Financial Inclusion of Rural Households in Andhra Pradesh, India

Socio-economic development of rural households is directly linked with the extent of access and usage of financial services, since it equips the households with credit in times of emergency and also useful in upliftment of their status by investing in the productive purposes. Despite possessing bank account by all rural households under study, access and usage of the financial services was found to be very low. The present study was conducted during the year 2019-20 with an attempt to analyse the determinants of usage of banking services and constraints that would be responsible in availing the financial services by rural households in Andhra Pradesh and to suggest measures to improve the financial inclusion. A total of 410 rural households in Andhra Pradesh were selected using multistage sampling procedure. The data on the determinants of usage of banking services were tabulated, coded and analysed through logistic regression using SPSS version 20.0 software and responses collected on constraints of financial inclusion were analysed using Garrett Ranking Technique. Explanatory variables like occupation, education status, income level of the household and land holding were statistically significant and a one unit increase in these variables favours the odds ratio of a household usage of banking services. Among the constraints identified, financial illiteracy emerged as the top most constraint of accessing the financial services followed by the difficulty in getting a loan/emergency credit from the financial institutions. So, to improve the accessibility and usage of formal financial services, there is need to simplify the procedures of financial institutions and also the security norms have to be relaxed for the rural households. Financial literacy has to be increased by conducting periodical training programmes by the concerned banks in the area to strengthen the accessibility to financial services.