Access to Banking Services and Poverty Reduction:A State-wise Assessment in India

Financial inclusion is the broad based delivery of banking and other financial services ataffordable cost to the poorest sections of society. In India, financial inclusion emphasizes toinclude maximum number of people under formal financial systems. The most important partof financial services in a region is typically measured by number of people who have accessto bank accounts. The present study investigates the drive to financial inclusion in the form ofthe growth in bank accounts of scheduled commercial banks and the changes in belowpoverty line population. The result suggests that the growth in bank accounts is notsignificantly associated with the reduction in below poverty line population across states.Providing banking services to maximum number of people is unsuccessful as a povertyreduction strategy. As a poverty reduction strategy, developing inclusive financial systemsshould give priority, which is financially and socially sustainable....