Contents

I. Introduction ........................................................................................................................................... 1
2. Financial Inclusion: Where Does India Stand? .......................................................................... 2
2.1. Performance on Access ................................................................................................................... 4
3. Usage of Financial Products and Services among Individuals and Households ............. 6
3.1. Ownership of Bank Accounts and Savings .............................................................................. 7
a) Pradhan Mantri Jan Dhan Yojana (PMJDY) ........................................................................ 9
b) Small Savings Schemes ................................................................................................................. 9
c) Sukanya Samriddhi Yojana ........................................................................................................ 10
d) Direct Benefit Transfer ............................................................................................................... 11
3.2. Credit.................................................................................................................................................... 11
a) Kisan Credit Cards ........................................................................................................................ 13
b) Credit to MSMEs........................................................................................................................... 13
3.3. Insurance ............................................................................................................................................ 14
a) Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) .................................................... 14
b) Pradhan Mantri Suraksha Bima Yojana (PMSBY) .......................................................... 14
c) Ayushman Bharat Yojana under PMJAY ............................................................................. 14
3.4. Pension ................................................................................................................................................ 14
a) National Pensions Scheme (NPS) .......................................................................................... 15
b) Atal Pension Yojna (APY) .......................................................................................................... 15
4. Digital Finance: Presenting New Opportunities ..................................................................... 17
4.1. COVID-19: A Push Towards Digitalisation .......................................................................... 17
4.2. Mobile Money: UPI and Fin-Techs revolutionized the game ....................................... 17
5. Conclusion ........................................................................................................................................... 20
5.1. Changing Face of Financial Inclusion: Addressing Usage ............................................. 20
5.4. Technology as an Enabler and Tackling associated risks .............................................. 21
5.2. Steering Focus on Quality of Financial Inclusion .............................................................. 21
5.3. Contingent on States ...................................................................................................................... 22
ANNEXURE .......................................................................................................................................... 27
Tables
Table 1: Data on Beneficiaries for PMJDY……………………………………………………13
Table 2: Bank Credit to MSMEs………………………………………………………………17
Table A1: International Comparisons – Financial Access Survey Indicators 2021…………...…33
Table A2: State-wise Kisan Credit Card data 2019-2020…………………………..……….…..34
Table A3: State-Wise Distribution of Offices of Scheduled Commercial Banks…………..……35

Figures
Figure 1: Trends in Scores of RBI’s Financial Inclusion Index (2017-21)………….……………7
Figure 2: Population Group-wise Number of Branches of Scheduled Commercial Banks………8
Figure 3: Individual Usage Indicators (Global Findex Data 2021)……………………………...10
Figure 4: Number of Deposit Accounts with Scheduled Commercial Banks according to
population groups (2000-21)…………………………………………………………………..11
Figure 5: Amount Outstanding of Deposits with Scheduled Commercial (banks population
group wise)……………………………………………………………………………………11
Figure 6: Regional Rural Banks- Outstanding (2000-21)……………………………………….12
Figure 7: Collection under National Savings Schemes (2002-21) (in crore)………………...…...13
Figure 8: Sukanya Samriddhi Yojana - Registered Subscribers and Savings (2015-22)……….…14
Figure 9: Outstanding Deposit Accounts with Scheduled Commercial Banks- Population group
wise………………………………………………………………………………………....…15
Figure 10: Amount Credit Outstanding of Scheduled Commercial Banks- population group
wise……………………………………………………………………………………….…...15
Figure 11: Number of SHGs Financed by Banks……………………………………….……...16
Figure 12: National Pension Scheme - Subscribers and Asset Under Management (AUM)…….19
Figure 13: Atal Pension Yojana - Subscribers and Asset Under Management (AUM)………….20
Figure 14: UPI Transactions - Monthly Volume and Value since 2016……………………...…23
Figure 15: Net NPAs as % of Total Assets (Bank group wise)…………………………...……26
Figure 16: State-wise Percentage of active workers (2022-23)……………………………...…..28
 I. Introduction
Financial inclusion in India has seen a paradigm shift since 2014 with the introduction of JAM
Trinity encompassing Jan Dhan Yojana (PMJDY) for universal banking access for all, Aadhaar
for unique biometric identification, and mobile services for direct transfers. Further, the Digital
India campaign launched in 2015 proved significant for roping the unbanked population into
the mainstream economic system with a formal financial net that was earlier at the fringes.

The comprehensive approach laid the foundation for flourishing digital financial
architecture which could help people and businesses sail through the turbulence owing to
lockdowns and restricted mobility during the COVID-19 pandemic in 2020-21. Further, it
pushed close to 80 million adults to make their first digital merchant payment during the
pandemic (World Bank, 2021). Despite a significant leapfrogging in the area of digital payments,
the hurdles of last-mile connectivity and lower usage of financial products and services remain
a focal point around the discourse on financial inclusion.

The present paper gauges the current landscape of financial inclusion in India with an
overview of trends and drivers on broad financial instruments and the progress made so far on
the three broadly accepted dimensions of financial inclusion i.e., access, usage, and quality;
particularly involving the individuals and the households amidst dynamic headways in the
financial ecosystem in India and also highlights the various facets of reforms undertaken to
overcome the challenges on the way since the digitalization push. It also underlines the gaps in
terms of inter-state variability in delivery and makes suggestions on the road ahead.

Section 2 provides a snapshot of the performance on the dimensions of financial

inclusion in India using previous research on indices of financial inclusion aimed at the
quantification of parameters and identification of lagging areas. Section 3 brings to the fore the
state of financial inclusion among individuals and households using domestic data on aspects
like ownership of bank accounts, savings, availability of credit, uptake of insurance, and pension.
These indicators are examined in light of support for the various government schemes and
initiatives taken to promote the said indicators of financial inclusion. Section 4 highlights the
positive spillovers of the digitalization push to financial inclusion which is further bolstered by
the COVID-19 pandemic since 2020. Section 5 concludes by making recommendations based
on the identified gaps.

1
 2. Financial Inclusion: Where Does India Stand?
The construct has been attempted to be defined in a multitude of ways. According to the World
Bank – “Financial inclusion means that individuals and businesses have access to useful and
affordable financial products and services that meet their needs delivered responsibly and
sustainably.” The Rangarajan committee (2008) defines it as “the process of ensuring access to
financial services and timely and adequate credit where needed by vulnerable groups such as
weaker sections and low-income groups at an affordable cost”. In a broad sense, it can be viewed
as individuals’ involvement with the financial system where they can access cost-effective means
of managing their financial lives—borrowing, spending, saving, and investing while being able
to protect their financial well-being through insurance.

Financial inclusion is a process than an end itself where individuals can adapt to the
evolving trends and nature of financial products and services at their disposal. Financial
instruments could be viewed as contracts that result in one entity having a financial asset and
another having a financial obligation or equity investment (Staszkiewicz and Staszkiewicz, 2015).
They are designed to allow market participants to trade cash flows with various risk
characteristics. And attributes. These range from savings account deposits, insurance, credit,
and equity to payments, savings, credit, and insurance, etc.

