Fig. 5 demonstrates the credit deposit ratio during the period of seven financial years which is started from 2007–2008 to 2013–2014. The remarkable growth has been observed in the year 2011–2012 and maximum declined recorded in 2008–2009. Credit deposit ratio is slightly fell in during the years 2012–2013 and 2013–2014.Fig.
5. Credit deposit ratio.Major findings:Table 5 illustrates the results of regression analysis for GDP and Financial inclusion indicators. A result of multiple regressions reveals that the beta value of Number of bank branches is 107.9 which show a positive impact on GDP. The p value is .
001 which is less than .05 at 5% level of significance, which indicates that there is a statistically significant impact on GDP. It further reveals that the beta value of ATM growth is ?11046.3 and p value is .570 which shows negative insignificant impact on GDP, as the p value is more than .
05. Moreover, Credit deposit ratio shows 221986.5 beta value which shows positive impact on dependent variable. The p value of Credit deposit ratio is .027 lesser than .05, which indicates a significant impact on GDP. As a rule of thumb if the VIF values more than 10 are not acceptable and shows a sign of multicollinearity.I.
ConclusionIn developing economies like India, the banks work as mobilizes of savings and allocators of credit for production and investment, have a very critical role. As a financial intermediary, the banks contribute to the economic growth of the country by identifying the entrepreneurs with the best chances of successfully initiating new commercial activities and allocating credit to them. Reserve bank of India (RBI) and government plays an important role in promoting financial inclusion for economic growth to increase the banking penetration, installation of new ATMs and implementation of various schemes in the country. The Reserve Bank has used FIPs to gauge the performance of banks under their financial inclusion initiatives. During the first phase of FIPs 2010–2013 a large number of bank accounts have been opened. The new FIP is now more focused on the volume of transactions which plays an important role in growth and development of India. The present study found the positive significant impact of number of bank branches and credit deposit ratio of banks on GDP of the country.
Whereas one indicator of financial inclusion, ATMs growth rate has been shown a statistical insignificant impact on Indian GDP. Hence, the study observed that financial inclusion is strongly associated with the progress and development of the economy. In spite of this there should be a need for proper financial inclusion regulation in the country to access financial services and customer awareness E-banking training and financial literacy programs should be organized. Thus, financial inclusion is a big road which India needs to travel to make it completely successful.
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VargheseRole of Financial Inclusion in the Development of Indian EconomyJournal of Economics and Sustainable Development.• Rangarajan, 2008C. RangarajanReport of the Committee on Financial InclusionMinistry of Finance, Government of India (2008).• Ravikumar, T. (n.d.). Assessing role of banking sector in financial inclusion process in India.
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The study also covered the Automatic Teller Machines (ATMs) in India as an indicator of financial inclusion growth. The number of ATMs has continuously increasing from the financial year 2007–2008 to the financial year 2013–2014. Fig. 4 depicts growth rate of ATMs across the country and 40.38% maximum growth has been noticed during the year 2013–2014. Minimum growth has been observed in 2012–2013 and it is dropped from 28.
43% to 19.5%.Fig. 3 shows the trend of number of functioning branches of Scheduled Commercial Banks (SCBs) in the country. It is clear from the graph that bank branches showing an increasing trend over the period of seven year. There were 61,132 bank branches in 2007–2008 that has been increased up to 117,200 in 2013–2014.
The highest growth (31.2%) has been marked during the year 2008–2009 and lowest growth (4.1%) recorded in the year 2012–2013 in number of bank branches across the countryData analysisGDP is an important economic indicator to find out the growth of a country and it is widely used by researchers (Chithra & Selvam, 2013; Kamboj, 2014). Fig.
2 illustrates Gross Domestic Product (GDP) of India during a period of seven years starting from the financial year 2008–2009 to the financial year 2013–2014. GDP has been on continuous increase during these financial years. In 2008–2009 GDP recorded 4582,086, it was noted at a level of 5303,567 in financial year 2009–10 (an increase of 15.75% from the previous financial year). GDP shows 18.7% growth in the year 2010–2011, which is the highest growth over the period of time (Table3)