ArticlePDF Available

Financial Inclusion and Usage Metrics of Financial Products and Services Among Slum Dwellers in Chennai City

Authors:

Abstract

This paper is a crucial review and examination onfinancial inclusion and usage metrics of financial products and services among slum dwellersin Chennai city. According to 2011 Censes of India, nearly 28.89% of people resides in slums of Chennai. In India Chennai ranks fourth in the list with 1.34 million slum dwellers. Mumbai stands in first place with 5.21 million slum dwellers followed by Hyderabad and Kolkata with 2.29 million and 1.41 million slum dwellers respectively. The financial inclusion initiatives of the Reserve Bank of India condense the national focus on financial inclusion, promoting financial education and literacy and making credit available to all segment of the society. Major initiatives taken by RBI in the context of financial inclusion and development are as follows: (i) Introduction of no-frills account (ii) Financial inclusion services through BC and BF models (iii) Enabling credit flow to priority sectors (iv) Conducting financial literacy programs (v) Credit delivery to SHGs, SC/ST community and Minority community (vi) Credit flow to agriculture (vii) Strengthening institutional arrangements. RBI noted that the schemes such as PMJDY have created the adequate banking infrastructure to enable financial inclusion, although efforts are required to improve access to insurance and pension services. The primary objective of this study is to test the impact of financial inclusion and to check the usage metrics of financial products and services among slum dwellers of Chennai city. The study Mathematical Statistician and Engineering Applications made use of convenient sampling technique. The major platform for analysis is excel spreadsheet and SPSS statistical software.
Mathematical Statistician and Engineering Applications
ISSN: 2326-9865
1547
Vol. 71 No. 3 (2022)
http://philstat.org.ph
Financial Inclusion and Usage Metrics of Financial Products and
Services Among Slum Dwellers in Chennai City
1 Violet Glady. P, Asst. Professor
Department of Commerce, Stella Maris College, Chennai 86.
2 Cimna Sunny. M, Asst. Professor
Department of Commerce, Stella Maris College, Chennai 86.
3 Mofika. SA, Asst. Professor
Department of Commerce, Stella Maris College, Chennai 86.
Article Info
Page Number: 1547 - 1554
Publication Issue:
Vol 71 No. 3 (2022)
Article History
Article Received: 12 January 2022
Revised: 25 February 2022
Accepted: 20 April 2022
Publication: 09 June 2022
Abstract
This paper is a crucial review and examination onfinancial inclusion and usage
metrics of financial products and services among slum dwellersin Chennai city.
According to 2011 Censes of India, nearly 28.89% of people resides in slums of
Chennai. In India Chennai ranks fourth in the list with 1.34 million slum dwellers.
Mumbai stands in first place with 5.21 million slum dwellers followed by
Hyderabad and Kolkata with 2.29 million and 1.41 million slum dwellers
respectively. The financial inclusion initiatives of the Reserve Bank of India
condense the national focus on financial inclusion, promoting financial education
and literacy and making credit available to all segment of the society. Major
initiatives taken by RBI in the context of financial inclusion and development are
as follows: (i) Introduction of no-frills account (ii) Financial inclusion services
through BC and BF models (iii) Enabling credit flow to priority sectors (iv)
Conducting financial literacy programs (v) Credit delivery to SHGs, SC/ST
community and Minority community (vi) Credit flow to agriculture (vii)
Strengthening institutional arrangements.
RBI noted that the schemes such as PMJDY have created the adequate banking
infrastructure to enable financial inclusion, although efforts are required to
improve access to insurance and pension services. The primary objective of this
study is to test the impact of financial inclusion and to check the usage metrics of
financial products and services among slum dwellers of Chennai city. The study
Mathematical Statistician and Engineering Applications
ISSN: 2326-9865
1548
Vol. 71 No. 3 (2022)
http://philstat.org.ph
made use of convenient sampling technique. The major platform for analysis is
excel spreadsheet and SPSS statistical software.
Key Words: Metrics, Financial Products, Financial Services and RBI Initiatives.
INTRODUCTION
Financial Inclusion is a predominant step towards inclusive growth. In a developing country like
India, the overall economic development of the country is dependent upon uplifting the
underprivileged population by providing them with modified financial products and thereby
bringing the disadvantaged under the scope of financial inclusion. Financial literacy is
considered as the significant tool for ensuring financial inclusion. To have knowledge on
personal finance which indeed helps in choosing the appropriate financial choices and to
participate in economic life. A financially sound person understands the importance and usage of
the financial products to meet his financial goal.
