FINANCIAL INCLUSION AND HOUSEHOLD SAVINGS BEHAVIOUR IN SEMI-URBAN INDIA

Financial inclusion in semi-urban India has raised the share of households that save, but it has changed where they save much more slowly than whether they save. Semi-urban centres, defined by the RBI as towns with a population of 10,000 to under 1 lakh, held 46,475 of India's 1,64,310 bank branches (28.3%) in March 2025. Most of the 59.09 crore Jan Dhan accounts are in rural and semi-urban areas (77.8% in the two combined). NABARD's All India Rural Financial Inclusion Survey (NAFIS), which covers rural areas and towns of up to 50,000 people, found that the share of households that saved rose from 50.6% in 2016–17 to 66% in 2021–22, and average annual financial savings rose from ₹9,104 to ₹13,209 per household. Insurance coverage jumped from 25.5% to 80.3% of households.Yet household wealth in India remains dominated by physical assets (77% real estate and 11% gold, against 5% financial assets for the average household), the share of households in debt also rose (47.4% to 52%), and many accounts stay dormant. Drawing on RBI, NABARD, Ministry of Finance and World Bank data and on the research literature, this paper argues that inclusion affects savings through four channels: safe storage, lower transaction costs, access to formal savings and insurance products, and financial literacy.