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Non-Banking Financial Companies are a supplement to the traditional banking system. Larger Banks and Financial institutions naturally view the market that NBFCs serve as having a higher risk due to the nature of business strategies (cost of borrowing). Customers contact NBFCs due to their quick decision-making, lack of paperwork, prompt services, and flexibility.
Non-Banking Financial Companies have been at the forefront of financial inclusion in India by lending to undeserving groups such as rural households and small companies. They have been essential in fostering inclusive growth and expanding access to formal credit.
By introducing additional goods, reducing transaction costs, and developing an integrated ecosystem, government agencies and financial institutions have played a crucial role in raising awareness across the country and accelerating the adoption of digital payments. Even in the nation’s most rural areas, consumers now demand bank branches and financial services be delivered right to their doorsteps.
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The process of providing banking and financial services to every member of society without any kind of discrimination is known as financial inclusion. Without taking into account a person’s income or savings, it essentially involves everyone in society by providing them with basic financial services.
Financial inclusion is primarily concerned with giving trustworthy financial assistance to those in the economically disadvantaged parts of society without discrimination. It is also dedicated to transparency while providing financial support without any additional fees or unexpected charges. Financial inclusion is crucial to secure, effective, and quick access to the country’s public.
The Indian Government has been adopting a number of unique programmes to promote financial inclusion. The Pradhan Mantri Jan Dhan Yojana (PMJDY) plan[1], which aims to give every household in India access to a bank account and other financial services, is one of the actions the Indian Government has taken to encourage financial inclusion in the nation. The Government has also encouraged the use of technology to reach isolated and underprivileged communities, which includes mobile banking and digital transactions. These projects hope to increase people’s economic security and well-being by bringing the unbanked into the established financial system.
Below are the programmes introduced at various times over the years. Here is a list of the national financial inclusion initiatives:
To serve our nation’s unbanked and underserved people, Non-Banking Financial Companies have, throughout the years, developed a solid ecosystem. Non-Banking Financial Companies
have been instrumental in resolving some of the major obstacles to financial inclusion. The following are the main factors that have supported financial inclusion in India:
In conclusion, Non-Banking Financial Companies have a huge potential to help people who need financial solutions the most. Non-Banking Financial Companies’ involvement will contribute to greater financial inclusion across the country. Their expertise in reaching out to remote areas and larger community reach is undoubtedly crucial in resolving challenges with rural families’ lack of working capital. Although the business model may have changed from earlier times, Non-Banking Financial Companies will still play a significant role in the financial sector.
Read our Article: Adoption of KYC norms by NBFC
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