Policymakers globally have turned to financial inclusion as a broader policy perspective

entailing financial development over the decades. The overwhelming light drawn by the subject
is attributed to the plethora of evidence that shows that individuals or households with greater
financial inclusion experience ripple effects not just through sound financial health but also with
better performance on human development (Sarma and Pais, 2011; Nanda and Kaur, 2016),
other socio-economic indicators like poverty (Kumar, 2012), inequality (Inoue, 2019), women
empowerment (Ojo, 2022) where income and education have shown to bear heavily on the
ability to access financial services (Demirgüç-Kunt and Klapper, 2013).

In India, nascent steps towards the agenda of access involved the promotion of
cooperatives, bank nationalization, and various lead bank schemes. Formally, financial inclusion
acquired a space in policy drafts after being included in the Rangarajan Committee in 2008.
Further, to bridge the rural-urban divide and to serve the vulnerable population groups in rural
areas, the brick-mortar structure of banking was pushed to ensure the coverage of the unbanked
in the ambit of the formal financial system. The Business Correspondent (BC) Model of
banking in tandem with rapid technological advancements in low-cost biometric applications
and core banking solutions enabled the wider provision of financial services which helped
significantly in bringing the unbanked into the formal channels of the financial system. Further,
RBI since 2010 has emphasized financial inclusion plans for various public and private banks.
Initiatives like simpler KYC norms and simplified branch authorization policies have been
taken.

A decade and a half later, the Indian banking and financial system has leapfrogged with
technology-driven alternatives and has benefitted a significant chunk of the population through
Direct Benefit Transfers (DBTs). Since 2015, new forms of banks were introduced like
differentiated banks, payments banks, and small finance banks with targeted objectives for

2
tailored deposit products for various sections of the population like farmers, low-income
households, small businesses, etc. From mobile banking to mobile money and innovative
payment mechanisms which have been discussed extensively in section 4.

Financial inclusion broadly encompasses three dimensions- access, usage, and quality. The
access aspect emphasizes the supply of financial infrastructure and services to the people
(individuals, households, and enterprises) which when scaled up eases the process of
mainstreaming the take-up of services. Many of the access indicators identified so far include
the number of outlets for banking including BCs, NBFCs, and post offices, etc., the total
number of savings accounts including small savings, points of service (number of bank branches
per 1000 adults, number of ATMs per 1000 sq. km), e-money accounts for digital payments,
etc. the JAM ecosystem, all type of cards and e-payment infrastructure, subscription base of
various pension schemes and offices and agents of life and non-life insurance, etc.

Utilization, or the demand side dimension, measures how actively financial

infrastructure is used in terms of savings, investments, insurance, availability of credit from
banks and non-banks, use of retail digital payments, penetration of insurance (life and non-life),
and participation in various pension plans, remittances, etc.

The last dimension i.e., quality covers areas like cost-of-service access, financial literacy,
fraud prevention, consumer protection, etc. that emphasizes sustainable adoption and
continued usage of the financial products and services particularly emphasizing on the
individual.

Also, the indicators vary across countries and contexts in terms of specific relevance to
the national and regional context. For instance, the G20 financial inclusion indicators globally
include the cost of usage in terms of opening a bank account, cost of credit transfers (collateral
requirements), ease of credit access, interoperability of points of service, mobile payments,
dispute resolution, and financial literacy among the end users as some of the benchmark
indicators for financial inclusion in addition to the traditionally accepted indicators mentioned
previously.

Researchers have devised indices to measure and quantify financial inclusion in India
(Sarma, 2008; Gupte et al., 2012; Goel and Sharma, 2017) and around the world (Dienillah et
al., 2018; Cicchiello et al., 2021). In 2021, the Reserve Bank of India introduced the index of
financial inclusion that captured information on various aspects of financial inclusion ranging
from 0 to 100 with a weightage of Access (35%), Usage (45%), and Quality (20%). With an
increasing overall index score standing at 53.9 in 2021, figure 1 highlights that the access
dimension has received higher scores consistently over the years reaching a maximum of 73.3
in 2021. This has been corroborated by the World Bank’s 2021 financial inclusion report that
from 35% in 2011 to 78% in 2021, account ownership has more than doubled in the last ten
years. Particularly, between 2014 and 2017, account ownership in India increased by 27
percentage points compared to 8 percentage points in developing economies (Demirguc-Kunt
et al., 2021). It reflects the consistent efforts by the Government to improve access around the
nation. What is particularly intriguing is that the usage dimension is lagging significantly with a
score of 43 in 2021, an aspect that would be dealt with in section 5.1.

3
 Figure 1: Trends in Scores of RBI’s Financial Inclusion Index
(2017-21)
90
80 73.3
71.6
67.5
70 63.9
61.7
60 52.6 53.853.1 53.9
51.4 49.9 50.7
48.5 46
50 43.4 43
42
38.7
40 33.7
30.8
30
20
10
0
2017 2018 2019 2020 2021*

Access Usage Quality FI-Index

(Source: RBI)

2.1. Performance on Access

The traditionally considered access indicators for cross-country comparisons based on IMF’s
Financial Access Survey 2021 are summarised in table A1 (annex) which reveals that commercial
bank branches in India both in terms of per 1000 km2 and per 100000 population stand at 51
and 15 respectively which is much higher than the peer fast-growing economies like China and
Indonesia. Whereas India has 75 ATMs per 1000 km2 which is much lower than China (101)
and Bangladesh (108) while ATMs per 100000 population stand at 21 as compared to China
(81), Indonesia (48), and Mexico (62). In comparison to the developed nations like the US,
Australia, and Canada the commercial bank branches are widespread in India in terms of per
1000 km2 but the commercial bank branches access per 100000 adults is still very low.

The domestic data released by RBI in September 2022 brings to the fore the numbers
on bank branches for scheduled commercial banks which shows a significant rise in the setting
up of such branches since 2000. Figure 2 shows the number of bank branches population-wise,
where rural and semi-urban areas have the largest number of Scheduled Commercial Banks
(SCBs) to cater to a wider rural population. The value is primarily driven by the growth in the
number of bank outlets, FBCs, total savings accounts, post offices, subscribers to mutual funds
(MFs), JAM ecosystem, offices for insurance, Prepaid Payment Instrument (PPI) issuers, and
Point of Sale (PoS) terminals, among other things, over the years and more recently.

4
 Figure 2: Population Group-wise Number of Branches of
Scheduled Commercial Banks
60000
53210
50000
42470
40000

30000 28144
20000 27426

10000

Rural Semi-Urban Urban Metropolitan

(Source: RBI Handbook of Statistics on Indian Economy 2021-22)

Further, the bank branches in villages have seen a very sharp increase of 60% from 2010 to
2021 whereas the banking correspondents for villages with a population> 2000 increased from
8,390 to 15,18,496 during the same period1. These statistics corroborate the strides in financial
access aimed at the supply of financial products and services.

1 IV. Credit delivery and financial inclusion, RBI annual report 2021-22

5
 3. Usage of Financial Products and Services among Individuals and
Households
The objective of financial inclusion is achieved among households in the event of sustained
‘usage’ concerning various financial products and services. The provision of financial products
is primarily dependent on the evolution of the financial ecosystem whereas the usage aspect in
addition to that is intertwined with contexts like behavior pertaining to adoption through
overcoming barriers of perception, cost, beliefs, trust, security, and lack of knowledge and
awareness. Therefore, these need to be addressed to achieve financial inclusion and the financial
well-being of individuals.

