Financial Inclusion (FI) is a socio-economic concept that aims to provide financial services at affordable costs to the underprivileged, who might not otherwise be aware of or able to afford these services. Global trends have shown that in order to achieve inclusive development and growth, the expansion of financial services to all sections of society is of utmost importance.

FI is considered as an effective means to sustainable economic growth and is intended to ensure that each citizen of the country is able to use their earnings as a national financial resource for redeployment in productive sectors of the economy. Such pooled financial resources can be channelized to develop enterprises, fueling the nation’s progress.

While inclusive banking began, in spirit, with the nationalization of banks in 1969 and 1980 in India, the real thrust on FI came in 2005 when the Reserve Bank of India (RBI) highlighted its significance in its annual policy statement of 2005-06. It urged banks to work towards reaching out to the masses, offering banking services down to the hinterland. The worrying fact was the mass exclusion of people from the formal banking system that hindered economic growth at the bottom of the pyramid. Then onwards, RBI began to persuade banks to include FI as a business objective.

In 2006, the government constituted a Committee on Financial Inclusion, which made a wide range of recommendations on the strategies for building an inclusive financial sector and gave a national rural financial inclusion plan. The government has set up the Financial Stability and Development Council (FSDC), which is mandated, inter alia, to focus on Financial Inclusion and Financial Literacy issues. In order to further strengthen the ongoing financial inclusion agenda in India, a high-level Financial Inclusion Advisory Committee has been constituted by RBI. FI thus became an integral part of the business domain of banks, with RBI advising all public and private banks to submit a board-approved, three-year FI plan (FIP) starting from April 2010.

Among associated developments, RuPay – an Indian domestic debit card – was introduced on 26 March 2012 by the National Payments Corporation of India (NPCI). It has been a game-changer in creating better digital infrastructure and enabled faster penetration of debit card culture.