Q.Why does financial inclusion matter? Discuss its importance.

Two independent answers below — key objectives of financial inclusion, OR the microeconomic trends of financial inclusion specifically in Manipur.

Part 1 — Four key objectives of financial inclusion:

1. Universal access to formal financial services: To ensure that every individual and household, especially in rural, remote, and low-income sections, has access to basic banking services — savings accounts, credit, insurance, and payment/remittance facilities — at an affordable cost.

2. Promoting savings habit and capital formation: To encourage even small and irregular savers to deposit their surplus funds in formal institutions (rather than keeping idle cash), which in turn mobilises these small savings into a pool of capital available for productive investment in the economy.

3. Providing affordable credit and reducing dependence on informal sources: To free poor and vulnerable households from dependence on exploitative informal lenders/moneylenders who charge very high interest rates, by giving them access to timely, adequate, and low-cost credit from banks and microfinance institutions.

4. Inclusive and sustainable economic growth: To reduce poverty and income inequality by bringing financially excluded sections into the economic mainstream, enabling them to participate in and benefit from overall economic growth, and improving their resilience to financial shocks.

OR

Part 2 — Microeconomic trends of financial inclusion in Manipur:

At the household/individual (microeconomic) level, financial inclusion in Manipur shows several notable trends: a steady rise in Self Help Groups (SHGs), largely led by rural women, that mobilise small savings and provide access to credit for micro-enterprises; growing enrolment under schemes like the Pradhan Mantri Jan Dhan Yojana, expanding the number of households with at least one bank account; increasing use of Business Correspondents, ATMs, and mobile/digital banking to reach households in hill districts where traditional bank branches are sparse due to difficult terrain and connectivity; and a gradual improvement in financial literacy, encouraging households to use formal savings and credit rather than informal sources. However, the hill districts still lag behind the valley districts in terms of branch density and digital infrastructure, so financial inclusion remains uneven across the state at the household level, even as the overall trend is one of steady improvement.