The data from the World Bank survey 2021 in figure 3 provides an overview of the
usage of financial instruments and services by individuals. It reveals a significant shift toward
ownership of the account in a financial institution from 35% to 77% from 2011 to 2021. A clear
shift from cash-based transactions to digital transfers was observed through digital payments
and receipts of digital transfers for the period 2011 to 2021 as illustrated in figure 3. It was
reported that public sector wages were received digitally by 73% of the respondents, a 10-
percentage point jump since the 2017 survey whereas utility payments using cash were done by
19% of the respondents. The dependence on cash has reduced considerably for making utility
payments as individuals and households shifted to digital payments.

The impact of trickle-down benefits has been corroborated by the World Bank report
2021 which brings out the insignificance of a gender gap in account ownership as India bridged
a gap of 22 percentage points from a decade ago.

On the other spectrum, the report also underlines that close to 33% of the accounts
owners did not make transactions in 2020, and the number of individuals who had an account
but did not make any digital payments was approximately 540 million in India. Some of the
most common reasons among inactive account users were attributed to distance from financial
institutions (49%), feeling of no requirement (46%), and trust deficit (48%). Also, it was
observed that 31% of the individuals borrowed from family or friends in the last year. RBI had
also listed reasons such as lack of surplus income, trust deficit, absence of suitability to
customer’s requirement, high transaction costs, remoteness of service provider, lack of product
awareness, and poor service quality as some of the reasons for financial exclusion2.

2 https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=1154#3

6
 Figure 3: Individual Usage Indicators (Global Findex Data 2021)

100
Percentage of Respondents

80
77
73
63
53

53
47

38
36

35
35

35
34
33

33
32
32

31

29
28

28
22

22
20
19

15
13

12
8 9

9
9

8
0 0 0 0 0 0

Received Received Made a Made a Borrowed Borrowed Has an Owns a Made or Financial
public public utility utility from from a inactive debit or received a institution
sector sector payment: payment family or formal account credit card digital account
wages: in wages: using cash using a friends (% financial (% with (% age payment (% age
cash only into an only (% financial age 15+) institution an 15+) (% age 15+)
(% of account age 15+) institution (% age account, 15+)
public (% of account 15+) age 15+)
sector public (% who
wage sector paid utility
recipients, wage bills, age
age 15+) recipients, 15+)
age 15+)

2011 2014 2017 2021

(Source: Global Findex Database 2021; Note: Data points missing for some indicators for 2011)

The following sub-sections would help to dive deep into the usage dimension in various facets
like savings, credit, insurance, pensions, etc. the following sub-sections further the discussion: -

3.1. Ownership of Bank Accounts and Savings

The primary indicator of financial inclusion is ownership of a bank account and figure 4
highlights the growth in deposit accounts with scheduled commercial branches which indicates
that the rural population covering the majority has the highest number of deposit accounts
followed by semi-urban, metropolitan and urban areas whereas the amount outstanding with
scheduled commercial banks (shown in figure 5) is in the reverse order with the maximum
amount in the urban areas which draws attention to marginal and small savings in the rural and
semi-urban areas.

7
 Figure 4: Number of Deposit Accounts Figure 5: Amount Outstanding of
with Scheduled Commercial Banks Deposits with Scheduled Commercial
according to population groups (2000- (banks population group wise)
800000
21)
9000000
725661
8026332
700000 8000000

600000 7000000
632368
6000000
500000
402135 5000000
400000
4000000 3253819
300000 356362
3000000
2497921
200000 2000000

100000 1000000 1665438

0
0

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

Rural Semi-Urban Urban Metropolitan Rural Semi-urban Urban Metropolitan

(Source: RBI Handbook of Statistics on Indian Economy, 2021-22; Note: No. of accounts in Thousands, Figures
in Rupees Crores)

Further, Regional Rural Banks (RRBs) have been the catalyst for leveraging financial services,
credit expansion, and diversification of products and services among the rural population in
India. Looking closely at the deposit and credit data of RRBs over two decades where they have
witnessed a consistent increase with a rise in deposits to the tune of 9% and credit at 13% for
2020-21, the year of the pandemic over 2019-20 as shown in figure 6.

Figure 6: Regional Rural Banks- Outstanding (2000-21)

700000
548312

600000

500000
357076

400000

300000

200000

100000

Aggregate Deposits (in Cr.) Bank Credit (in Cr.)

(Source: RBI Handbook of Statistics on Indian Economy, 2021-22)

8
 It is imperative to look into some of the flagship efforts that have boosted bank account
ownership and savings among individuals/households in India: -

a) Pradhan Mantri Jan Dhan Yojana (PMJDY)

The scheme was introduced in 2014 to ensure basic account ownership with banks or business
correspondents (Bank Mitra) without balance requirements and coupled with various financial
services like basic savings & deposit accounts, remittance, insurance, pension, and credit
affordably. Further ‘RuPay’ debit cards were provided to the account holders and insurance
cover of up to Rs. 1 lakh (extended to 2 lakhs on accounts opened after 28 August 2018). Table
1 shows the official data on beneficiaries where a total of 46.57 crore people has been benefitted
with an average state-wise surveyed household coverage of 99.97%.

Table 1. Data on Beneficiaries for PMJDY

Bank No. of No. of No. of Rural- No. of Total Deposits Number of
Name/ Beneficiaries Beneficiaries Urban Beneficiaries in Rupay Debit
Type at at urban Female Accounts Cards issued
rural/semi- metro centre Beneficiaries to
urban centre bank beneficiaries
bank branches
branches
Public Sector
22.97 13.66 20.19 36.64 133605.28 27.51
Banks
Regional
7.44 1.17 4.97 8.62 34078.66 3.41
Rural Banks
Private Banks 0.70 0.6 0.71 1.31 4933.53 1.11

Grand Total 31.12 15.44 25.87 46.56 172617.47 32.03

(Source: https://pmjdy.gov.in/account data as on 17/09/2022; Note: Figures in Rupees Crores)

b) Small Savings Schemes

Various small savings scheme was introduced by the government for the promotion of risk-free
government-backed saving portfolios for low- and medium-income individuals including
national savings deposits account, post office savings account, Senior Citizen Savings Scheme,
Kisan Vikas Patra and National Savings Certificate (NSC). Figure 7 maps the collections under
NSS for 2021-22 which stand at Rs. 2,20,259.13 crore.

9
 Figure 7: Collection under National Savings Schemes (2002-21)
(in crore)

320000

2,20,259.13
270000

220000

170000

120000

70000

20000

-30000

(Source: National Savings Institute; Note: Figures in Rupees Crores, 2021-22 (up to Jan 2022)

The developments in the state-by-state per capita gross private small savings collections in banks
and post offices from 2001-2002 to 2017-2018 highlighted by Jain and Goli (2022) demonstrates
that over the time under consideration, per capita gross collections increased significantly in all
states. Himachal Pradesh has experienced the most increase in gross receipts, followed by
Odisha, Kerala, Karnataka, West Bengal, Andhra Pradesh, and Maharashtra in that order.

c) Sukanya Samriddhi Yojana

The savings scheme launched in 2015 is targeted at the accumulation of savings funds for girl
children 10 years or younger by parents under the initiative of ‘Beti Bachao-Beti Padao’. With a
minimum initial deposit of Rs. 1,000, a limit of up to Rs. 150,000 in a financial year, and tenure
of deposit until 21 years of age of the beneficiary is a tool to accumulate a corpus for the girl
child’s higher education, marriage, and other needs. Figure 8 shows the growth in subscribers
and savings since the launch. Bhattacharya and Gandhi (2020) show that states like Uttarakhand,
Himachal Pradesh, Goa, Tamil Nadu, and Haryana are the highest-ranking states while
Nagaland, Meghalaya, Mizoram, Bihar, and Uttar Pradesh are the lowest in terms of the number
of accounts and amount deposited.

