Indian Journal of Science and Technology

Abstract

Background/Objectives: The Reserve Bank of India (RBI) has stated that financial inclusion is a process of delivering financial services at a reasonable cost to the people especially from the most down sided sections in the society. The financial services such as timely credit facilities and accessing financial products like small saving deposits reach the rural people easily by the formal financial institutions such as banking industries. Due to the non-availability of banking facilities, people from remote villages face several hindrances to meet their basic necessities. Therefore this paper has done an investigation to measure the level of financial inclusion with the three different dimensions such as Branch Penetration of Banking Industries, Deposit Penetration and Credit Penetration in the rural areas of all the districts in the state of Tamil Nadu. Methods/Statistical Analysis: Secondary data has been collected from various resources such as web sites of Reserve Bank of India (RBI), State Level Banker’s Committee (SLBC) Tamil Nadu, articles and Journals. The dimensions such as Branch Penetration, Credit Penetration and Deposit Penetration in the rural areas of all the districts in Tamil Nadu have been measured using the multidimensional approach to calculate the index of financial inclusion. Findings: Ariyalur District has achieved 64.79 IFI that is, the maximum score of financial inclusion in the rural areas by the year 2015. The district Perambalur has higher (>55) level of financial inclusion. The Districts Sivaganga, Nagapattinam and Pudukottai have above average (between 40.0 to 55) level of financial inclusion. The districts Tiruvarur, Karur, Krishnagiri, Ramanathapuram, Dharmapuri, Thanjavur, Cuddalore, Nammakal, Tuticorin and Villupuram have financial inclusion in rural areas with below average level. And the rest of the districts have very low level of financial inclusion. Application / Improvement: Many districts of Tamil Nadu have very low level of financial inclusion in the rural areas. The Government of India and concern authorities should consider those districts which are excluded from receiving financial services to revamp the status of financial inclusion
Keywords: Banks, Branch Penetration, Business Correspondents, Credit Penetration, Deposit Penetration, Financial Inclusion, Rural Areas in Tamil Nadu