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An Evaluation of Factors Affecting the Usage of Financial Services in Punjab
This paper focuses on the usage of accounts to avail various financial services under the financial inclusion drive by the Government of India. It examines the factors affecting the use of financial services by 500 respondents from three districts of Punjab, namely Jalandhar, Gurdaspur, and Sangrur. It investigates financial services such as deposits, withdrawals, loans, remittances, and insurance. It applies logistic regression to understand the factors affecting the usage of these services. Education was the most significant of these factors, indicating the need for promoting financial literacy among the masses, especially those who are marginalised.
It is of paramount importance that we understand the extent to which people use their bank accounts as a result of financial inclusion initiatives as access does not always lead to usage. People have banking facilities within their reach, but they do not utilise them for one reason or another. As part of the Reserve Bank of India’s (RBI) financial inclusion drive, everyone has a basic bank account in Punjab. However, the actual success of financial inclusion initiatives is measured through the usage of bank accounts and other banking services.
Having a family bank account is the first step towards integrating with a formal financial framework. But it does not produce income in itself; rather, it could be considered, at best, an empowering factor. The significant angle here is analysing the purpose and frequency of the use of existing bank accounts. It is common knowledge that the vast majority of family units open bank accounts just to receive government transfers, such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) wages, self-help group advantages, or government credits.
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