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Indian Jou nal o
Mode n Resea ch and Re iews
This Jou nal is a membe o he ‘Commi ee on Publica ion E hics’
Online ISSN:2584-184X
Resea ch Pape
P omo ing Economic G ow h h ough Financial Inclusion in
India
B. Vijay Raj 1*, D . K. Su esh 2
1 PhD (Pa -Time) Resea ch Schola , PG & Resea ch Depa men o Economics, Ramak ishna Mission Vi ekananda
College (Au onomous), Mylapo e, Chennai, Tamil Nadu, India
2 Assis an P o esso PG & Resea ch Depa men o Economics, Ramak ishna Mission Vi ekananda College
(Au onomous), Mylapo e, Chennai, Tamil Nadu, India
Co esponding Au ho : *B. Vijay Raj DOI: h ps://doi.o g/10.5281/zenodo.17667965
2
ABSTRACT
Manusc ip In o.
India has wi nessed ema kable p og ess in ad ancing inancial inclusion, aimed a ensu ing
a o dable and accessible inancial se ices o all, pa icula ly low-income and unde se ed
popula ions. The na ional h us owa d inancial inclusion has ocused on add essing long-
s anding challenges such as inadequa e banking in as uc u e, limi ed inancial li e acy, and
geog aphic ba ie s. The apid expansion o digi al echnologies—including mobile banking,
he Uni ied Paymen s In e ace (UPI), and in ech-led solu ions—has signi ican ly widened
inancial access, enabling deepe in eg a ion o emo e and ma ginalised communi ies in o he
o mal inancial sys em. Financial inclusion oday goes beyond basic banking access; i seeks o
empowe indi iduals by acili a ing pa icipa ion in economic ac i i ies, enhancing inancial
secu i y, and imp o ing o e all li elihoods. This inclusion-d i en app oach has s eng hened
economic g ow h in India by expanding access o c edi , insu ance, sa ings ins umen s, and
digi al paymen pla o ms. Go e nmen ini ia i es such as P adhan Man i Jan Dhan Yojana
(PMJDY), MUDRA Yojana, and na ionwide inancial li e acy p og ams ha e u he
accele a ed inancial deepening and inc eased inancial awa eness. As a esul , India has seen
subs an ial g ow h in he numbe o bank accoun s, c edi up ake, and digi al ansac ion
olumes. This s udy examines hese ans o ma i e ini ia i es and e alua es he ex en o which
inancial inclusion has con ibu ed o economic g ow h and de elopmen in India.
✓ ISSN No: 2584- 184X
✓ Recei ed: 12-09-2025
✓ Accep ed: 23-10-2025
✓ Published: 29-10-2025
✓ MRR:3(10):2025;53-58
✓ ©2025, All Righ s Rese ed.
✓ Pee Re iew P ocess: Yes
✓ Plagia ism Checked: Yes
How To Ci e his A icle
Raj BV, Su esh KS. P omo ing
economic g ow h h ough inancial
inclusion in india. Ind J Mod Res Re .
2025;3(10):53-58.
KEYWORDS: Financial Inclusion, Financial Inclusion Index, Digi al Finance, Economic G ow h, India.
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1. INTRODUCTION
Financial inclusion se es as a powe ul ca alys o economic
g ow h, pa icula ly when implemen ed wi h s a egic planning
and sus ained commi men . In ecen yea s, India has made
ema kable p og ess in his domain, ecognising inancial
inclusion as a key d i e o sus ainable and inclusi e socio-
economic de elopmen , po e y educ ion, and employmen
gene a ion (G an Tho n on, 2020). The coun y has adop ed
cos -e ec i e and scalable me hods o ad ance inancial
inclusion, especially ac oss u al and emo e egions whe e
access o o mal inancial se ices was his o ically limi ed
(G an Tho n on, 2020). By le e aging digi al echnologies and
add essing adi ional ba ie s such as inadequa e in as uc u e,
limi ed inancial li e acy, es ic i e legal amewo ks, and high
ansac ion cos s, India has success ully expanded he each o
banking and inancial se ices o unde se ed popula ions
(De yl D’Sil a e al., 2019). Financial inclusion becomes uly
e ec i e only when indi iduals om all socio-economic
segmen s pa icipa e ac i ely in o mal inancial sys ems and
ma ke s. Be ween 2014 and 2019, India’s digi al economy g ew
2.4 imes as e han he o e all economy, unde sco ing he
ans o ma i e ole o digi alisa ion in s eng hening inancial
inclusion and os e ing economic g ow h (Dhi end a Gajbhiye e
al., 2022). Technology-led e o ms in he inancial sec o ha e
signi ican ly enhanced e iciency, anspa ency, and economic
oppo uni ies, as highligh ed in he Economic Su ey 2022–23.
