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Key Terms and Definitions

EXECUTIVE SUMMARY

The National Strategy for Financial Inclusion (NSFI) 2019-2024 had set forth the vision and key objectives of the financial inclusion policies in India to help expand and sustain the financial inclusion process at the national level through a broad convergence of action involving all the stakeholders in the financial sector. It aimed at broadening, deepening, and accelerating financial inclusion alongside promoting financial literacy and consumer protection, with a view to promoting economic wellbeing, prosperity, and sustainable development. The five-year period of NSFI: 2019-24 witnessed significant improvements across the access, usage, and quality dimensions of financial inclusion.

2. Continuing the journey and leveraging the gains in the bank account ownership to near saturation, expansion in physical and digital access infrastructure, and improvements in customer awareness and protection measures, NSFI: 2025-30 envisions upscaling the financial inclusion efforts towards seamless and effective access to a bouquet of formal financial services, coupled with financial literacy, consumer awareness and customer protection. It emphasises adoption of a synergistic ecosystem approach and focusing on improving the quality and consistency of last mile access, and effective usage of financial services through linkages with skilling and livelihood initiatives.

3. NSFI: 2025-30 document comprises of five chapters. Chapter-I provides a retrospect of NSFI: 2019-24. It highlights the strategic pillars and milestones under NSFI:2019-24 and offers detailed assessment of the progress in the achievement of its milestones.

4. Chapter-II analyses the state of financial inclusion in India by presenting the trends relating to key parameters of financial inclusion, namely, banking infrastructure, number of bank accounts/cards per capita, bank deposits, credit, and mutual-fund - asset under management, insurance/pension subscribers and supporting infrastructure, volume and value of digital transactions, financial literacy programmes, and financial inclusion index. The analysis shows good progress in various financial inclusion parameters. This chapter also discusses certain supply and demand side impediments to financial inclusion based on empirical studies, so that the recommendations of NSFI: 2025-30, are aligned to addressing such impediments through suitable policy solutions.

5. Chapter-III of the NSFI document underscores that the mandate of financial inclusion goes beyond access to financial services to ensure effective usage of financial services towards wellbeing of people that can lead to desirable outcomes in terms of financial safety, financial security, financial resilience, and financial discipline. The vision of NSFI: 2025-30 is to strengthen the financial inclusion ecosystem with the synergised efforts of stakeholders for ensuring delivery of equitable, responsible, suitable, and affordable financial services duly supported by livelihood enablers, financial literacy, digital public infrastructure, and customer protection. The timeline of NSFI: 2025-30 is synchronized with the 2030 UN Agenda for Sustainable Development. The principle of universality: ‘Leave No One Behind’ and omni- dimensional development as the global agenda for 2030, aligns well with the NSFI’s strategic objectives intended towards ensuring wellbeing of people, especially the vulnerable and marginalised.

6. Chapter-IV of the NSFI: 2025-30 puts forward the following five strategic objectives (Panch-Jyoti) towards elevating the state of financial inclusion in the country.

1. Improving the availability and use of Equitable, Responsible, Suitable, and Affordable Bouquet of Financial Services to achieve Financial Safety and Financial Security for households and micro enterprises.
2. Adopting Gender-Sensitive Approach for Women-led Financial Inclusion and Differentiated Strategies for Improving Financial Resilience of Households, especially for the Underserved and Vulnerable segments.
3. Synergizing Livelihood, Skill Development and Support Ecosystem and its linkages with Financial Inclusion.
4. Leveraging Financial Education as a tool for Promoting Financial Discipline.
5. Strengthening the Quality and Reliability of Customer Protection and Grievance Redressal Measures.

7. The strategic objectives under Panch-Jyoti have structured recommendations to be implemented through 47 action points, including three measurement related action points indicated in Chapter-V on Monitoring and Measurement Mechanism. The focus of the recommendations is on enhancing the usage and quality dimensions of financial inclusion, while improving the last mile access and ensuring effectiveness and granularity in the monitoring and measurement mechanism. The action-points and timelines under NSFI: 2025-30 are distributed across financial sector regulators (Reserve Bank of India – RBI, Securities and Exchange Board of India – SEBI, Insurance Regulatory and Development Authority of India – IRDAI, and, Pension Fund Regulatory and Development Authority – PFDRA), and financial services providers under their respective jurisdictions, along with National Bank for Agriculture and Rural Development – NABARD, National Skill Development Corporation – NSDC, and National Centre for Financial Education – NCFE.

8. To sum up, NSFI: 2025-30 leverages the gains and progress made during the period of the previous strategy and strives to put in place a strategic vision and pathway to further deepening and strengthening the financial inclusion ecosystem towards the wellbeing of people.

