Role of Banking Sector in Rural Financial Inclusion through Micro Finance

Abstract: This study is done to analyse the role of the banking sector in Financial Inclusion in rural areas through Micro Finance. Through Micro Finance Banks provide finance to lower income groups or extremely poor people who cannot access banking services directly. Microfinance is an economic tool that promotes financial inclusion by giving small loans which help the lower income groups and poor households to increase income, come out of poverty, and in improving their standard of living. The main purpose of microfinance is to provide small finances to lower-income groups to start and operate small businesses. Microfinance is provided by Scheduled Commercial Banks (SCBs), Co-operative Banks, Non-Banking Financial Companies (NBFCs), and Micro Finance Institutions which are registered as NBFCs.   The objective of the study is to analyze the credit flows to MSMEs and to measure the progress of financial inclusion. A descriptive research design has been used for the study and the study is based on secondary data.

Keywords: Financial Inclusion, Commercial Banks, Low–Income group, Microfinance