The Rese e Bank o India’s Na ional S a egy o Financial
Inclusion (2019–24) u he ou lines a clea ision o expanding
inancial access by p omo ing comp ehensi e and a o dable
inancial se ices, pa icula ly in unde se ed egions. The
s a egy also emphasises he impo ance o inancial li e acy and
consume p o ec ion o ensu e esponsible and inclusi e
inancial pa icipa ion.
S a emen o he P oblem
Despi e India’s signi ican p og ess in expanding inancial
inclusion h ough ini ia i es such as P adhan Man i Jan Dhan
Yojana (PMJDY), MUDRA loans, and apid digi alisa ion, la ge
sec ions o he popula ion emain ou side he e ec i e each o
he o mal inancial sys em. Al hough millions o bank accoun s
ha e been opened, challenges pe sis in e ms o accoun usage,
access o a o dable c edi , inancial li e acy, and he abili y o
ma ginalised g oups o meaning ully pa icipa e in inancial
ma ke s. A conside able numbe o accoun s emain do man ,
e lec ing gaps be ween access and ac ual inancial beha iou .
Mo eo e , u al households, women, in o mal wo ke s, and
mic o-en ep eneu s con inue o ace s uc u al and socio-
economic ba ie s, including low-income le els, limi ed digi al
capabili ies, and inadequa e ins i u ional suppo . The pe sis en
digi al di ide u he es ic s he bene i s o in ech-d i en
inclusion, as no all ci izens possess he necessa y echnological
skills o in as uc u e o u ilize digi al inancial se ices. These
limi a ions aise c i ical ques ions ega ding he eal
e ec i eness o inancial inclusion ini ia i es in con ibu ing o
b oad-based, sus ainable economic g ow h. In his con ex , he
co e p oblem is de e mining whe he inancial inclusion e o s
ansla e in o angible economic de elopmen ou comes, and
iden i ying he cons ain s ha hinde inclusi e inancial
pa icipa ion. Add essing his p oblem is essen ial o designing
policies ha ensu e equi able g ow h and educe socio-economic
dispa i ies.
2. OBJECTIVES OF THE STUDY
This s udy, which discusses he a ious aspec s o inancial
inclusion, has ocused on he ollowing objec i es:
1. To discuss he concep o he meaning o inancial inclusion
2. To discuss he ini ia i es aken o p omo ing inancial
inclusion in India
Resea ch Design
This s udy is desc ip i e in na u e and based on seconda y da a.
The key websi es like RBI, Minis y o Finance, and Economic
Su ey ha e been u ilised o ga he ing ela ed in o ma ion.
Apa om hese, o he seconda y sou ces ha e also been used
o his s udy.
3. LITERATURE REVIEW
Financial inclusion has been ex ensi ely s udied a bo h he
na ional and in e na ional le els, wi h nume ous s udies
examining i s impac and challenges. A ew key s udies a e
discussed below:
Ozili (2020) p o ided a comp ehensi e e iew o ecen global
e idence on inancial inclusion, examining egions wo ldwide.
The s udy explo ed issues like op imal inancial inclusion,
ex eme inclusion, and how he o mal inancial sec o could be
impac ed by isks ansmi ed om inancial inclusion. I also
in es iga ed he ela ionship be ween inancial inclusion and
exclusion, pa icula ly conside ing he economic cycle. The
s udy concluded ha inancial inclusion in luences inancial
inno a ion, po e y le els, inancial sec o s abili y, economic
condi ions, inancial li e acy, and egula o y amewo ks.
Howe e , he impac o hese ac o s a ied ac oss coun ies.
De yl D’Sil a e al. (2019) highligh ed India's app oach o
building digi al inancial in as uc u e as a public good. The
s udy emphasized ha India’s expe ience in inancial inclusion
could se e as a aluable model o economies a all s ages o
de elopmen .
Ambica & Naga (2018) ocused on he s eps aken by he
Rese e Bank o India (RBI) o s eng hen inancial inclusion,
de ailing he pe o mance o a ious banks in p omo ing
inancial inclusion. Thei s udy also analyzed he ac ions
ini ia ed by banks o suppo his cause.
Iqbal & Sami (2017) explo ed he ela ionship be ween inancial
inclusion and economic g ow h, analyzing a se en-yea pe iod.
Using eg ession analysis, he s udy ound ha he numbe o
bank b anches and c edi -deposi a io had a posi i e and
signi ican impac on India’s GDP, while he g ow h o ATMs
showed minimal impac on economic g ow h.
