Financial exclusion is the unavailability of banking services to people living in poverty

Poverty

Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...

. It is believed to be one factor preventing poor people from exiting poverty, by forcing them to manage their finances on a cash

Cash

In common language cash refers to money in the physical form of currency, such as banknotes and coins.In bookkeeping and finance, cash refers to current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately...

-only basis and restricting their access to equitable sources of credit

Credit (finance)

Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...

.

Financial exclusion can make poor people vulnerable to loan shark

Loan shark

A loan shark is a person or body that offers unsecured loans at illegally high interest rates to individuals, often enforcing repayment by blackmail or threats of violence....

s. Microfinance

Microfinance

Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....

is an approach used to reduce financial exclusion.

External links

• http://www.npi.org.uk/projects/financial%20exclusion.htm
• FinancialInclusion Taskforce
• http://www.jrf.org.uk/publications/understanding-and-combating-financial-exclusion