Prof. Sougata Ray
Specialization: Finance & Economics
Designation: Assistant Professor
Financial Inclusion is the process of making appropriate financial products and services to all sections of the society. It is a key enabler for inclusive and sustainable development as it creates a positive habit of savings and investments and shoots the process of economic growth. Availability of timely, adequate, and transparent credit from formal banking channels inspires entrepreneurial spirit of people living in financial duress and leads them to yield outputs enabling to thrive in prosperity.
The process starts with opening a bank account but goes beyond that to provide access to loans, insurance and other savings products for maintaining livelihood as well as mitigating the risk of financial losses that the common people face.
One of the latest developments in India, in the context of evaluation and monitoring of financial inclusion progress, has been the introduction of Financial Inclusion Index (FI-Index) in 2021. Conceptualized in consultation with the Government and other financial regulators to capture many aspects of financial inclusion using a single value number which ranges from 0 to 100; where “0” indicates complete financial exclusion and “100” signifies complete financial inclusion. The index is based on 97 indicators clubbed under three major aspects of financial inclusion, i.e., access, usage, and quality. The FI-Index published for the year ending March 2021 stands at 53.9. Going forward, this index will be published on a yearly basis by RBI.
The National Strategy for Financial Inclusion, 2019-2024 published by RBI in January 2020, stresses the importance of financial literacy or financial education, along with the creation of a robust and effective digital networks infrastructure to all the financial services. The existing financial institutions, particularly the banks, need to make necessary investments and subsidize services in initial levels till the beneficiaries reach a sustainable condition (RBI, 2020).

In recent times, the opening of Pradhan Mantri Jan-Dhan Yojana (PMJDY) accounts and the relaxation in KYC norms because of the Aadhar usage has proven to be a significant step in providing banking services to the unbanked population. The usage of direct benefit transfer and the combined system of Jan Dhan, Aadhar and Mobile (JAM) linkage with the help of digital technology has not only helped with the delivery of social welfare benefits to the larger masses but has also improved the financial inclusiveness of the nation.
The outbreak of the Covid-19 pandemic has in fact acted as a serious disruption in the progress of Financial Inclusion initiatives. The Government along with RBI was forced to take several policy measures to alleviate the credit crisis for the needy segments. By lowering the interest rates, promoting liquidity schemes, and injecting liquidity through financial stakeholders, authorities have alleviated the stress on individuals, small businesses and MSMEs. The use of digital payment system, particularly the Unique Payment Interface (UPI), saw multifold growth during this period.
All this has further increased the importance of Financial Literacy or Financial Education. We need to be financially literate to be financially inclusive. There is hardly any choice but to act and act fast. Financial literacy is important because it will not only equip an individual with the knowledge and skill to manage their money effectively but also creates a strong foundation to understand the usability of various products and services available to take care of an individual’s savings, investments, and insurance requirements.
RBI has come up with the National Strategy for Financial Education (2020-2025) document with an objective to create a financially aware and empowered India. Several measures and initiatives have been taken as per the strategy. The recent version of the document suggests a ‘5 Cs’ approach. The strategy focuses on development of relevant content in the curriculum of educational intuitions, capacity of financial service providers, taking positive advantage of community-led models for financial literacy through proper communication strategy, and signifying collaboration among various stakeholders.
Various international and nation institutions such as UNDP, NABARD, IRDA, SEBI and others have come up with programs and innovative steps to enhance the level of financial literacy in the country. Some of these institutions have also prepared extensive curriculums to teach and train both adults and children about the basic principles of money, credit, savings, and investments and introduce them to the way our financial system operates. However, there is a long way to go as the level of financial literacy continues to be low.
There is a need for involving the civil society and all stakeholders, including government, non-government, NGOs in spreading financial literacy.
Maybe it is the right time for the institutions providing higher education to take up the challenge and provide innovative solutions which can take the country to the next level of progress and prosperity.
RBI (2020), National Strategy for Financial Inclusion 2019-2024; Available at
RBI (2021), National Strategy on Financial Education 2020-25; RBI Bulletin January 2021. Available at
RBI (2021), Reserve Bank of India introduces the Financial Inclusion Index. Available at