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D . Ja an Kanwa Jain (2016) a gued ha inancial inclusion is
essen ial o e e yone, ega dless o demog aphics o loca ion,
and mus be o e ed a an a o dable cos . The s udy also
add essed he challenges o implemen ing inancial inclusion in
India and he issues hinde ing i s success.
Financial Inclusion
Financial inclusion is one o he s uc u al e o ms in he
economy (Economic Su ey, 2022-23). Financial inclusion
includes he in ol emen o inancial ma ke s, banks and o he
inancial ins i u ions o p o iding and designing inancial
p oduc s and se ices o he a ge pa ies. He e, he a ge g oup
includes he weake sec ion o socie y and u al a eas. RBI has
de ined inancial inclusion as he p ocess ha a ge s ulne able
and weake sec ions o socie y and makes easy a ailabili y and
accessibili y o inancial se ices and p oduc s a easonable
p ices wi hin a anspa en manne .
Ini ia i es o P omo ing Financial Inclusion in India
Unde inancial inclusion, he ollowing inancial se ices a e
ocused on he a ge g oup.
3. Financial Inclusion in Banking Sec o
The Indian banking sec o has played a emendous ole in
inancial inclusion and opened se e al b anches in he u al
sec o o scheduled comme cial banks and egional u al banks.
I has ul ima ely achie ed a la ge numbe o bank ou le s and
basic bank sa ings deposi accoun s in u al a eas. The ollowing
able exhibi s he p og ess o he banking sec o in he a ea o
inancial inclusion:
Table: 3.1 P og ess unde Financial Inclusion Plans (All SCBs & RRBs)
Yea
Bank Ou le s in Villages
BSBDA h ough B anches (No. in Lakh)
Ma -2010
67,694
600
Ma -2011
1,16,208
730
Ma -2012
1,81,753
810
Ma -2013
2,68,454
1,010
Ma -2014
3,83,804
1,260
Ma -2015
5,53,713
2,103
Ma -2016
5,86,307
2,380
Ma -2017
5,98,093
2,540
Ma -2018
5,69,547
2,470
Ma -2019
5,97,155
2,547
Ma -2020
5,99,217
2,616
Dec-2021
17,34,658
2,712
Dec-2022
16,48,780
2,704
Dec-2023
16,48,780
2,780
Sou ce: RBI
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Sou ce: RBI Annual Repo s (2010–2020)
4. Financial Inclusion in Mic o Insu ance
A landma k ini ia i e o p omo ing inancial inclusion has been
aken by he Insu ance Regula o y Au ho i y o India (IRDA) wi h
he issuance o he IRDA (Mic o Insu ance) Regula ion, 2015.
Ano he conside able ini ia i e is he issuance o he IRDAI
(Obliga ions o Insu e s o Ru al and Social Sec o s) Regula ions,
2015, which se o h he obliga ions o insu e s in he u al and
social sec o . I will open up he doo o p o iding insu ance
p oduc s o he u al and u ban poo people. The ollowing Table
No. 2 shows he numbe o new insu ance policies issued in 2021-
22:
Table 4.1: Numbe o New Insu ance Policies Issued in 2021-22
Yea
Type o Insu ance Policy
Numbe o Policies
FY21 2021-22
Li e-insu ance Segmen
10.7 lakh
2021-22
Mic o insu ance policies
53,046
Sou ce: Cons uc ed om in o ma ion a ailable om he Economic Su ey 2022-23
Se e al schemes ha e also been issued by he go e nmen in his sec o , which a e lis ed in he ollowing Table No. 3 (Economic
Su ey, 2022-23):
Table 4.2: Schemes Issued by Go e nmen
Name o Scheme
Explana ion abou he Scheme
Majo Resul
1
Ayushman Bha a Yojana
Heal h co e age o ₹5 Lakh pe bene icia y o
poo and ulne able amilies
Till Janua y 20, 2023: Numbe o bene icia ies ha ing
Ayushman Ca d = 19.7 C o e, Empanelled Heal hca e
P o ide s = 28,667
2
P adhan Man i Su aksha Bima Yojana
Risk Co e age o bene icia ies: ₹2 Lakh o
acciden al dea h and comple e Disabili y ₹1 lakh
o pa ial disabili y
Till No embe 30, 2022: Numbe o en olled
bene icia ies: 31.3 C o e
3
P adhan Man i Jee an Jyo i Bima
Yojana
Risk Co e age: ₹ 2 Lakh on he dea h o he
insu ed.