CHAPTER - I

NATIONAL STRATEGY FOR FINANCIAL INCLUSION (NSFI) 2019-24:
A RETROSPECT

The National Strategy for Financial Inclusion (NSFI) 2019-2024 set forth the vision and key objectives of the financial inclusion policies in India to help expand and sustain the financial inclusion process at the national level through a broad convergence of action involving all the stakeholders in the financial sector. The strategy provided a pathway to accelerate financial inclusion to promote economic wellbeing, prosperity, and sustainable development in the country.

2. The strategy was prepared based on the consultations and suggestions from Government of India, other Financial Sector Regulators namely, Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), and Pension Fund Regulatory and Development Authority of India (PFRDA) as also the specialised institutions and market participants, namely, National Bank for Agriculture and Rural Development (NABARD), National Payments Corporation of India (NPCI), Commercial Banks, etc.

3. Anchored to the country’s development priorities, the strategy sought to address the inherent barriers in access to formal financial products and services. It recognised that an inclusive financial system, ably supported through sound financial inclusion policies with focus on financial education and customer protection, is not only pro-growth but also pro-poor. Further, it has the potential to reduce income inequality and poverty, promote social cohesion and shared economic development. NSFI underscored that financial exclusion leaves the disadvantaged and low- income segments of society with no choice other than informal options, making them vulnerable to financial distress, debt, and poverty, and ultimately leading to several multi-dimensional physical, socio-cultural, and psychological barriers and deprivations. Hence, it warranted attention from the policy makers for effective action.

4. NSFI concurred with the widely available empirical evidence on how financial inclusion has a multiplier effect in boosting overall economic output and reducing poverty and income inequality at the national level. It emphasised that financial inclusion of women is particularly important for gender equality and women’s economic empowerment. With greater control over their financial lives, women can help themselves and their families to come out of poverty, reduce their risk of falling into poverty; eliminate their exploitation from the informal sector; and increase their ability to fully engage in measurable and productive economic activities. An inclusive financial system supports stability, integrity, and equitable growth, which the NSFI intended to achieve through a set of six strategic pillars (Figure I.1) and 18 milestones.

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Assessment of Progress in Achievement of NSFI Milestones

5. Released in January 2020, the strategy aimed to provide access to formal financial services in an affordable manner, besides broadening and deepening financial inclusion and promoting financial literacy and consumer protection. Over the course of strategy, the NSFI has catalysed the deepening of financial inclusion in the country. With emphasis on the last mile delivery of formal financial services, some form of banking access has been provided within a radius of 5 KM of 99.9 percent of the identified villages/hamlets of 500 households and a slew of measures were undertaken towards strengthening the Business Correspondent (BC) channel for last mile access.

6. There has been marked improvement in the availability of acceptance infrastructure leading to accelerated adoption of digital financial services by way of setting up of Payment Infrastructure development Fund (PIDF), Bharat Net Project, provision of e- KYC across financial sector regulators and scaling up of Expanding and Deepening of Digital Payments Ecosystem (EDDPE) project. The five-year period has also witnessed efforts towards bolstering responsible financial innovation with several cohorts launched under Regulatory Sandbox and by mainstreaming of novel financial solutions for reaching the last mile. There were several landmark achievements on the demand side of financial inclusion with coverage of all the blocks in the country through Centres for Financial Literacy (CFL), development of tailored financial literacy modules for key segments by National Centre for Financial Education (NCFE), setting up/strengthening of web portals for grievance redressal and institutionalisation of toll- free helpline numbers by all the financial sector regulators.

7. During the five-year period of the strategy, the extent of financial inclusion has improved significantly. The total number of banking outlets in villages has increased from 5.97 lakh in March 2019 to 15.98 lakh in March 2024¹. Similarly, total number of basic savings bank deposit accounts has increased from 57.42 crore in March 2019 to 70.59 crore in March 2024². The enrolment in case of insurance and pension schemes has also shown improvement during the strategy period, with enrolment in Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) improving from 5.34 crore in March 2019 to 16 crores in March 2024³, with a CAGR of 25 percent. Similarly, enrolment in Pradhan Mantri Suraksha Bima Yojana (PMSBY) improved from 13.52 crore to 33.78 crore during the period⁴, with a CAGR of 20 percent. Cumulative number of subscribers to Atal Pension Yojana (APY) grew at a CAGR of 42 percent from 97 lakh to 555 lakhs during the period of strategy.

