A COMPARATIVE STUDY ON FINANCIAL INCLUSION OF SLUM DWELLERS IN TWO MAJOR METROPOLITAN CITIES IN INDIA: DELHI & MUMBAI

Abstract

In present scenario, exclusion of people from formal banking system is a major challenge faced by the policy makers towards achieving the goal of inclusive growth. Financial inclusion in this regard is widely emphasized for poverty reduction and economic growth by many nations. To increase the access and usage of formal banking services among people in India the government introduced various schemes and initiatives. Despite this greater emphasis a larger section of people is financially excluded in India (Census of India, 2011). Though, financial services access is adequate in urban areas in comparison to rural parts, yet usage of these services is seen low. A thorough review of literature revealed that studies related to financial inclusion are scanty in urban context. Therefore, taking cognizance of past studies this study proposed four objectives, firstly to explore factors affecting financial exclusion, secondly to study the determinant of financial inclusion, thirdly to expound factors affecting formal and informal borrowing and lastly to study the relationship between financial inclusion and financial remittance. This study was conducted in slums of two major metro cities in India i.e., Delhi and Mumbai. A multistage cluster sampling technique was used to collect the data. While, primary data was collected through face to face interviews conducted with the help of a questionnaire. In total, 450 individuals each in Delhi and Mumbai were selected for the sample. There exist many commonalities and difference in utilization of various financial services in these two cities. The study reveals range of socio-economic factors affecting the financial inclusion. Though, formal credit usage is seen low and mostly affected by factors like age and household expenditure. Further, it was found that no saving, lengthy bank process and high bank charges are likely to impact exclusion from banking services in both cities. Though, this study found no significant relationship between financial inclusion and financial remittance. The study has various policy implications to banks and the government in strategizing better policies for financial inclusion in urban areas in India.