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Write a Business Report on the Financial Services for the Poor?
Over 2 billion across the globe do not have access to formal financial services and around fifty percent of adults are unbanked in the disadvantaged households. Financial inclusion is considered as a significant enabler to reduce poverty and boost economic prosperity of the downtrodden. It means that people would gain inexpensive financial services to cater to their needs. It involves access to easy and fast financial transactions, making payments, savings, credit and insurances which are offered in an accountable and sustainable mode. The ease of financial access assists families to conduct their day-to-day living, and devise plans to achieve their long-term goals and meet unexpected emergencies. The overall quality of life is expected to increase as financial service receivers tend to invest in credit and insurance, engage in new business ventures, make investments in education and health management, risk mitigation and overcome financial losses. This report explains about the need for financial inclusion and the challenges faced while incorporating this strategy.
Since 2010, over 55 countries have committed to launch financial inclusion strategy as a part of their economic policies. It is observed that when countries launch such strategy, it tends to increase the speed and effect of reform programs. This has enabled a favorable regulatory and policy environment that encourages banks and financial institutions to expand their financial service offerings. However, the development of such a market is to be supported by relevant consumer protection measures to ensure responsible marketing of such financial services.
It is recommended that financial service providers adopt digital financial technology and leverage the spread of mobile usage to facilitate expanding their services to down-trodden communities. Some of the effective services that have proven to be beneficial for the poor include micro-financing, shelf-help group and bank linkage and business correspondent model.
Financial inclusion is an activity of facilitating financial services to the poor and vulnerable in the society (M.Bhuvana & S.Vasantha 2016). This can be achieved through effective and transparent financial service offerings. Financial Institutions like banks are showing enormous interests in providing their banking services to the poor people. In this report, the background of the financial service offerings available for the poor, the need for financial inclusion, drivers for financial inclusion of the poor are discussed. As various supply and demand side factors come into play, innovative formal financial services delivery models are recommended for the financial institutions to be adopted. It is concluded that the success of financial inclusion relies on the creation of awareness about service offerings and educating the poor about formal financial systems.