10
 Figure 8: Sukanya Samriddhi Yojana - Registered
Subscribers and Savings (2015-22)
35000000 160000
29374765
30000000 140000
139296
120000
25000000
100000
20000000
80000
15000000
60000
10000000
40000

5000000 20000

0 0
2015 2016 2017 2018 2019 2020 2021 2022

Registered subscribers Amount Saved (in Crores)

(Source: National Savings Institute; Note: As of 31st March of the year)

d) Direct Benefit Transfer

Direct Benefit Transfer (DBT) has been instrumental in the acceleration of financial inclusion
as it has helped eliminate human interface and leakages in the system that ensured timely,
accurate, and quality services and fund transfers to the beneficiaries. Sabherwal et al. (2019)
highlighted that DBTs have enabled the strengthening of banking activity, mobility and
bargaining power, particularly among women. This tool has helped immensely in the disbursal
of benefits to a wide population spread geographically through 318 Government schemes like
Pradhan Mantri Matratva Vandana Yojana (PMMVY) for women, Pradhan Mantri Ujjwala
Yojana (PMUY) and, while others, such as the Krishi Unnati Yojana (KUY) or Mahatma
Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for beneficiary bank
accounts held by any gender. The total benefit transfers accruing for Rs. 6,30,264 crores for
2021-223.

3.2. Credit

Credit can prove to be a tool of empowerment and growth with a multiplier force in case of
easy and low-cost availability. Traditional banks extend credit based on parameters like credit
scores or collateral, or sometimes the product design is not suited to the needs of the large
segment of consumer demographics. Figure 9 and figure 10 shows the number of outstanding
deposit account and outstanding credit amount with commercial banks.

3 https://dbtbharat.gov.in

11
 Figure 9: Outstanding Deposit Figure 10: Amount Credit Outstanding
Accounts with Scheduled Commercial of Scheduled Commercial Banks-
Banks- population group wise population group wise
100000 7000000
6244749
90000 87531 6000000
80000
76643
5000000
70000 75334
60000 58827 4000000
50000
3000000
40000 2236786

30000 2000000
1514772
20000
1000000
10000 1081743

0 0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Rural Semi-urban Urban Metropolitan Rural Semi-urban Urban Metropolitan

(Source: RBI Handbook of Statistics on Indian Economy 2021-22; Note: No. of accounts in Thousands, Figures
in Rupees Crores)

Moreover, having more affordable credit solutions is a challenge for incentivizing businesses
for scaling up the services for those with limited credit history. In such a scenario, the role of
government is crucial in enabling timely and adequate access to cheaper credit and fostering a
robust regulatory framework. The Self-Help Groups (SHGs) credit program has been shown to
increase the take-up of loans and has substituted the use of informal credit (Hoffmann et al.,
2021). Figure 11 shows the number of Self-help groups financed by banks since 2000-01 where
the post-pandemic recovery is evident from 2020-21 to 2021-22.

Figure 11: Number of SHGs Financed by Banks

4000000
3398267
3500000

3000000

2500000

2000000

1500000

1000000

500000

(Source: RBI)

12
 Some of the vital steps in the circulation of credit in the economy among diverse population
groups are as follows: -

a) Kisan Credit Cards

Kisan Credit card scheme is aimed to provide adequate and timely credit support to the farmers
for their agricultural activities at various stages of farming. For the financial year 2020-21, the
total operative KCCs stand at 306.96 lakhs with a total outstanding loan amount of 4,56,736
crore. Table A2 (annex) shows the state-wise numbers on operative KCCs and the amount
outstanding with distribution in line with the agricultural activities in the states with Uttar
Pradesh, Karnataka, Madhya Pradesh, Maharashtra, and Rajasthan in the top states in both the
criteria and states/ union territories like Goa, Sikkim, Delhi and Chandigarh with the least
coverage under the scheme.

b) Credit to MSMEs4

According to the 2019 estimates by the RBI, the credit gap for MSMEs stood at Rs. 20-25
trillion5. Various steps have been taken to plug the credit financing gap, firstly, priority sector
lending was given impetus for sectors like agriculture, micro-enterprises, weaker sections, etc.
Secondly, new models have been promoted in the form of intermediaries like Loan Service
Providers (LSPs), Trade Receivables Discounting System (TReDS) platforms for effective
mechanisms to cater to liquidity issues, etc. Thirdly, no collateral loans for up to Rs. 10 lakhs
have been mandated by the RBI guidelines 2010. Lastly, schemes like credit guarantees for the
bank, NBFCS along with PM SVANidhi, MUDRA Loans, Stand Up India, etc. have helped
strengthen the credit delivery system and flow of credit to underserved enterprises.

Further COVID-19 has exacerbated the liquidity constraints of the MSMEs. The credit
extended to MSMEs has been summarised by data from RBI in table 2 which reflects that
outstanding credit to MSMEs by SCBs increased by 13.4% in 2021-22 as compared to 10.6% a
year ago while the number of accounts decreased significantly owing to mandatory registration
on Udyam portal under the new MSME definition.

Table 2. Bank Credit to MSMEs

Year Micro Enterprises Small Enterprises Medium Enterprises MSMEs
No. of Amount No. of Amount No. of Amount No. of Amount
Accounts Outstanding Accounts Outstanding Accounts Outstanding Accounts Outstanding
2020-21 387.93 8,21,027.77 27.82 6,62,998.50 4.44 2,99,898.53 420.19 17,83,924.80
2021-22* 239.81 8,87,800.05 22.07 7,25,822.77 3.23 4,09,011.46 265.10 20,22,634.29
(Source: RBI, * Provisional data)

4 This paper for the purpose of brevity does not elaborate on the status of Micro Small Medium and Enterprises’
financial inclusion (MSMEs) in the analysis for various other financial instruments and channels. But individuals/
entrepreneurs are naturally part of the MSME landscape therefore, availability of credit especially during and post
COVID-19 assumes a very important role and thus is discussed in this sub section.
5 https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=924#

13
3.3. Insurance
The insurance sector has faced lower penetration (premium as a percentage of GDP) and
density in India (Ray et al., 2020). The pandemic has brought major shift in attitude towards
insurance products67 and expected a year-on-year growth of 6.6 % in 20228. From 2021–2022
through the end of January 2022, life insurers' gross first-year premium climbed by 6.94%,
totaling Rs. 2,27,188 crores9.

