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Addressing Financial Exclusion in France and India: A Review of Strategies and Institutions

Tara Nair, Addressing Financial Exclusion in France and India: A Review of Strategies and Institutions, FMSH-WP-2017-124, février 2017.

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Despite the significant differences with respect to coverage of bank accounts, India and France have experienced exclusion of large sections of the population from banking and financial services. While India has been trying to accelerate the pace of coverage of bank accounts through several initiatives, France has been fighting to bridge the gap between extensive coverage of bank accounts and limited access to banking services with the help of institutional arrangements within and outside the banking sector. In India the recent policies have opened up avenues for players like MFIs and technology-driven businesses to be part of the mainstream financial inclusion drive. The drive towards greater private participation in financial activities is visible in France too, despite the country’s rich history of solidarity based approaches to social inclusion and constitutional right granted to its citizens to hold bank accounts. The experience of France clearly shows that ensuring the right to have bank accounts by itself will not lead to inclusive banking or increased financial capability of individuals, especially, the economically vulnerable. Stability of income and security of livelihood are critical to achieving inclusion. Both India and France face the prospect of rise in livelihood insecurity of the working class in the face of economic restructuring. This has serious implications for the banking behaviour of the poorer sections of population, which cannot be addressed by sheer extension of coverage of modern banking facilities. Along with effective labour market strategies, social safety measures need to be strengthened to benefit those sections of population who are economically vulnerable and, hence, cannot negotiate the market for financial services to make benefits. Both countries also need national policy on financial inclusion integrating the roles of diverse institutional resources and operational models and clearly articulating the links between financial inclusion and inclusive social development.

The author

Tara Nair’s research mainly concerns policy and institutional issues in the areas of pro-poor financial services, rural innovation, women and development, and livelihoods. She has contributed to the discourse on Indian microfinance and financial inclusion since the late 1990s through research studies and policy critiques. Particularly, she has looked at the connections between the moral, social and economic aspects of the working of microfinance in India. She co-authored the Inclusive Finance India Report 2014 and has edited a volume of essays titled, Microfinance in India: Approaches, Outcomes and Challenges (Routledge India, 2015).

The text

A significant part of the background research for this paper was carried out during April-May 2016, when I was a visiting exchange scholar in France under the India-France Cultural Exchange Programme jointly administered by the Indian Council of Social Science Research (ICSSR), New Delhi and the Fondation Maison des Sciences de l’Homme (FMSH), Paris.


Malgré les différences importantes quant à la couverture des comptes bancaires, l’Inde et la France ont été victimes de l’exclusion de larges segments de la population des services bancaires et financiers. Alors que l’Inde tente d’accélérer le rythme de couverture des comptes bancaires par le biais de plusieurs initiatives, la France s’efforce de combler le fossé entre la couverture étendue des comptes bancaires et l’accès limité aux services bancaires grâce à des arrangements institutionnels au sein et en dehors du secteur bancaire. En Inde, les politiques récentes ont ouvert des voies aux acteurs de la microfinance et aux entreprises axées sur la technologie pour faire partie de la campagne d’intégration financière. La tendance à une plus grande participation du secteur privé aux activités financières est également visible en France, en dépit de la riche histoire des approches solidaires de l’inclusion sociale et du droit constitutionnel accordé à ses citoyens de détenir des comptes bancaires. L’expérience de la France montre clairement qu’assurer le droit d’avoir des comptes bancaires personnels ne conduira pas à un système bancaire inclusif ou à une capacité financière accrue des individus, en particulier des personnes économiquement vulnérables.

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