Financial inclusion measures in India

The RBI and Government have launched several financial inclusion measures and programs over the last one decade. Financial inclusion measures on a mission mode were started since the launch of no-frills account by the RBI in 2005. Later in 2010, it was replaced by the BSBDA. A big stride to provide banking services to the 600000 rural habitations were made with the launch of Financial Inclusion Plan by commercial banks in 2010. Besides these lead measures, the Jan Dhan Yojana has made a camp approach in 2014 towards financial inclusion. In recent years, several digital payments options were used by the RBI to support financial inclusion.

Following are the main financial inclusion measures and programmes launched in India.

 1. The basic banking account or Basic Savings Bank Deposit Account (BSBDA): This is the bank account with a minimum bouquet of services including savings and payments given to the financially excluded people that. The BSBDA account has replaced the previous no frills (zero balance) account. Minimum bouquet of products and services were offered under BSBDA and they include:

  • A savings cum overdraft account
  • A pure savings account, ideally a recurring or variable recurring deposit
  • A remittance product to facilitate EBT and other remittances, and
  • Entrepreneurial credit products like a GCC or a KCC

2. Simplified KYC norms: the RBI has simplified KYC regulations especially for small value clients and transactions. This is because in a country like India where documents and identity proof are not with many, it is very difficult to attract them to stricter KYC standards. Hence essential and basic level identities are needed under this simplified KYC regime.

3. Liberalized policy towards ATMs and White label ATMs. To expand the network of ATMs, the RBI has allowed non-bank entities to start ATMs (called ‘White Label ATMs’).

4. Adoption of Business Correspondents (BCs): BCs were allowed to provide banking services in rural areas.

5. Promotion of technology-based instruments for spreading banking services: Several technologies based solutions were initiated by the RBI to promote financial inclusion. These include incentivizing banks to issue smart cards and ATM cards etc, supporting internet banking and mobile banking with regulatory measures. Business Correspondents have to use ICT while delivering products in remote areas.

6. Promotion of Payment infrastructure including pre-paid instruments: technological development has transformed payment operations. Payments are essential banking services. Here, the RBI itself has the NEFT and RTGS. Banks and Non-Bank entities like telecom companies are allowed to issue prepaid instruments like mobile wallet etc.

7. RuPay debit cards were launched in 2012 by NPCI. “RuPay” is the coinage of two terms Rupee and Payment. The RuPay Cards have significantly increased its market share to 38 per cent (250 mn) of the total 645 million debit cards in the country so far. The card has been provided to the account holders of PMJDY (170 million).

8. Financial Literacy Programme: Financial Literacy Centers were started by commercial banks at the request of RBI to give awareness and education to the public to access financial products. Here, RBI’s policy is that financial inclusion should go along with financial literacy. RBI provides support to Financial Literacy and Credit Counselling Centres (FLCCs).

9. Financial Inclusion Plan for the expansion of branch and branchless banking. Commercial banks have launched FIP to provide banking services to remote areas. (

10. Liberalized branch license scheme: the RBI has launched this step in December 2009. Here, domestic scheduled commercial banks were permitted to freely open branches in tier III to tier VI centres with a population of less than 50,000 subject to reporting. In north-eastern states and Sikkim, domestic scheduled commercial banks can now open branches in rural, semi-urban and urban centres with the same liberalized procedure. Similarly, banks were asked open at least 25 per cent of the total number of branches in unbanked rural centres.

11. Kisan Credit Cards (KCC) and General Credit Cards (GCC)

Kisan Credit Cards were issued to small farmers to get hassle free credit from banks. Issue of credit cards to the credit needy people was another component of the RBI’s financial inclusion drive. Under GCC, banks have been asked to introduce general purpose credit card facility up to Rs 25,000 at their rural and semi-urban branches for low-income people. The objective of the scheme is to provide hassle-free credit to customers based on the assessment of cash flow without insistence on security, purpose or end-use of the credit.

12. Bank -SHG linkage programme

13. Aadhaar enabled payment system

14. Direct Benefit Transfer (DBT): The launch of direct benefit transfers through the support of Aadhaar and Bank Account is one of the biggest development that activated and retained people in the newly opened account.

15. PMJDY: Pradhan Mantri Jan Dhan Yojana

16. EBT: RBI has encouraged Electronic Benefit Transfer for routing social security payments through the banking channel.

17. Unified Payments Interface:  UPI is a payment mechanism built by the NPCI to promote online money transactions. It is aimed to facilitate retail payments for ecommerce, small ticket money transfers for person to person payment, micropayments, utility bill payments etc. Purchase of tickets, payment of school fees, etc. can be easily carried out by the interface rather than submitting the bank details while executing the transaction.

18. BHIM App