Any insurance program's success depends on clearly established procedures for

payments, referrals, complaints, and quality control measures. Some of the schemes that have
helped insurance reach the vulnerable population are as follows: -

a) Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

The 2015 program's goal is to provide coverage for death from any cause to the uninsured,
especially the poor class. All bank account holders who subscribe to the plan are given a
renewable 2-lakh-rupee term life insurance policy (aged 18-50). As of July 2022, 5,93,316 claims
totaling 11,866 crores were paid under the scheme for an annual premium of just Rs. 436.

b) Pradhan Mantri Suraksha Bima Yojana (PMSBY)

To all subscribing bank holders, the PMSBY scheme provides a renewable one-year accidental
death/disability cover (aged 18-70). A subscriber is eligible for a claim of Rs. 2 lakhs in case of
death or whole disability and a claim of Rs. 1 lakh in case of partial disability with an annual
payment of just Rs. 20 through auto debit. The PMSBY system had 24 crores cumulative
enrollees as of July 2021, with 45.8% of them being women, and a total claim of Rs. 972.6 crores
(US$ 133 million).

c) Ayushman Bharat Yojana under PMJAY

The scheme aims to address health disparity and reduce patient health costs. It is one of the
largest scale-wide healthcare schemes globally aimed at covering 50 crore individuals with
coverage of up to Rs. 5 lakhs.

3.4. Pension

India has deliberated for a long on the development of the micro pensions market through
various targeted schemes and policy initiatives. The need and demand for the same have been
assessed by studies like Mukherjee and Mitchell (2017) using a field experiment, where it was
found that withdrawal ages, government matching rates, and options for lumpsum withdrawals
were sensitive indicators to the take-up of pension designs, particularly by the vulnerable groups.

6 https://bfsi.economictimes.indiatimes.com/blog/insurance-in-india-current-trends-and-whats-ahead/93525208
7 https://www.financialexpress.com/money/insurance/from-investment-to-protection-life-insurance-trends-in-
india-2022/2643853/
8 https://www.livemint.com/news/india/india-likely-to-become-sixth-largest-insurance-market-in-next-10-years-

11662037712911.html
9 https://www.ibef.org/industry/insurance-presentation

14
The following schemes have helped old age security reach a broader spectrum of the population
through various schemes: -

a) National Pensions Scheme (NPS)

Regulated by Pension Fund Regulatory and Development Authority (PFRDA), NPS is

mandatorily applicable for central government employees, voluntarily for corporates, and all
citizens (aged 18-65 years) with matching contributions by the employer. As of March 2022, a
total of 1.57 crore people have subscribed to the National Pension System (figure 12) of which
35% come under the state government followed by 24% and 14% under the central
government. Interestingly, looking closely at the geographical division, 91% of subscribers
belong to the non-metro while the remaining 9% hail from the metros in India where women
constitute 42.13% of the subscriber base (NPS Trust, 2022).

Figure 12: National Pension Scheme - Subscribers and

Asset Under Management (AUM)
1,80,00,000 1,57,44,183 8,00,000
1,60,00,000 7,15,670 7,00,000
1,40,00,000

AUM (in Rs. Crore)

6,00,000
No. of Subscribers

1,20,00,000
5,00,000
1,00,00,000
4,00,000
80,00,000
3,00,000
60,00,000
40,00,000 2,00,000
20,00,000 1,00,000
0 0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

No. of Subscribers AUM (Rs in Crore)

(Source: NPS Trust)

b) Atal Pension Yojna (APY)

The micro pensions framework especially for the unorganized sector and those who do not
come under the formal income tax ambit are encouraged to subscribe to the scheme where the
contribution is as low as Rs. 42 per month at age 18 for a fixed old age monthly pension in the
future. Figure 13 shows the subscribers base and assets under management under APY, where
as of September 2022, there are 4.11 crore subscribers with Rs. 23,316 crores AUM. According
to the 2021-22 report by the National Pension System Trust, 95% of the subscribers are aged
18-25 years.

15
 Figure 13: Atal Pension Yojana - Subscribers and Asset
Under Management (AUM)
4,00,00,000 3,62,76,704 25,000
3,50,00,000 20,923
20,000

AUM (in Rs. Crore)

No. of Subscribers

3,00,00,000
2,50,00,000 15,000
2,00,00,000
1,50,00,000 10,000
1,00,00,000
5,000
50,00,000
0 0
2017-18 2018-19 2019-20 2020-21 2021-22

No. of Subscribers AUM (Rs in Crore)

(Source: NPS Trust)

Similarly, there are schemes like Varishtha Pension Bima Yojana (VPBY) and Pradhan Mantri
Shram Yogi Maandhan (PM-SYM) pension scheme for the unorganized sector.

16
 4. Digital Finance: Presenting New Opportunities
Digital finance has brought millions of people into the formal economy through payments,
acceptance, invoice settlements, and fund transfers anytime and anywhere at their fingertips.
The mobile telephony and internet revolution over the last years has penetrated the remotest of
places. This has replaced cash-heavy transactions and widened financial services mapped to
digital ID (Aadhar) through technological innovations like net banking, mobile wallets, payment
platforms, etc.

Digitalization has also helped better governance, service delivery, and administration of
schemes through interlinkages with the JAM framework and direct benefit transfers. Various
studies have found the benefits and positive outcomes plugging of leakages and frauds once
identifier-based systems were put in place. For example, Muralidharan et al. (2016) found that
by transitioning from cash to biometric-based smart cards, leakages in pension systems were
reduced by 47% in the implementation of NREGS among 19 million people in India in addition
to faster payment receipts and resources saved enough to bear the cost of new systems. Not
just economic costs were brought down, but social indicators also witnessed improvement,
particularly in reducing inequality among women as direct benefit transfers gave them higher
financial control and incentivized women to gain employment (Field et al., 2021). Additionally,
the gender gap in India decreased from 22% in 2011 to negligible in 2021 due to the considerable
increase in account ownership (World Bank, 2021).

4.1. COVID-19: A Push Towards Digitalisation

While the groundwork for the switch towards digital finance was done in the pre-pandemic
period, the pandemic provided a serious push to individuals and households to adopt new
payment technologies in the wake of social distancing norms. The Financial Access Survey 2021
also brings out that mobile money was more prevalent in low- and middle-income nations
whereas developed nations relied on mobile and internet banking.

During the pandemic, the BC model—which employs the Aadhaar-enabled Payment

System (AePS) channel—came to the fore, ensuring last-mile delivery of cash benefits as
promised by the Pradhan Mantri Garib Kalyan Yojana (PMGKY) by carrying out more than 94
crore transactions totaling 2.25 lakh crore in 2020–21. A reliable safety net was created by the
policy measures and individual assistance actions.

4.2. Mobile Money: UPI and Fin-Techs revolutionized the game

Payments architecture gradually moved to MICR-based cheque processing systems, RTGS,

Electronic fund transfers like NEFT, RTGS, and mobile banking systems but with existing
developed telecom infrastructure and continuous growth of internet services, mobile money, a
pay-as-you-go form of medium of exchange could reach at the disposal of the most vulnerable
in semi-urban and rural areas through high market penetration and with zero physical contact
which revolutionized the way payments were made. Moreover, owing to the convenience of
negligible to no usage cost for most applications and independence from traditional banking
networks, it has become a key mode of financial services even among populations with low

17
banking activity (Bazarbash et al., 2020). This is particularly interesting, given credit card
transactions in the US cost small merchants 2-5% transaction and services fee. Such instances
can be observed through success stories in many Sub-Saharan African nations like Namibia
where mobile money penetration is close to 43% (World Bank, 2021) or M-PESA in Kenya (Lal
et al., 2016).

