I have added another paper to my website on the need for financial inclusion and it focuses on India. The paper puts forth a couple of ideas:
Use behavioral economics/finance,
Address social issues
Real-sector inclusion is as important
I have written a lot about behavioral finance and even pointed a paper which looks at using BF to enhance financial inclusion.
As far as the other two points are concerned, I found some material which confirms my belief.
This speech from Prof Yunus shows how Grameen Bank addressed various social issues. He shows how he convinced more women to take micro-credit in what was otherwise a male dominated bastion. Without addressing these issues, this revolution would not have succeeded. As we see very similar conditions in India, we need to understand these issues in detail.
I came across this article from James Surowiecki where he says just providing finance is not enough. If we provide microfinance we expect them to open some small business from the finance. As not all people are entrepreneurs and most actually work for someone else, the problem doesn’t end.
The author goes a step further and advocates the need to promote small and medium enterprises which will employ people.
In any successful economy most people aren’t entrepreneurs—they make a living by working for someone else. Just fourteen per cent of Americans, for instance, are running (or trying to run) their own business. That percentage is much higher in developing countries—in Peru, it’s almost forty per cent. That’s not because Peruvians are more entrepreneurial. It’s because they don’t have other options.
They need more small-to-medium-sized enterprises, the kind that are bigger than a fruit stand but smaller than a Fortune 1000 corporation. In high-income countries, these companies create more than sixty per cent of all jobs, but in the developing world they’re relatively rare.