markets to fulfill their financial needs in recent times. Presently the growth rate of the financial sector in India is nearly 8.50% per year. For developing countries like India, it is essential to maintain a healthy growth rate because it shows the country's financial stability, as the rise in growth shows the better financial position of a nation. The financial sector mainly comprises financial institutions, financial markets, financial instruments, and financial services. It is divided into two sectors, i.e. organized sector (wholly governed by the government) and unorganized sector (governed by private investors but having some control of government). Financial inclusion provides a choice to use financial services but does not necessarily include that everyone should use them. An inclusive financial system creates an opportunity for the economically and socially excluded people to integrate into the economy and contribute to the nation's overall development. Financial inclusion as shown in figure 1includes the whole gamut of financial products and services like bank accounts, cheque book, debit cards, credit cards, insurance, and health care, loans and affordable credit, etc.
Figure 1.
Component of Financial Inclusion (Author’s File)
It is necessary to reach financial services to every household. But lack of awareness and illiteracy of financial terms drive the rural people to keep away from the banking services. It is suggested that the banks open the “No Frill” accounts (basic deposit account) with zero balance or a small amount of balance which allows the user to the transaction. Money transfer facility is the most common service used by the households to transfer money either to the children studying in towns and cities or to the parents living in villages. The small loans provided to the rural people for production purposes or personal purposes encourage the people to use the services and helps in financial inclusion.
There are several studies conducted on financial inclusion but most of the studies focus on the impact of financial inclusion on economic development. However, very few academic studies are shown on the factors determining financial inclusion wit special relevance to India. To fill this gap, the study aims in identifying the impact of Socioeconomic and Psychographic factors on the FA, FB, and FK thereby affecting financial inclusion in India. In this context, variables like age, gender, income, education level, occupation, demographic, etc are taken into consideration. Understanding the linkage between Socio-economic, psychographic factors, and financial literacy will help the economic policymakers and practitioners identify the factors that will lead towards financial inclusion in India. Economic policymakers can focus on these factors for strengthening financial inclusion in India.