According to the Annual Status of Education Report (ASER) survey 202110, the
availability of smartphones in rural India increased from 36.8% in 2018 to 67.6% in 2021 with
at least 27.9% of households have bought a new smartphone for their children’s education.
Also, as per the February 2022 report by Deloitte11, the number of smartphone users in India
would reach 1 billion by 2026 where rural demand would drive the internet-enabled phones
with a compound annual growth rate of 6% in the rural segments. The internet-enabled
technologies and services are expected to further invite higher adoption with a program like
BharatNet by the government that would provide high-speed internet facilities even in the
remotest of villages.

Financial Technology companies also known as the ‘neo-banking’ space have powered
the drive for financial inclusion and its expansion can be seen with estimates that the fintech
sector is expected to reach $ 200 billion in revenues by 203012. One technological innovation
that changed the mobile money, wallets, and payments interface has been the Unified Payments
Interface (UPI). Since the pilot launch in April 2016 by RBI, (UPI), a payment system that
accommodates multiple bank accounts into a single mobile application while allowing
interoperability of various merchant payments, seamless routing of funds, and ‘peer to peer
payment collection requests and authentication mechanisms at the click of the button has
practically revolutionized the way digital payment transactions are made in India going
completely cashless. Figure 14 takes through the growth in both the volume as well as the value
of transactions made through UPI with more than 6.5 billion transactions worth Rs. 10.72
trillion in August 2022. The data from RBI’s Handbook 2021-22 further mirrors the trends and
patterns underlining the rapid uptake of digital financial transactions where the total digital
payments transactions grew at 65% YoY in 2021-22 putting India at the helm in terms of real-
time transactions in the world at 48 billion in 202113.

10 https://img.asercentre.org/docs/aser2021finalreport_16.116.54pm1.pdf
11 https://www2.deloitte.com/in/en/pages/technology-media-and-telecommunications/articles/big-bets-on-
smartphones-semiconductors-and-streaming-service.html
12 https://www.ey.com/en_in/financial-services/how-is-the-fintech-sector-in-india-poised-for-exponential-

growth
13 https://cebr.com/reports/the-times-of-india-at-48-billion-india-account-for-largest-number-of-real-time-

transactions-in-the-world/

18
 Figure 14: UPI Transactions - Monthly Volume and
Value since 2016
7000 6,579.63 1200000

6000 1000000
10,72,792.68
5000
800000
4000
600000
3000
400000
2000

1000 200000

0 0
Jul-16

Apr-17
Jul-17

Apr-18
Jul-18

Apr-19
Jul-19

Apr-20
Jul-20

Apr-21
Jul-21

Apr-22
Jul-22
Oct-16
Jan-17

Oct-17
Jan-18

Oct-18
Jan-19

Oct-19
Jan-20

Oct-20
Jan-21

Oct-21
Jan-22
Volume (in Million) Value (in Cr.)

(Source: National Payments Corporation of India)

19
 5. Conclusion
The above sections have covered various facets of financial inclusion in India and despite strides
and staggering achievements in the arena, some of the observations and challenges that remain
in the process have been pointed out as follows:

5.1. Changing Face of Financial Inclusion: Addressing Usage

The early agenda on financial inclusion mainly insinuated the elimination of ‘financial exclusion’
through making access to financial products and services widespread to the vulnerable
population and in remote areas and set the role of the government as a central authority to
ensure a sound supply side i.e., ‘access-oriented policy’ along with putting a regulatory
framework in place.

Gradually, digitalization would render some traditional indicators like ATMs as points
of service less relevant over time as more individuals and households adopt mobile money
services. Therefore, to see only access at the heart of the matter renders a myopic view,
particularly in terms of scaling of existing products given the vast geographical variations and
differences in experiential learnings, networks, and resources (Salignac et al., 2016) that people
draw their insights from, which in turn affect their usage behavior.

The World Bank report mentions that the share of account inactivity was observed at
35% in India, the highest in the world with a 12-percentage point gap in terms of gender
difference making women’s financial inclusion more difficult. Barua et al. (2016) while studying
the MNREGS note that the financial activity of the accounts remains low, revealing that most
of these accounts are just used for receiving income and encouraging savings, and have taken
up few loans with commercial banks. This gap despite ownership and access to the saving
account in the utilization and sustained engagement in the financial ecosystem is a challenge
that can be viewed from a behavioral lens.

Behavioral science theories attribute lower financial inclusion around the world to
psychological biases like self-control (Pompian, 2011), herding (Zhang and Chen, 2017), loss
aversion (Ngoc, 2014), etc. to poorly designed products, information complexity, and overload
among others. This furthers the argument that non-usage does not hint lack of intention but
certain inertia coupled with a lack of information and fear of risky propositions to take up a
certain financial product. Individuals’ choice of financial products is also driven by various
underlying biases. For instance, the recently released data on financial savings of the households
by RBI as on March 2022 indicates that the majority of the savings are accumulated in the form
of fixed deposits (48.9%of the GDP) whereas the number for life insurance and mutual funds
stood at 22.3% and 9.1% respectively14. Deb et al. (2021) reveal that people choose insurance
as a saving alternative than protection, thus, individuals subscribe to traditional financial
products that are perceived as safe. To overcome such biases even for upcoming technological
adoptions, financial literacy has been considered a very relevant tool to invite changes in the
practices and behavior of individuals. Financial education needs to be included at all stages of

14 https://rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=21387

20
adult education, in addition to initiatives like the establishment of the National Center for
Financial Education (NCFE) by the regulators and the implementation of the Centre for
Financial Literacy (CFL) program by the RBI.

5.4. Technology as an Enabler and Tackling associated risks

The emergence of digital financial services in the form of the FinTech revolution has disrupted
the core services and pushed banks towards innovation to stay relevant. It has opened various
opportunities to experiment with dynamic forms of products and services on offer. Taking
credit as a point of discussion, COVID-19 has immensely affected households and micro,
medium, and large enterprises and limited their access to credit, and diminished their ability to
repay debt. Digital credit is an evolving proposition using smartphone technology or web
platforms that has served the needs of many households and business enterprises as well. The
recent announcement15 for zero merchant fee (MDR) for RuPay credit cards on UPI for
transactions up to Rs. 2000 is a step ahead to making small credit available to the masses while
being able to have a cash flow-based credit mechanism to manage credit-based risk.

Another development is the framework16 introduced for geo-tagging of payment system

touch points by RBI in March 2022 where digital payment transactions can be mapped and
traced through payment touch point details via the information on PoS terminals, QR Codes,
etc. This could in the future provide data on regional penetration of digital payments and can
help bring financial services to the underserved areas in the country thereby bridging the
geographic digital divide.

With all the new possibilities of paradigm shifts augmented by digital finance, a new set
of risks surfaces manyfold for financial inclusion. The neo-banks are more exposed than their
traditional counterparts and are less collateralized which poses a system-wide risk17.
Additionally, cyber insecurity via frauds, leakage of confidential information, cyber-attacks, etc.
is growing globally18, thus summing the risks attached to digital finance.

