Financial Inclusion drive initiated by the government would bring in 80% of households into formal banking network in the next 5 years from the existing level of 47%.
Consequently, the financial service providers would be able to capitalise on this untapped profit opportunity, a study conducted by CII in consultation with Boston Consultancy Group said.
"It is expected that formal financial penetration will increase from the current 47% to 80% in five years. The financial service providers would be able to unlock a hitherto untapped profit opportunity of Rs 3,500 crore per annum by the fifth year," it said.
The current level of financial inclusion at 47% of the total households is an improvement over the statistic of 35% five years ago.
It expressed concern that more than half of Indian households do not have access to products like remittances, savings and credit.
The report said historically, banks have attempted efforts to build an efficient and low–cost distribution network to serve the marginal customers.
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The introduction of Business Correspondents (BCs) for the purpose have improved economics but are still not sufficient, it added.
Finance Minister Pranab Mukherjee in his Budget speech last month said: "I had advised banks to provide banking facilities to habitations having a population of over 2000 by March, 2012. The banks have identified about 73,000 such habitations for providing banking facilities using appropriate technologies."
During this year, banks will cover 20,000 villages, he said adding the remaining will be covered during 2011-12.
With the inclusion of vast population into formal banking system, the government would be able to reduce leakages and corruption in the delivery of payments, it said.
India as a nation would benefit immensely due to multiplier effects on the income of the ‘included’ families, the report added.
The report opined that financial inclusion is poised to happen, not because it is politically correct, but because it will soon be economically correct as well. It is a question of how all the stakeholders can come together and make this happen sooner rather than later.