Financial Inclusion and the Indian Middle Class

> Posted by Samit Ghosh, CEO, Ujjivan
The Center for Financial Inclusion is quite right in saying that a simple indicator of having a bank account is not a barometer of financial inclusion. Till 1985 the only financial services the middle class in India could access were bank savings account and fixed deposits. It is only after 1985 that retail banking and financial services revolution took place in India and it took another 15 years till we could say that the middle class was finally included financially. This changed their way of life and ushered in the tremendous growth we have seen in India.
Financial inclusion means that the segment of population must have access to all or most of the financial services they need for their personal and professional lives.

  1. Do they have an easily accessible savings facility – bank account, post office account, ATM facility?
  2. Do they have choice of investment vehicles in which the can invest long term savings?
  3. Do they access to pension fund for security at old age?
  4. Can they borrow easily for their business, personal needs – housing, transport, education, emergency, etc.?
  5. Do they have access to basic insurance: life, health and general insurance for their business?
  6. Can they transfer funds economically and easily for their business and personal needs?

When we can tick all or most them off, there is financial inclusion which will transform their lives. I saw this happen with the 200 million middle class in India, 1985-2000.
Samit Ghosh is the CEO of Ujjivan, a leading Indian microfinance institution.
Image Credit: Flickr/Dainis Matisons
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