To ensure that income inequality is reduced rather than widened with technological
advantage at the hands of the few and the divide between rural-urban is plugged, it is imperative
to strengthen capacity for say, fraud prevention and credit assessment using technological
interventions, enabling enforcing contractual and property rights, protecting investors, allowing
fair competition and ensuring financial stability. So, fostering a regulatory framework is required
instead of resisting new technologies, private sector-led innovations need to be passively
accepted to reap efficiency gains.

5.2. Steering Focus on Quality of Financial Inclusion

While access and usage have always taken center stage in discourse about financial inclusion,
the provision of a better quality of financial inclusion is very relevant to enable access and

15 https://www.npci.org.in/PDF/npci/rupay/2022/Operating-circular-for-RuPay-Credit-Cards-linked-to-
UPI.pdf
16 https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12260&Mode=0
17 https://www.imf.org/en/Blogs/Articles/2022/04/13/blog041322-sm2022-gfsr-ch3
18 https://www.imf.org/external/pubs/ft/fandd/2021/03/global-cyber-threat-to-financial-systems-maurer.htm

21
widespread usage. It is viewed from the consumer’s perspective in terms of affordability,
transparency, convenience, consumer protection, availability of diverse choice options, etc.

The quality dimension also encompasses a robust banking system, for which an efficient
insolvency and debt resolution framework is a key driver to improve access to credit. One of
the attempts by the Government at improving the quality dimension is through purging the
banking sector of Non-Performing Assets (NPAs). As can be observed in figure 15 the net
NPAs as a percentage of total assets for various bank types plummeted after 2017-18. This was
primarily due to the implementation of the Insolvency and Bankruptcy Code 2016.

Figure 15: Net NPAs as % of Total Assets (Bank group wise)

5
4.5
4
3.5
3
2.5 1.8
2
1.7
1.5
1.3
1 0.9
0.5
0.2
0 0

Scheduled Commerial Banks Public sector banks New private sector banks

Foreign banks Small Finance banks

(Source: RBI)

The quality of financial inclusion in terms of cost of usage falls significantly once the ecosystem
is developed and becomes conducive to scaling up, thereby ramping up adoption after
overcoming initial teething problems is crucial to eventually improve quality. Also, innovations
in the nature, design, mode of product, and service delivery are important aspects. New models
of service delivery in new areas ought to be explored, for example, remittances require
innovative models given as it presents untapped opportunities.

5.3. Contingent on States

Studies have highlighted inter-state variations in financial inclusion, for instance, Gupta et al.
(2014) measured the performance of states on financial inclusion using an index and ranked
states like Goa, Punjab, Kerala, Tamil Nadu, and Karnataka in the top five states while states
like Bihar, Arunachal Pradesh, Mizoram, Nagaland, and Manipur were ranked lowest, therefore,
the northern, southern and western region fare far ahead of Northeastern and central regions
states in the country. Earlier, research has also underlined the regional variations in terms of

22
access and usage parameters of financial inclusion (Kuri and Laha, 2011; Sinha, 2014;
Ambarkhane et al., 2016).

A closer look at the insurance data from IRDAI Report 2020-2119 reveals that the
composition of health insurance premiums among states is skewed such that Maharashtra alone
has a 32% share followed by Karnataka (10%), Tamil Nadu (10%) while the rest of the country’s
contribution stands at 34%. Further, in case of access to life insurance through the presence of
offices, out of 49 districts with no such office, 38 districts belong to the Northeastern states of
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, and Sikkim. Table A3
(annex) provides a similar picture of the distribution of scheduled commercial bank branches
across states since 2012.

Considering the case of the MNREGS program aimed to provide rural employment for
a minimum period with Direct Benefit Transfers (DBT) into the bank accounts of the
individuals covering over 734 districts with 16.47 crore job cards issued. The latest numbers for
2022-23 by the Ministry of Rural Development point out that 24.99 crore DBT transactions
were done and 4.84 households benefitted with 15.43 crore active workers.

Despite the numbers, still as shown in Figure 16 the percentage distribution of active
workers enrolled varies considerably across states for 2022-23 where Northeastern states of
Mizoram and Tripura have the highest percentage of active workers while states like Goa,
Gujarat, Jharkhand, and Haryana have less than one-third active workers. Regional differences
are also highlighted by Turangi (2022) using the analysis of household coverage under the
scheme over the period 2006-21 where northern states were more dependent as compared to
the southern states for the receipt of wages. It was observed that the scheme witnessed an
increasing trend in coverage between 2006-07 and 2010-11, followed by a steady decline
between 2011-12 and 2014-15 and the momentum picked up after 2015-16. Interestingly, during
the COVID-19 outbreak, MGNREGS’s coverage increased significantly from 32.5% in 2019-
20 to 44.8% in 2020-21 which is attributed to returning migration and lack of economic activities
during the lockdown.

19https://www.irdai.gov.in/admincms/cms/uploadedfiles/annual%20reports/Annual%20Report%202020-

21.pdf

23
 Figure 16: State-wise Percentage of active workers (2022-23)
Mizoram 93.4
Tripura 83.92
Ladakh 79.24
Chhattisgarh 72.79
Nagaland 72.32
Meghalaya 69.55
Tamil Nadu 69.1
Jammu And Kashmir 66.15
Sikkim 65.95
Manipur 65.68
Madhya Pradesh 64.66
Arunachal Pradesh 60.68
Uttarakhand 56.82
Telangana 55.35
Rajasthan 54.48
Assam 52.61
Andhra Pradesh 51.32
Uttar Pradesh 51.03
Himachal Pradesh 50.62
Punjab 50.45
West Bengal 49.04
Karnataka 48.01
Odisha 43.14
Puducherry 42.77
Haryana 41.88
Jharkhand 38.97
Gujarat 30.81
Andaman And Nicobar 28.4
Goa 13.27
Lakshadweep 1.3

0 10 20 30 40 50 60 70 80 90 100

(Source: Ministry of Rural Development, GOI)

It highlights how financial inclusion can be a tool to mitigate deprivation and provide timely
relief even during disasters and crises. Therefore, to ensure homogeneous development spatially,
the impetus to financial inclusion ought to be viewed as an exercise where states need to
complement various delivery mechanisms and overcome implementation bottlenecks factoring
in their needs. Most of the schemes are implemented through sharing of resources and/ or
administrative capacity between the center and the states. Thus, a large majority in terms of the
success of the initiatives is contingent on the states. For example, under PM-Jan Aarogya
Yojana, the states can choose the implementation model and can implement the scheme
through trust, insurance company, or mixed model. Also, states are given the flexibility to
integrate existing IT systems for existing insurance schemes and update data on PM-JAY in real
time.

Financial inclusion would be higher structurally in locations where the cost of providing
financial services per person is lower since offering financial services to big populations benefits
from economies of scale (Barajas et al., 2022). Also, higher income per capita is positively
connected with financial inclusion because household income has a significant impact on the
volume and value of their financial activities (Park and Mercado, 2015). Thus, keeping in mind
these variables, the states must identify tailored solutions based on local conditions and
infrastructure to accelerate the pace of financial inclusion.

