Financial Inclusion in detail

The concept of financial inclusion was first introduced in India in 2005 by the Reserve Bank of India. Financial inclusion refers to providing greater access to financial services for poor and low-income individuals, as well as businesses with limited resources.

It aims to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives .


Financial inclusion enhances the financial system of the country & strengthens the availability of economic resources.

These initiatives help boost the economy of poorer regions and countries.. It  is a major step towards inclusive growth as it helps in the overall economic development of the underprivileged population.

 In India, effective financial inclusion is needed for the upliftment of the poor and disadvantaged people by providing them with the modified financial products and services.

Greater financial inclusion also means greater potential profits for banks and other financial institutions.


Financial inclusion aims to fulfill the following objectives :

  • It aims to establish proper financial institutions to cater to the needs of the poor people.
  • To ensure the availability of mobile banking or financial services to the people living in rural areas of the country.
  • To increase awareness about the benefits of financial services among the economically underprivileged sections of the society.
  • To improve financial literacy and financial awareness in the nation.


In order to promote financial inclusion, the Indian government initiated the ‘Pradhan Mantri Jan Dhan Yojna’ for motivating and encouraging poor individuals to open bank accounts. This programme targeted at least 75 million individuals to open bank accounts by the year 2015.

Apart from this, there are several other schemes launched for this purpose in India , like Jeevan Suraksha Bandhan Yojana, Pradhan Mantri Vaya Vandana Yojana, Pradhan Mantri Mudra Yojana, , Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), Varishtha Pension Bima Yojana (VPBY), Credit Enhancement Guarantee Scheme (CEGS) for scheduled castes, and Sukanya Samriddhi Yojana etc.

In addition to this, the rise and growth of financial technology – commonly referred to as FINTECH – has been an important factor in increasing financial inclusion. It has not only greatly broadened access to financial services, but also significantly reduced the cost of many financial services.


There are many barriers to financial inclusion, the first of which is extreme poverty. People with little to no money have little to no need for financial services. The other challenges in the path of financial inclusion are-

  • Bank services do not have enough support for scalability.
  • The technology adoption is limited.
  • The lack of the availability of documents for the purposes of banking activities.
  • Almost minimal financial literacy.
  • In the case of rural areas, telecom connectivity and infrastructure are poor.


Thus, in simple words financial inclusion refers to the provision of equally available and affordable access to financial services for everyone, regardless of their level of income.

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