A Study on the Challenges Faced by Customers in Financial Inclusion

This paper evaluates the current status of financial inclusion in India with a focus on the state of Kerala. It seeks to identify factors impeding the use of financial services by potential clients in the state. It provides recommendations to overcome these challenges in order to ensure effective financial inclusion. The paper also summarizes key initiatives taken by the Government and the Reserve Bank of India to step up financial inclusion in the country. The study is based on both primary and secondary data. The primary data was collected from interviews with 300 respondents from two districts of Kerala while the secondary data was collected from published and unpublished financial reports, papers, journals, and websites. Key challenges to financial inclusion highlighted in the paper include:

• Lack of enough money to save;
• Lack of financial literacy, awareness, and confidence required to approach a bank;
• Availability of local and informal sources of credit and savings;
• Lack of attractiveness of financial assets in comparison to other assets like gold or land;
• Non-availability of banking facility or ATMs in close vicinity;
• Cumbersome loan documentation process in banks;
• Lack of trust in new banking channels such as business correspondents.