8. Furthermore, during the period of strategy, the Reserve Bank launched two specific indices viz. Digital Payments Index (DPI) and Financial Inclusion Index (FI-Index) in 2021, to capture the extent of digitalisation of payments and assess the level of financial inclusion across the country, respectively. The DPI, which stood at 153.47 in March 2019, has risen to 445.50 in March 2024. The FI-Index has improved from 49.9 in 2019 to 64.2 in 2024, with Access sub-index improving from 67.5 in 2019 to 79.3 in 2024, usage sub-index improving from 38.7 in 2019 to 55.5 in 2024 and quality sub-index improving from 52.6 in 2019 to 65.8 in 2024.

9. A brief summary of the progress made with regard to each of the NSFI strategic objectives/ milestones is presented in the Annex-I.

CHAPTER - II

STATE OF FINANCIAL INCLUSION IN INDIA

Financial Inclusion: Progress and Key Trends – 2019-24

The five-year period of NSFI: 2019-24 witnessed significant improvements across the access, usage, and quality dimensions of financial inclusion. While moving forward to the NSFI: 2025-30, it is important to take stock of the progress achieved during the period of NSFI: 2019-24 and look forward to the journey ahead.

2. The following paragraphs present the progress and trends⁵ relating to key aspects of financial inclusion, namely, banking infrastructure, number of bank accounts/cards per capita, bank deposits, credit, and mutual-fund–asset under management, insurance/pension subscribers and supporting infrastructure, volume and value of digital transactions, financial literacy programmes and participants, and the financial inclusion index.

Banking Infrastructure

3. The banking infrastructure in terms of the number of bank branches, Automated Teller Machines (ATMs), NBFC branches, and fixed-point business correspondents is shown in Chart II.1. The chart shows moderate but consistent expansion in branches and ATMs, along with rapid rise in the number of fixed-point business correspondents (FBCs). FBCs have provided a significant support to the last mile reach of banking infrastructure.

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4. In terms of banking infrastructure per lakh population, the progress shows 85.6 FBCs per lakh population, up from 30.1 FBCs per lakh population in 2019. The position of bank branches and ATMs has been consistent with the average number of branches per lakh population hovering around 12.5 and average number of ATMs per lakh population around 17 to 18 (Chart II.2).
 

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Usage of Banking Infrastructure

5. Chart II.3 throws light on usage of banking infrastructure in terms of per capita number of bank accounts and cards, followed by trend of mutual fund assets under management (MF-AUM), bank deposits, and credit over the last five years in Chart II.4.

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6. Both the charts (II.3, II.4) show consistent growth in the parameters indicating gradual expansion of footprints of the financial system, with none of the parameters showing any negative trend. MF-AUM has also shown consistent growth along with rise in current deposits.

7. Another important dimension of usage is reflected in Chart II.5, which shows the trend of insurance/pension (NPS) subscribers and the corresponding infrastructure (offices and agents of insurance companies). All the parameters, except office (non- life) indicate growth and there is a significant improvement in the subscriber base of Atal Pension Yojana.

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Digital Transactions and Usages

8. Riding on the backbone of Digital Public Infrastructure, digital transactions both in terms of volume and value have contributed significantly to the deepening and broad basing of the reach of financial inclusion initiatives (Charts II.6 and II.7). There has been an exponential increase in the volume of digital transactions led by Unified Payments Interface (UPI). Amongst the retail digital payments, there has been substantial growth across the board in national electronic funds transfer (NEFT), immediate payment service (IMPS) and UPI, with UPI touching more than 13,000 crore transactions in 2023-24. The NEFT however, carried much higher value of transactions as shown in Chart II.7.

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Quality of Financial Inclusion – Financial Literacy

9. Financial literacy being one of the key enablers of the quality of financial inclusion has shown tremendous progress over the period 2019-24. Chart II.8 shows a consistent rise (except during the period of Covid-19) in the number of financial literacy programmes run by Centers for Financial Literacy (CFLs) and Financial Literacy Centers (FLCs), especially during the last two years with rapid expansion in the opening of CFLs touching more than 3.5 Crore participants. Besides financial literacy programmes run by RBI regional offices, National Centre for Financial Education (NCFE) and other sectoral regulators have also covered significant ground in this regard.

Overall Progress – Financial Inclusion (FI-Index)

10. Chart II.9 shows trend of FI-Index⁶ and its sub-indices (Access, Usage, and Quality). Their respective contribution to FI-Index is shown in Chart II.10. The index shows a consistent growth over the period of 5 years with improvements seen across all the sub-indices. In the year 2024, the major growth in the index was on account of the usage sub-index, which shows deepening of financial inclusion. The dip in quality sub-index in 2021 was due to reduced number of financial literacy activities due to lockdown led restrictions during the COVID-19 pandemic.

