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Financial inclusion has been a buzzword in the financial ecosystem for several years and has now assumed greater importance in post-Covid India. Though a grand rollout has happened thanks to the Jan-Dhan programmes, there is still some way to go. The goal of replacing a bank account per family with a bank account for every adult has to be achieved.
Also, there is a wide inter-state disparity in the issuance of ATM-cum-debit cards that accompany the Jan-Dhan accounts. At the end of FY21, about 90% of the beneficiaries of Jan-Dhan accounts in Ladakh had debit cards, while only 35.14% had it in Mizoram. The national average is slightly more than 73%. This is hardly conducive to the goal of digital India.
The coverage of these cards is crucial since it empowers the recipients for transactions in ATMs and make online transactions. It is significant that RBI governor Shaktikanta Das has once again reiterated the importance of financial inclusion on Thursday, saying it is crucial in addressing income inequality and poverty.
There are other gaps too. The pandemic has shown the crucial need for life insurance coverage for a far larger share of the population than the current 4%. The financial literacy mission must include the need for insurance too.
The fintech space that is expanding at a blistering pace must also address the needs of the bottom of the pyramid segment of the population. If this segment of the population can have access to investment avenues tailored to suit their needs, it can, in a sense, be the fulfillment of the ultimate goal of financial inclusion.
It was heartening to see Das mention financial inclusion will continue to be a priority area for the RBI and it would soon publish an index for it. But to make it a reality, every stakeholder needs to pitch in. Private sector banks lag behind the public sector banks by a big margin when it comes to opening Jan-Dhan accounts. Promises made to the bottom of the pyramid need to be kept.