A Win-Win Financial Ecosystem

Financial inclusion improves the economic activity in every country and, in turn, fosters economic growth by reducing income inequality and poverty. Faster financial inclusion, especially in rural India, will be a crucial aspect of the Indian government's dream of becoming a $5 trillion economy by 2029. The government's efforts toward this goal have been commendable. Pradhan Mantri Jan Dhan Yojana (PMJDY) has been on a long stride towards this ambitious goal. The iconic program of the Government of India that it launched right after Prime Minister Narendra Modi took oath in 2014, PMJDY aims to democratize affordable access to financial services such as bank accounts, remittances, credit, insurance, and pensions.

The program has been a considerable success, with around 45 Crore banking accounts opened so far under the scheme with a cumulative balance of Rs. 160,839.87 crore. Today, 1.26 lakh Bank Mitras deliver branchless banking services in Sub-Service Areas under the scheme. Promoting savings, use of ATMs, getting ready for credit, availing insurance and pensions, and using basic mobile phones for banking are creating a favorable ecosystem for financial companies to thrive in the country creating a win-win situation.

On the other hand, to effectively track and enhance financial inclusion in the country, the Reserve Bank of India (RBI) last year constructed a composite Financial Inclusion Index (FI-Index) based on multiple parameters that will reflect the broadening and deepening of financial inclusion in the country. We are still far from where we want to be. It takes a collaborative approach to improve the FI-Index, wherein the private sector banks and NBFCs will have to play an instrumental role. In this edition, we have researched and curated a set of stories from the financial industry.