Sam Gupta, Director & CEO, RBP Finivis Pvt Ltd

A graduate from Punjabi University and MBA finance, Sam also holds Exim diploma expertise in International trade finance and merchant banking. He has over 23 years of exposure in countries like Hong Kong, Singapore, Thailand, Malaysia and Dubai. It is his experience and exposure that helps him provide organisational leadership with his unique combination of technical acumen and business understanding. He always stays on the top of industry trends; deploys exciting & comprehensive tools; and can be heeded to for learning resources and updates on technological advancements.


Globally, financial inclusion is considered a critical indicator of overall development and well-being of a society.  By making financial services affordable for all individuals and businesses, regardless of the net worth, financial inclusion seeks to address and provide solutions to the roadblocks that prevent people from taking part in the financial sector. Research has shown that countries with greater levels of financial inclusion i.e., access to affordable and adequate financial services, have robust growth rates and less income inequality. 

According to government reports, in 2019, about 34.43 crore accounts were opened under Pradhan Mantri Jan Dhan Yojana (PMJDY). In absolute terms, this shows that India still has a huge unbanked population, which will possibly be targeted in forthcoming years. Though research and policy discussions have mainly focused on access to credit, the poor and marginalised require access to a whole range of financial services for managing their economic lives. 

Financial Inclusion in India – Current Scenario 

Financial inclusion in a big and a diverse country like India needs to be studied as a spectrum of multiple services, so as to encapsulate the various dimensions of the population they seek to service. 

Certain sections of the society – such as the poor, women, and rural populations – are excluded from employment opportunities, living and working within the informal economy.  These sections of people have the lowest access to formalised financial instruments, pushing them to rely on archaic mechanisms – friends, relatives, moneylenders, age-old savings schemes or money stored in the kitchen jar. These informal mechanisms are highly inefficient, unorganised and unreliable as well as very costly. 

Financial exclusion, thus, imposes a huge opportunity cost on those who suffer from it the maximum. When combined with information asymmetries and exorbitant transaction costs, the poor with no collateral or credit history all get stuck in a bad equilibrium without any escape route. 

Rapid implementation of Financial Inclusion Plans (FIPs) was witnessed post 2010-11. Commercial banks had set up new rural branches, ATMs and digital kiosks, greater coverage of villages, opened no-frills accounts and offered credit through KCCs and GCCs. The introduction and adoption of core banking mechanisms and proliferation by alternate delivery channels boosted the process of inclusion to a large extent. 

Steps Taken So Far

Numerous policy and financial regulatory measures have been adopted to make effective progress in terms of the financial inclusion indicators – account density, credit & deposit numbers or branch penetration. Landlines have been widely embraced as a low-cost means of communication and Aadhaar has been expanded as a unique biometric identifier. Even the public and private cell phone operators have expanded their reach and coverage in remote locations in the past few years. 

The self-help group movement in India has also immensely helped in bringing about a transformation in rural areas especially. Microfinance Institutions (MFIs) have further played an integral role in facilitating financial inclusion because they are in a unique position to reach out to the rural poor. Many operate in a limited geographical area, have a deeper understanding of the specific issues of the rural people, enjoy a greater receptiveness amongst the rural poor and operate flexibly to provide their clientele with a level of comfort. 

With a strong infrastructure in place for financial inclusion and PMJDY accelerating the rate of progress, the next milestone needs to be bringing about a mindset change and cultural shift among the newly connected beneficiaries for deriving advantages from the formal financial system. This includes borrowing loans from banks and repaying them on time. This will in turn aid micro and small enterprises, and hence eliminate poverty from the roots and raise the standard of living of different communities at the grassroots level. 

Summing Up

As the financial ecosystem in India evolves, any kind of financial inclusion in future must recognise the broader needs. And to study the implications of such inclusion, one must look at the policy mandates as well as the wider metrics. From a policy standpoint, analysing such metrics will not just deepen our understanding of the effects of financial inclusion but also provide answers to the crucial questions of how to achieve it. 

Related Articles