Role and Importance of Financial Inclusion in India

“If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin”

Charles Darwin

Even after 70 years of Independence, majority of the population still remain unbanked. Majority of rural population is still not included in economic growth, therefore the concept of financial inclusion becomes a challenge for India.

While talking about India there are three sections that demands special attention; the low salary earners in the unorganised sector, the small and marginal farmers and the small and micro industries. Collectively, these three constitutes a significant part of the population that needs improvement in their financial capabilities. Since, these three are important contributors to India’s GDP and labour force.

Financial inclusion focuses on improved and better social and economic development of the nation.

Financial inclusion enables the participation of underprivileged, poor and weaker sections of the society to make them self-sufficient to make them well informed and take better financial decisions. The lack of financial awareness among the rural population is the main factor which is hindering the growth of the economy as majority of the population does not have access to basic financial literacy.

A country is said to be fully developed when economy’s backbone i.e. the banking system is accessible to everyone and each and every individual is actively participating and having access to financial services. When every individual is contributing his share economically, then only we can say that the nation is on the path of financial inclusion.

In India, presently the focus of financial inclusion is confined to ensure basic minimum access to a savings bank account without frills to all. To keep this view point, the current prime minister Mr. Narendra Modi has started scheme of Pradhan Mantri Jan Dhan Yojana(PMJDY) considered to be as a national mission for Financial Inclusion to ensure access to basic banking services in an affordable manner. As per one report, around 11.5 crore bank account covering 99.74% of households have been opened under this scheme against the target of 10 crore which resulted in declining share of zero-balance accounts.

Financial Inclusion is a necessity for sustaining equitable nation’s growth as it provides an avenue to bring the savings of the poor into formal financial banking system which further channelled into investment. It will help government to make payments under various social security schemes through bank account of the beneficiaries via electronic transfer. It will minimise per transaction cost of banks thereby ensuring efficient payment mechanism.

Financial inclusion will help in bringing transparency in the banking system. Since, maximum number of transactions are done online through transfers directly in bank accounts, thereby, helping in minimising chances of frauds and leakages.

Financial inclusion is the cherished goal which should be undertaken by all the financial entities and other players like MFI’s, NBFC’s, NGO’s, etc. All of them have to play a complimentary role in achieving this objective to bring our nation on the path of sustained economic development where everyone is enjoying the benefits of financial services and is contributing also to country’s economic development.


Ms. Deeksha Suneja

Assistant Professor

JIMS Kalkaji








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