Till No embe 30, 2022: Numbe o en olled
bene icia ies: 14.4 C o e
4
P adhan Man i Vaya Vandana Yojana
Old age income secu i y o senio ci izens
Till Sep embe 30, 2022: Numbe o subsc ibe s: 8.6 Lakh
5
P adhan Man i Fasal Bima Yojana
Risk insu ance o a me s agains c op damage
Applica ion ecei ed: 2763.9 Lakh be ween 2016 and
2022
Sou ce: (Economic Su ey, 2022-23)
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5. P og ess o Financial Inclusion Via Digi al Mode
India has ollowed he app oach o p o iding digi al inancial
in as uc u e in he o m o a public good (De yl e . Al., 2019).
The access o o mal inancial se ices has been inc eased
simul aneously wi h a educ ion in cos wi h he in oduc ion o
digi al public goods (Swallow, Haksa , and Pa nam, 2021) and
(Economic Su ey, 2022-23). I is clea ly men ioned in he
Economic Su ey 2022-23 ha p og ess in public digi al
in as uc u e o e he las six o se en yea s will add 30- 50 basis
poin s o he po en ial GDP g ow h. The inno a ions in he digi al
a ea ha wo k as pilla s o boos ing inancial inclusion in India
a e lis ed below:
a) Digi al Ve i ica ion (e-KYC)
b) Digi al Signa u e
c) Digi al Reposi o ies (Digilocke )
d) Digi Paymen s (UPI)
e) Digi al Iden i y Aadha
) Linking bank accoun s wi h PM-Jan Dhan Yojana
g) JAM T ini y
h) Cen al Bank Digi al Cu ency (CBDC)
6. Financial Inclusion Index
The Financial Inclusion Index, named as he FI Index, has been
cons uc ed as an inclusi e index which inco po a es banking,
insu ance, in es men , pos al and pension indus y. This index
was launched by he RBI in 2021. I is based on h ee dimensions,
i.e. access, usage and quali y. This index will be inalised a e
consul ing wi h he conce ned Go e nmen and egula o y body,
and ga he s in o ma ion on di e en pa ame e s o inancial
inclusion, and inally indica es a single alue anging be ween 0
and 100. He e, 0 ep esen s comple e inancial exclusion and 100
shows comple e inancial inclusion (Economic Times, 2023). This
index will ensu e ha inancial se ices a e p o ided o all weake
sec ions and low-income g oups a a o dable p ices. Acco ding o
RBI, he FI-Index has been eco ded a a alue o 56.4 o he yea
ended Ma ch 2022, and his index s ood a 53.9 in Ma ch 2021
(D ish i IAS, 2022).
7. CONCLUSION
Achie ing long- e m inancial s abili y in India equi es a
comp ehensi e s a egy ha in eg a es bo h inancial inclusion
and inancial li e acy, especially among u al popula ions and
ma ginalised g oups. Financial li e acy is essen ial o ensu ing
ha indi iduals unde s and he bene i s, isks, and uses o
inancial p oduc s and se ices, enabling hem o make in o med
inancial decisions. Wi hou adequa e inancial knowledge,
inancial inclusion ini ia i es may ail o p oduce meaning ul
imp o emen s in he li es o a ge communi ies. Thus,
s eng hening inancial li e acy is a c i ical s ep owa d building a
uly inclusi e inancial sys em ha eaches all sec ions o socie y.
When e ec i ely implemen ed and con inuously moni o ed,
inancial inclusion has he po en ial o signi ican ly ad ance
India’s economic g ow h. Expanding access o a o dable
inancial se ices o low-income households i b eaks long-
s anding s uc u al ba ie s and enables b oade pa icipa ion in
he o mal inancial sys em. This con ibu es o po e y educ ion,
imp o es economic pa icipa ion, and suppo s sus ainable
de elopmen . Mo eo e , inancial inclusion ac s as a ca alys o
accele a ing India’s digi al ans o ma ion. The in eg a ion o
digi al paymen pla o ms, mobile banking, in ech inno a ions,
and seamless digi al in as uc u e enhances he e iciency,
anspa ency, and ou each o inancial se ices. These
ad ancemen s educe ansac ion cos s and s eng hen las -mile
deli e y, pa icula ly in emo e and unde se ed egions. In
conclusion, inancial inclusion is a i al d i e o India’s
economic de elopmen . By p io i ising inancial li e acy, ensu ing
e ec i e policy moni o ing, and le e aging digi al echnologies,
India can achie e sus ainable and inclusi e g ow h, ensu ing ha
no indi idual o communi y is le behind in he coun y’s
economic ad ancemen .
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