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Question

Direction- (18 -20):-   Read the following information to answer the questions below: Financial inclusion is a method of offering banking and financial services to individuals. It aims to include everybody in society by giving them basic financial services regardless of their income or savings. It focuses on providing financial solutions to the economically underprivileged. The term is broadly used to describe the provision of savings and loan services to the poor in an inexpensive and easy-to-use form. It aims to ensure that the poor and marginalised make the best use of their money and attain financial education. With advances in financial technology and digital transactions, more and more startups are now making financial inclusion simpler to achieve.

Financial inclusion is a crucial aspect of promoting economic growth and reducing poverty. Which of the following strategies are commonly used to enhance financial inclusion?

                       

1) Implementing mobile banking and digital payment solutions.

2) Expanding the reach of physical bank branches in urban areas.

3) Providing financial literacy and education programs to underserved populations.

4) Offering microfinance services to support small businesses and entrepreneurs.

5) Requiring high minimum deposit amounts for opening bank accounts.

 

Choose the correct answer.

A 1, 2, and 4 only Correct Answer Incorrect Answer
B 1, 3, and 5 only Correct Answer Incorrect Answer
C 1, 3, and 4 only Correct Answer Incorrect Answer
D 2 and 5 only Correct Answer Incorrect Answer
E 1, 3, 4, and 5 only Correct Answer Incorrect Answer

Solution

Financial inclusion strategies aim to provide access to financial services and products to underserved and marginalized populations. Let's examine each statement:   1.    Implementing mobile banking and digital payment solutions: This statement is true. The expansion of mobile banking and digital payment solutions has been a significant driver of financial inclusion. These technologies enable individuals to access financial services, such as banking, payments, savings, and remittances, through their mobile phones or other digital devices, overcoming geographical barriers and the need for physical bank branches. 2.    Expanding the reach of physical bank branches in urban areas: This statement is incorrect. While physical bank branches play a role in financial inclusion, expanding their reach in urban areas alone does not effectively address the needs of underserved populations. Financial inclusion strategies often focus on reaching remote and rural areas where access to banking services is limited. 3.    Providing financial literacy and education programs to underserved populations: This statement is true. Financial literacy and education programs play a crucial role in enhancing financial inclusion. By providing individuals with knowledge and skills related to financial management, savings, budgeting, and understanding financial products and services, they empower people to make informed financial decisions and utilize financial services effectively. 4.    Offering microfinance services to support small businesses and entrepreneurs: This statement is true. Microfinance services, which include microloans, micro savings, and microinsurance, are instrumental in promoting financial inclusion. These services cater to the financial needs of small businesses and entrepreneurs who may not have access to traditional banking services due to lack of collateral or credit history. 5.    Requiring high minimum deposit amounts for opening bank accounts: This statement is incorrect. Requiring high minimum deposit amounts for opening bank accounts creates a barrier to financial inclusion. Financial inclusion strategies often focus on reducing or eliminating such barriers by promoting low-cost or no-frills accounts with minimal requirements.   Therefore, implementing mobile banking and digital payment solutions (1), providing financial literacy and education programs (3), and offering microfinance services (4) are commonly used strategies to enhance financial inclusion, making option C the correct answer.

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