A Study on Regional Disparity of Bank Performance towards Financial Inclusion

Abstract

Financial inclusion plays an important role towards development of the nation. Over the years, from regional levels to World Banks all are taking initiatives to bring the unbanked population into banking net to fulfill the target of financial inclusion. In regular intervals, regulators are giving direction to banks and financial institutions toward expansion of banking services. As per the global statistics and national level data, a large percentage of the population still excluded from banking services. In this situation the present study looks into the regional disparity in financial inclusion, assessing bank performance across regions in regard to the expansion of banking coverage. The researchers apply ANOVA test with variables of bank branch penetration, deposit penetration and credit penetration to investigate disparity between regions. The research also measures the trend of growth of the selected variables by using trend equation. The period of study is 6 years from 2012–2013 to 2017–2018. The empirical results find that there is a regional disparity between regions and banks are not performing equally in all the regions in India. Among the regions, north-eastern region followed by northern region is far away in achieving expansion of banking services. The results also find higher growth trend in north-eastern region due to low banking penetration. In India bank-led model for financial inclusion has been emphasized. Hence, expansion of bank branch is essential for long-term sustainability of banking business and to reach a large number of excluded people with banking services.