Impact of Financial Awareness on Financial Inclusion of Members of Self Help Groups: A Study in Tripura

Abstract

The banking sector saw major reforms as a step towards financial inclusion with the nationalization of banks to increase the outreach of state controlled formal financial system among the people particularly the rural and low income people. Inspite of expansion of bank branches a significant number of rural population still remains outside the formal banking system. Self help group bank linkage program started as a pilot project by NABARD in 1992 is another attempt to provide access to low cost financial services to the members of the self help groups. Considering awareness of financial product as a significant factor for taking financial decision leading to use of financial services, this paper explores the relationship between financial awareness and its impact on financial inclusion. Primary data were collected through a structured questionnaire from 384 members belonging from 78 self help groups registered in the state of Tripura under the flagship program run by National Rural Livelihood Mission. The paper is divided into three parts; in the first part it deals with the identification of level of financial inclusion and the second part identifies the level of financial awareness. The third part explains the impact of financial awareness on the level of financial inclusion. The study reveals that financial awareness is an significant factor affecting financial inclusion of the sample members. The self help group members having high level of financial awareness are more financially included in the formal banking system with the high use of variuos banking and financial products that are available at their disposal. The study also emphasis on conducting of financial literacy camps to enhance the decision making ability of the members giving them oppurtunity to use formal financial services and reduce their dependence on informal source.