MBF 2025-wl-7119-Financial Inclusion in India – Context, Policy Approach and Outcomes

The paper looks at the process of financial inclusion in India by laying out its context, policy approach and outcomes, while highlighting the areas for future reforms. India offers a rich context to financial inclusion starting with the creation of credit cooperatives in the pre-Independence period. The paper argues that the current drive for universalising and digitalising the access to finance reflects a blend of the ‘activist’ and ‘modernist’ approaches, the two political economy approaches to financial inclusion. This blended approach has delivered on enhancing the access to bank deposits. However, the redistribution of bank credit and its affordability are critical for taking forward the process of financial inclusion. The growth in digital payments has been striking, but digital divides need to be bridged for a wider use of digital finance.