The Organisation for economic co-operation and development (OCED) have established a
correlation between financial literacy and financial inclusion. It is said that financial education
encourages to take up formal financial products and to come under the ambit of the regulated
financial system. On a further note it suggests that consumer protection regulation is also needed
to gain the trust of the people to prevent them from losing money and also to make the financial
products available at the reasonable price. Thus, to summarize it is found that creating awareness
on financial system, educating consumer rights and consumer protection in a structured financial
system.
Financial inclusion is inevitable for sustainable growth and development of the nation. World
Bank have stated that “financial inclusion is the key enabler to reducing poverty and boosting
prosperity”. Financial inclusion enforces the access of financial products and services at
affordable cost to meet the people needs such as payment, savings, credit, transaction and
insurance. The concept of inclusion is highly needed for deprived segment of the society like
marginal and small farmers, fisher men’s, rural household women’s and unban slum dwellers.
The future growth and development of Rural India is dependent on people knowledge towards
the access of financial products and services. This study concentrates on factors restricting
Mathematical Statistician and Engineering Applications
ISSN: 2326-9865
1549
Vol. 71 No. 3 (2022)
http://philstat.org.ph
financial inclusion in Chennai slum and the means to overcome the constraints. Chennai with
metropolitan population of 86,53,521 of which 11,55,025 slum dwellers in and around all part of
Chennai. According to the survey conducted by Tamil Nadu Slum Clearance Board the highest
slum dwellers is recorded in Thiruvottriyur with 142 slums and 32,592 households, followed by
Thondiarpet, Thiru-vi-ka-nagar, Adyar etc., the highest slum dwellers are recorded in North
region of Chennai. 53% of the slum population with the monthly income below Rs.5,000. Taking
the data into record the study highly concentrates on means and ways to bring this deprived
segment of the society under the ambit of access to formal finance.
Slum dwellers are increasing day by day and year by year due to migration and unemployment.
The financial knowledge of slum people is also restricted due to lack of awareness and high
illiteracy rate. Financial awareness needed to be created among people in order to avoid future
uncertainties. Slum areas are prone to fire accidents, casual accidents, water stagnation,
sanitation problems and health hazards. In order minimize these uncertainties insurances
coverages should be adopted by slum dwellers.
Need of the Study
1. The main motive of the study is to measure the usage metrics and awareness of financial
products and services among slum dwellers of Chennai city.
2. The study facilitated the need to anticipate the usage of financial product and services is
dependent on their income.
3. The study anticipated the source of knowledge and information about financial product
and services are media, social groups, NGO’s, Bank and Financial intermediaries.
4. The study establishes the usage of financial product and services based on gender
category.
REVIEW OF LITRATURE
1. In 2008, Sriram and Sundaram conducted a study in rural areas of Vellore district of Tamil
Nadu to identify and analyze various determinants of financial inclusion. The researchers also
identified thereasons for lower number of bank accounts by collecting data from 20 village
blocks of Vellore. By using index of financial inclusion and percentage analysis, it was found out
Mathematical Statistician and Engineering Applications
ISSN: 2326-9865
1550
Vol. 71 No. 3 (2022)
http://philstat.org.ph
that financial inclusion was at mid-range of 0.55 for Vellore. The major reasons for lack of
financial access were identified as unemployment, lower literacy levels and lower income levels
(Sundaram and Sriram, 2008)
2. Chattopadhyay (2011) has developed the financial inclusion index for the major states in
India and for all the districts in West Bengal. They have considered number of rural outlets,
number of accounts per outlets, per outlet deposit amount, per outlet credit amount as indicator
of financial inclusion in India
3. Purvi Shah and MedhaDubhashi (2015) has tried to study the role of financial inclusion as a
means of inclusive growth. They found that only 41 per cent adults have a formal account, with
only 37 percent of women having formal account against 46 per cent of men; the gender gap
widens further because of varying degrees of income inequalities observed among the
developing countries.
4. Roy (2012) studied the summarized the financial inclusion in India. The study concluded that
banks have set up their branches in the rural segment of the country. Rules and regulations have
been simplified. The study also insists that banking sector has shown tremendous growth in
volume during last few decades.
Objective of the Study
1. To test the reasons for having bank account by the slum dwellers in Chennai.
2. To determine the source that provided information about the financial product and
services.
3. To establish the relationship mapping between the income and usage of financial product
and services.