24
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 ANNEXURE
Table A1. International Comparisons – Financial Access Survey Indicators 2021
Country Commercial Commercial ATMs ATMs Deposit Loan Mobile and Value of
bank bank per per accounts accounts internet mobile and
branches branches 1,000 100,000 with with banking, internet
per 1,000 per 100,000 km2 adults commercial commercial Transactions, banking
km2 adults banks per banks per per 1,000 transactions
1,000 adults 1,000 adults adults (% of GDP)
India 50.72 14.58 74.58 21.44 2046.75 288.47 28091.97 214.78
Bangladesh 84.50 8.98 107.79 11.45 1034.56 96.56 319.39 4.44
Brazil 3.49 17.13 19.24 94.47 - 3532.09 553564.57 470.23
China 10.87 8.77 100.96 81.44 8742.14 -
Indonesia 17.92 15.79 54.56 48.09 2101.55 429.59 37809.95 234.76
Mexico 5.98 11.98 31.09 62.26 1130.25 - 17526.50 629.30
Philippines 23.60 8.99 77.09 29.37 819.58 - -
Singapore 469.68 6.97 3660.08 54.33 - - - -
Sri Lanka 46.93 17.35 - - - - - -
Turkey 12.68 15.01 67.87 80.37 4619.85 76793.39 337.46
Malaysia 6.66 8.70 41.55 54.28 2146.18 805.16 136129.74 717.06
Kenya 2.63 4.39 4.16 6.94 1944.83 381.74 - -
UAE 9.10 7.60 61.90 51.70 1305.57 589.88 - -
UK - - 220.72 96.28 - - - -
United States 8.38 28.26 - - - - - -
Australia 0.65 24.06 3.34 123.59 - - - -
Canada 0.73 20.69 7.53 212.44 - - - -
France 33.84 33.27 - - - - 35911.75 -
Italy 60.37 34.47 154.94 88.47 767.18 859.38 - -
Japan 102.48 33.89 353.57 116.94 7236.31 193.41 - -
(Source: Financial Access Survey 2021 Data)

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 Table A2. State Wise Kisan Credit Card Data 2019-2020

Number of Operative KCCs Amount outstanding

States under Operative KCCs
(in '000)
(in ₹ Crore)
Uttar Pradesh 10,649 1,13,070.2
Karnataka 7,467 44,114.5
Madhya Pradesh 5,897 66,350.1
Maharashtra 5,769 45,109.6
Rajasthan 5,726 77,974.1
Andhra Pradesh 4,522 47,630.8
Telangana 4,079 35,796.4
Odisha 4,005 17,622.9
West Bengal 3,035 12,030.8
Bihar 2,801 18,957.1
Gujarat 2,466 46,586.1
Haryana 2,144 44,782.6
Punjab 1,969 56,217.5
Tamil Nadu 1,948 21,146.7
Chhattisgarh 1,522 5,952.5
Kerala 1,080 15,862.1
Jharkhand 1,021 4,734.9
Assam 741 3,851.8
Uttarakhand 516 6,006.5
Jammu & Kashmir 468 5,136.4
Himachal Pradesh 377 6,181.3
Tripura 251 523.9
Meghalaya 64 313.4
Nagaland 28 140.2
Manipur 25 132.1
Mizoram 18 110.2
Arunachal Pradesh 12 78.2
Puducherry 12 132.0
Goa 7 74.2
Sikkim 6 32.9
Andaman and Nicobar Island 5 15.6
New Delhi 4 56.7
Chandigarh 4 277.9
(Source: RBI)

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 Table A3: State-Wise Distribution of Offices of Scheduled Commercial Banks

Region/State/Union
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Territory
NORTHERN REGION 17905 19681 22000 23843 24700 25481 25868 26636 27500 27543
Haryana 3022 3412 3962 4407 4567 4762 4842 5008 5224 5225
Himachal Pradesh 1164 1264 1386 1466 1510 1542 1531 1635 1652 1683
Jammu and Kashmir 1198 1364 1535 1634 1706 1741 1783 1830 1767 1800
Punjab 4346 4854 5547 6024 6168 6366 6474 6614 6735 6700
Rajasthan 4936 5359 5907 6426 6805 7011 7184 7391 7775 7871
Chandigarh 363 383 408 439 433 444 441 442 454 442
Delhi 2876 3045 3255 3447 3511 3615 3613 3716 3825 3747
Ladakh - - - - - - - - 68 75
NORTH-EASTERN
2556 2769 3129 3345 3562 3739 3847 3916 4632 4735
REGION
Arunachal Pradesh 96 106 128 135 143 151 153 155 164 169
Assam 1639 1749 1945 2103 2209 2306 2370 2404 2957 3020
Manipur 94 111 134 138 150 159 176 192 203 210
Meghalaya 237 256 286 294 319 338 343 346 364 367
Mizoram 111 122 141 151 167 186 190 192 203 210
Nagaland 108 124 141 145 150 157 160 164 176 180
Tripura 271 301 354 379 424 442 455 463 565 579
EASTERN REGION 16345 17469 19376 20893 21703 22361 22698 23264 25339 25678
Bihar 4650 4990 5696 6210 6445 6602 6711 6917 7463 7584
Jharkhand 2180 2368 2582 2763 2840 2910 2954 3051 3169 3190
Odisha 3319 3558 3995 4410 4567 4748 4839 4914 5223 5289
Sikkim 89 98 113 122 128 131 137 143 162 164
West Bengal 6061 6402 6931 7327 7660 7903 7988 8170 9251 9379
Andaman & Nicobar Islands 46 53 59 61 63 67 69 69 71 72
CENTRAL REGION 19948 21581 24096 25926 26797 27657 28168 28969 30292 30437
Chhattisgarh 1597 1818 2062 2253 2346 2443 2516 2634 2823 2844
Madhya Pradesh 4805 5085 5601 5997 6209 6411 6581 6747 7234 7248
Uttar Pradesh 12096 13092 14694 15773 16264 16774 17022 17462 18041 18125
Uttarakhand 1450 1586 1739 1903 1978 2029 2049 2126 2194 2220

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 Region/State/Union
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Territory
WESTERN REGION 15751 17013 18673 19821 20261 20880 21174 21896 23011 23021
Goa 521 570 632 670 670 686 684 697 697 687
Gujarat 5548 6084 6743 7241 7432 7697 7922 8150 8626 8582
Maharashtra 9608 10272 11203 11810 12058 12392 12462 12943 13578 13648
Dadra & Nagar Haveli* 40 47 51 53 54 58 59 59 110 104
Daman & Diu 34 40 44 47 47 47 47 47 - -
SOUTHERN REGION 28300 30766 33691 36654 37835 39203 39615 40693 42328 43071
Andhra Pradesh 8333 9095 9900 6290 6567 6839 6935 7087 7252 7431
Karnataka 7137 7797 8625 9365 9640 10037 10041 10285 10778 10875
Kerala 5006 5430 5858 6190 6299 6452 6382 6622 6801 6869
Tamil Nadu 7641 8245 9090 9847 10164 10487 10851 11206 11829 12028
Lakshadweep 12 12 13 13 13 13 13 13 13 21
Puducherry 171 187 205 228 234 241 245 253 267 268
Telangana - - - 4721 4918 5134 5148 5227 5388 5579
ALL INDIA 100805 109279 120965 130482 134858 140216 141909 145374 153102 154485
(Source: RBI Handbook of Statistics on Indian States 2021)

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