Cost Issues in Inclusive Finance - Min B. Shrestha, Ph.D. Abstract

The Alliance for Financial Inclusion issued the Maya Declaration in September 2011, which recognizes the critical importance of financial inclusion for empowering and transforming the lives of people all over the world. [...] This shows the difference in the preference of the financial instruments in South Asia and Sub-Saharan Africa. [...] Following are some of the potential measures which can help in reducing the cost of financial services: (i) Design new inclusive finance measures making the cost equitable as far as possible and implement them effectively: One way for this is to develop such a model in which each institution or unit of the institution can provide full range of financial services such as payments and transfer/remit. [...] (ii) Introduce initiatives to reduce the cost of inclusive financial services extended under the existing modality: Initially, availability of financial service was the focus of the financial access and inclusion policies. [...] Reducing the price of debt by restricting the interest rate is in the same category as reducing the price of food grains, ensuring a basic minimum of labor opportunities and enhancing the cash inflow of the poor (ADB, 2006).