4. To study the usage of financial product and services among male and female population
in slum area of Chennai.
RESEARCH METHODOLOGY
The study focuses on Financial Inclusion and Usage Metrics of Financial Products and Services
Among Slum Dwellers in Chennai City”. The primary data applied for this research is obtained
Mathematical Statistician and Engineering Applications
ISSN: 2326-9865
1551
Vol. 71 No. 3 (2022)
http://philstat.org.ph
from people residing in slum area of Chennai. Structured questionnaire is prepared to collect
response from the slum dwellers. The samples are tested using SPSS software.
The methods used to establish the test and output is:
1. One Variable, Chi-Square test:one variable chi-square test is used to test two or more
variables and similar to binomial test. In this study, source of knowledge about financial
information ad services is been test to arrive at conclusion whether the square of observed less
expected frequency is equal or not equal to zero.
2. Kolmogorov-Smirnov Z test: It is a test used to check the normality of the samples. In
this study, the reason for having bank account among sample is been tested whether the samples
are normally distributed.
3. Relationship Mapping: The study has recorded the relationship mapping of usage of
financial product and services among various income category people. The following mapping
diagram have relationship and category counts. The circle size and thickness of the line emphasis
on the relationship between the variables under different category.
4. Chi-square test of independence of categorical variable: Test of independence is used
to test two different categorical variables. Here in this study male and female samples usage
metric of financial product and services is been test to measure the association between two
categories.
ANALYSIS
Table 1: Reason for having bank account
H0: the data are normally distributed
Ha: the data are not normally distributed
To receive
Govt.
payments
from
NREGP
To receive
Govt.
payments
from
schemes
other than
NREGP
For
receiving
remittances
For
saving
money
N
100
100
100
100
Mathematical Statistician and Engineering Applications
ISSN: 2326-9865
1552
Vol. 71 No. 3 (2022)
http://philstat.org.ph
Mean
2.04
2.86
2.89
2.68
Std. Deviation
1.044
1.504
1.569
1.171
Most Extreme
Differences
Absolute
.295
.186
.195
.178
Positive
.295
.186
.195
.172
Negative
-.165
-.186
-.171
-.178
Kolmogorov Smirnov Z
2.953
1.862
1.947
1.777
Asymp. Sig. (2-tailed)
.000**
.002**
.001**
.004**
The Kolmogorov Smirnov test depicts the test statistics that is used to test the normality. Here
we notice that the Kolmogorov Smirnov test takes the statistic value of 2.953, 1.862, 1.947,
1.777 and 2.142 respectively. Here we see P-Value provided by SPSS is .000, .002, .001, .004
and .000.It is clear that the P value fall in the range of 0.000 to 0.010 and it is highly significant
and here we reject the null hypothesis that the variable follows a normal distribution.
Table 2: Source of information about financial product and services:
H0: ⅀ (O-E)2= 0
Ha: (O-E)2 ≠ 0
Media
Financial
Advisor
Family/
Friends
Bank
NGOs
Chi
Square
43.040
32.160
47.7000
22.100
19.300
Df.
3
3
4
4
4
Asymp. Sig.
.000**
.000**
.000**
.000**
.001**
From the above study it is established that the p values are .000 for the variables Media,
Financial Advisor, Social Groups (Family/friends) and Bank. Another variable NGOs with .001
as p value. In all the case the test is significant at 1% level. Here the test is highly significant.
Hence reject the null hypothesis at 1% level of significance. Thus, the observed less expected
frequency square is not equal zero.
Mathematical Statistician and Engineering Applications
ISSN: 2326-9865
1553
Vol. 71 No. 3 (2022)
http://philstat.org.ph
Fig 1: Relationship mapping of Samples Income per month and usage of financial product
and services.
It is clear from the network that large circle “I don’t use any financial Product” falls
under the category count of 50-60.
The medium size circle “Debit card” falls under the category count of 40-50.
The small circle on “insurance” falls under the category count of 30-40.
Majority of the daily wage’s samples, income category of <Rs.2,000, Rs.2,000 5,000
and 5,000 10,000 falls under the network of “I don’t use any financial products”.
The thin blue line represents very limited respondent from all income category use debit
card and insurance.
