Social Banking in India, A Journey Well Traversed: An Empirical Study in its Interrelation among Selected Semi Urban, Urban, and Rural Areas in The State of Maharashtra

Abstract

Social Banking, an expression that gained prominence in India since the mid-2000, refers to the process of making the benefits of banking available to those sections excluded from them due to a variety of reasons. Connectivity to banking services is major factor impacting sustainable and inclusive growth. Banking sector needs to function with a social conscious apart from business point of view if the economy has to come out of poverty and inequalities. The Reserve Bank of India Deputy Governor "Dr. K. C. Chakrabarty" has defined Social Banking as the "Process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable groups such as weaker sections and low income groups in particular, at an affordable cost in a fair and transparent manner by regulated, mainstream institutional players". The principal objective of this paper is to test empirically whether financial knowledge level of any area, viz., semi urban, urban or rural, may be influenced by social banking of that area along with other demographic variables. A comprehensive questionnaire is designed to cover major aspects of financial knowledge and household financial planning for the purpose of collection of primary data relating to calculation of financial knowledge score. A total of 150 respondents, 42 from semi urban, urban and 108 rural areas could be finally reached from Nagpur and its two adjoining districts - Bhandara and Gondia. The mean financial knowledge of semi urban and urban respondents is found to be much lower than that of rural respondents. The CRISIL Inclusix score of the selected districts is taken as a measure of social banking. The findings of analysis show that Age, Occupation, Educational Background and Household Income are significant demographic factors influencing financial knowledge. Social Banking Index emphasizes on achieving a statistically significant relationship with financial knowledge. Principal Component Analysis results moreover support the same findings.