Volume 6 • Issue 4 • 1000235 Arabian J Bus Manag Review ISSN: 2223-5833 AJBMR an open access journal Research Article Open Access Arabian Journal of Business and Management Review A r a b i a n J o u r n a l o f B u s i n e s s a n d M a n a g e m e n t R e v i e w ISSN: 2223-5833 Bhuvana and Vasantha, Arabian J Bus Manag Review 2016, 6:4 http://dx.doi.org/10.4172/2223-5833.1000235 Keywords: Banking Services; Financial inclusion; Factors; Rural people; Innovative delivery channels Introduction In India Dr. K.C. Chakrabarty, Deputy Governor of Reserve bank of India in October 2011 deined inancial inclusion as a process of providing access to the inancial services and products for the most vulnerable groups such as people from low income and weaker sections in the society at a very low afordable cost in a proper and transparent way by the recognized institutional participants. He also deines the basic necessities and expectations of the excluded members of the inancial system such as safety and security of deposits, less transaction costs, less paper work, recurring deposits, easy access of credits, remittances it to their income and expenditures. According to the global snapshot report 2014, India has a very low access to inancial products or services and the level of informal borrowing between members of family, friends and employees are quite high, whereas the formal credit is inadequate when compared to other countries in the study. According to World Bank Global Findex Database 2014, from Figure 1 it can be seen that India has 21% of adults are unbanked and the adults who possess inancial services from the formal inancial institution were only 53%. Financial exclusion is nothing but excluding low income and poor people to get an access of inancial products and services from the traditional inancial institutions. Objectives 1. To analyze various factors that determines inancial inclusion in rural areas. 2. To study the various innovative delivery channels used to reach out rural areas. 3. To develop a conceptual model to ind out the factors that drives inancial inclusion. Factors determining inancial inclusion in rural areas Global Findex Report 2014 has analyzed the self-reported barriers for accessing account in inancial institutions they are listed below: • Religious reasons • Lack of trust • Cannot get an account • Lack of necessary documentation • Distance of inancial institutions • Expensive accounts • Family members already has an account • Do not need an account • Not enough money From Figure 2 as per the report it was analyzed that 59% of adults were identiied without an account and the most common reason is lack of money. Priya Naik [1] states that the ecosystem of inancial system consists of many participants namely the government, Banks, Microinance institutions, nonbanking inancial institutions, Non- governmental organizsations (NGOs) and Technology Venders. Financial Inclusion has to be viewed through the lens of two side barriers namely supply side barriers and demand side barriers. Supply side barriers are inappropriate products, Complicated Processes, Insuicient Reach and Access. he demand side barriers are inancial literacy, Socio – Cultural Factors and Unfriendly interface. Varun Kesavan [2] analyzed the factors that are afecting access to inancial services they are psychological and cultural barriers, legal identity, income level, terms and conditions, procedural formalities, limited literacy, place of living, social security payments, Occupation types and product attractiveness. Dr. Anurag B. Singh et al. [3] listed that gender issues, legal identity, limited literacy, place of living, bank charges, income and occupation are the factors that afect the access to inancial services. Indira Iyer [4] analyzed that the policy and infrastructure are supply side barriers whereas inancial capability, trust, lack of knowledge distance are said to be the demand side factors that determines the use of inancial services. *Corresponding author: M Bhuvana, School of Management Studies, Vels University, Chennai, India, Tel: 9790766095; E-mail: bhuvi.tejal@gmail.com Received April 20, 2016; Accepted April 28, 2016; Published May 05, 2016 Citation: Bhuvana M, Vasantha S (2016) Drivers of Financial Inclusion to Reach Out Poor. Arabian J Bus Manag Review 6: 235. doi:10.4172/2223-5833.1000235 Copyright: © 2016 Bhuvana M, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Drivers of Financial Inclusion to Reach Out Poor M.Bhuvana* and Dr. S.Vasantha School of Management Studies, Vels University, Chennai, India Abstract Financial inclusion is deined as an activity of facilitating banking as well as inancial services to the low income group people and people from most vulnerable group in the society. The successful achievement of inancial inclusion can be done by the most effective and transparent inancial services. In India, government has taken several initiatives to foster inancial inclusion. Financial Institutions like banks has shown an immense increase in its extent to provide their banking services to the people from the unreached and excluded sections in the society. But World Bank Global Findex Database 2014 has highlighted that, in India 21% of adults are unbanked and only 53% of adult population possess inancial services from a formal inancial institutions. This paper identiies that inancial literacy, high cost, technology, trust, income level, distance and inappropriate products are the factors that determine the inancial inclusion in rural areas. This study discusses about the various innovative delivery channels used to reach the rural people and a conceptual model is developed to ind out the factors that drives the inancial inclusion.