Financial Inclusion in Rural Indian Punjab: Evidence from Fields

This report examines the state of financial inclusion in rural areas of Punjab, India. It stresses the importance of financial inclusion to achieve stable financial, economic, political and social growth. It highlights the need for service providers to consider potential customers behavioral and motivational attributes in order to develop a successful financial inclusion strategy.

A key finding of the report is that even savings accounts have low penetration amongst the lowest income households. Further, financial inclusion will be incomplete if it is measured only in terms of new accounts being opened and operated. Infrequent, but quantitatively significant expenditures like ceremonies and medical costs are important considerations. A financial inclusion strategy should be viewed in terms of the business opportunity that it offers and not as a deliverable that has been imposed on the service provider. The report recommends developing appropriate and effective technology to accelerate financial inclusion. It recommends that banks:

• Perfect their delivery and business models;
• Open brick and mortar branches in unbanked villages;
• Adequately compensate business correspondents;
• Provide a minimum of four basic products;
• Design new products tailored to poor borrowers' needs.