Table 3: Chi-Square test for association between gender and access financial product and
services
H0: There is no association between gender and access financial product and Services
Ha: There is association between gender and access financial product and Services
Formal Financial Services
and Products
Gender
Total
Chi Square
value
P Value
Male
Female
I don’t use any Financial
Products
25.5
26.5
52
3.411a
.182
Insurance
8.3
8.7
17
Mathematical Statistician and Engineering Applications
ISSN: 2326-9865
1554
Vol. 71 No. 3 (2022)
http://philstat.org.ph
Debit Card
15.2
15.8
31
Total
49
51
100
Since P value is greater than 0.05. Hence the null hypothesis is accepted @ 5% level of
significance. Therefore, there is no association between the gender and access to financial
product and services. The score for female sample is more for use of debit card and insurance
with 15.8 and 8.7 respectively.
CONCLUSION:
Financial inclusion is an inevitable concept to cover the deprived segment of the society under
the access of formal finance. The study has established that the slum dwellers and mostly daily
wages labours and the usage of financial services and products are very limited. Income of
samples ranges from Rs. 2,000 Rs. 10,000 per month which makes the survival very difficult
for slum dwellers. But it is recorded from the study that most of the people have account in bank
but savings habit is very less. In order to avail government benefits account have been opened by
the people of slums in Chennai. The study has established the association between gender and
their usage metric of financial product and services. The result states that there exist no
association between the usage and gender category. Hence it is clear that the usage metric of
financial product and services among slum dwellers is very much restricted due to following
reasons such as lack of knowledge, less intervention of banking correspondence and less or null
income.
REFERENCE:
1. Chattopadhyay S. K (2011), “Financial Inclusion in India: A Case-study of West Bengal”,
RBI Working Paper Series, W P S (DEPR): 8 / 2011.
2. Rangarajan C. (2008), Report of the Committee on Financial Inclusion, p-2, 34-35 &amp;
77.
3. Sriram, M. &amp; N, S. (2016). Financial inclusion in India: A review, International Journal
of Applied Engineering Research, 11(3):15751578.
4. Shah, Purvi and MedhaDubhashi. “Review Paper on Financial Inclusion-The Means of Inclusive
Growth” Chanakya International Journal of Business Research 1, no.1 (2015): 37 – 48.
ResearchGate has not been able to resolve any citations for this publication.
Article
Full-text available
The study observes that although there has been an improvement in outreach activity in the banking sector, the achievement in respect of financial inclusion is not significant in West Bengal. An index of financial inclusion (IFI) has been developed in the study using data on three dimensions of financial inclusion. It is revealed from the index that Kolkata district leads with the highest value of IFI, while rest of the districts show a very low level of financial inclusion. This implies that the State has to go a long way in achieving financial inclusion. Apart from this computation, a survey has also been conducted in the state in order to gauge the financial inclusion in rural Bengal and the results reveal that around 38 per cent of the respondents do not have sufficient income to open a savings account in the bank. It is also revealed that moneylenders are still a dominant source of rural finance despite wide presence of banks in rural areas. It is also observed that although various measures have been undertaken for financial inclusion in the State, the success is not found to be significant. However, only supply side factor is not responsible for the financial exclusion. Demand side factors are also equally responsible for this exclusion. Thus there is a need to solve both these problems with the help of appropriate policies. A whole-hearted effort is called for from all the corners of the society, viz., bankers, beneficiaries and regulators in order to make financial inclusion more meaningful and effective.
Article
Financial inclusion plays a major role in inclusive growth of the country. It is estimated that globally over 2.5 billion people are excluded from access to financial services of which one third is in India. The origins of the current approach to financial inclusion can be traced to the United Nations initiatives, which broadly described the main goals of inclusive finance as access to a range of financial services including savings, credit, insurance, remittance and other banking / payment services to all 'bankable' households and enterprises at a reasonable cost. In India, financial inclusion first featured in 2005, when it was introduced by Dr. K.C. Chakrabarty, the Chairman of Indian Bank. Mangalam Village becomes the first village in India where all households were provided banking facilities. The availability of quality financial services in rural areas is extremely important for the growth of the economy as this will enable the large number of rural households to fund the growth of their livelihoods. The growth of the economy is dependent on the growth of the rural market in the country. Therefore greater financial inclusion in these segments is imperative. The main objective of this study is to review various papers on the how financial inclusion serves as a means of inclusive growth and to study the initiatives taken by Government and Reserve Bank of India for strengthening financial inclusion in the country. The study is based on secondary data collection. Reserve Bank of India's vision for 2020 is to open nearly 600 million new customers' accounts. The government should encourage the banks to adopt financial inclusion by means of financial assistance, financial literacy, advertisement, awareness program, etc. to achieve the aim of 11th plan of Inclusive Growth.