OPINION: Formal employment remains key to financial inclusion in India
Monday, August 25, 2014
Financial inclusion is a key policy initiative for the government and the Reserve Bank of India. Recently the finance minister is his Budget speech announced a launch of a programme on 15th August this year that will provide all households with banking services. Under the programme at least two bank accounts per household which are eligible for availing credit will be opened.
While this is a welcome step, we believe the biggest boost to financial inclusion will come from a push to higher employment in the formal sector, especially regular, salaried employment. We explore here the reasons behind this inference.
Household debt from commercial banks was nearly Rs 12 trillion as of end-March, 2014, including housing and educational loans. Most of it was accumulated in the last decade and nearly half was taken to buy houses.