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11. The above analysis shows substantial growth and progress in various financial inclusion parameters as discussed above. NSFI also played a key role during the period of COVID-19 pandemic (Box II.1). However, financial inclusion initiatives being aspirational in nature should always keep striving for improvements and effectiveness by mitigating gaps and improving the ground level implementation with a holistic approach and outcome orientation. Accordingly, it is important to gather feedback, examine existing and incipient supply and demand side impediments to financial inclusion and implement suitable policy solutions. The recommendations and approach of NSFI: 2025-30, are aligned to this edifice and direction.

Supply and Demand Side Impediments to Financial Inclusion

12. Financial inclusion initiatives start from the supply side of financial services whereby the availability of financial services in terms of access points, products, etc. is ensured. Availability of adequate supply infrastructure for financial services in terms of well-functioning access points, physical or digital interfaces, suitable products, and services, etc., is necessary though not a sufficient condition for effective financial inclusion, as demand for financial services also plays a crucial role in effectiveness of financial inclusion initiatives. Hence, both supply and demand aspects of financial inclusion should be paid adequate attention to, while formulating financial inclusion strategies.

13. Amongst the key supply side challenges, the quality and effectiveness of last mile reach to the financial services remains the most important element. On the other hand, demand side issues are conditioned by several factors in the usage and quality dimension of financial inclusion.

14. The first set of challenges to the demand for financial services stem from information asymmetry, lack of proper knowhow about availability, cost, and use of financial services, and at times, inability to understand and comprehend the information due to language or literacy barriers. Secondly, behavioural factors, such as personality traits, experiential factors, bounded rationality, and impulsive actions also play a role in catalyzing or dampening the usage of financial services. Behaviourally, the perceived need for financial services, and trust in the system are the two most crucial determinants of the demand side of financial inclusion. If people trust that it is in their benefit to use formal financial services, they will seek access and ensure usage, provided the services are suitably and conveniently made available in an affordable manner. Another critical demand-side impediment to financial inclusion falls in the domain of financial constraints, which either sway away people from the banking system or their usage remains very low. The effectiveness of customer protection and grievance redressal measures remains at the core of the demand for financial services, especially for the underprivileged and vulnerable segments of the population. Moreover, the ecosystem gaps, namely, inefficient, or broken linkages between various initiatives, and gaps in market access coupled with funding constraints could dampen the demand side of financial inclusion.

15. The success in financial inclusion initiatives, therefore, requires multi-stakeholder contribution in all its dimensions, namely, access, usage, and quality. To be effective, financial inclusion policies besides having a focus on strengthening supply initiatives in the financial sector in terms of easy and trustworthy availability of access points, minimum cost of services, suitable products, financial literacy and proper flow of information, and an effective grievance redressal mechanism, should also adequately focus on understanding and mitigating demand side impediments and improving the enablers both in supply and demand dimensions.

16. The National Strategy for Financial Inclusion (NSFI: 2019-24) highlighted the need for periodic evaluation of the state of financial inclusion through monitoring of financial inclusion parameters to provide policy makers and stakeholders with necessary insights to understand the achievements made and to address issues and challenges through a coordinated approach. NSFI also underlined that in addition to data collected from financial service providers (supply-side data), there is also a need to seek views and insights from the customers (demand-side insights) at periodic intervals. Accordingly, specific studies and surveys were undertaken by the Reserve Bank to understand the ground level issues and impediments, in both demand and supply dimensions. Based on the studies, the following is a summary of key supply and demand side impediments to financial inclusion.

Supply Side Impediments – Last Mile Reach by Business Correspondents

17. An assessment of supply side impediments, especially from the angle of last mile access reveals that the last mile reach of financial services being carried out by business correspondents (BC) requires improvements. An all-India survey was conducted by the Bank on the operations of BCs during January-March 2024 through its Regional Offices across the country. About 63% of BCs covered by the survey were in rural areas, 23% in semi-urban areas, and 14% in urban areas. The survey covering 13274 BC outlets in 31 States/UTs involving 154 districts with a greater weightage to aspirational districts, revealed the following areas of concerns, which require corrective measures.

1. The presence of a significant number of non-dedicated outlets in the BC ecosystem was a matter of concern, as financial services not being their primary business, diluted the access and quality of financial services available at these outlets,especially in the areas where BCs were the only or primary modes of access to financial services. Representation of women in the BC agents also needed an uptick.
2. Remittances and cash in/out were the most commonly provided services by BC outlets. Some BCs also provided services relating to savings, recurring, and fixed deposits. However, other services, such as insurance, micro-pension, loans, overdrafts, KCC, GCC, etc. were provided only at select BC outlets. Hence, there was a possibility of deficiency in the uniform availability of services in areas entirely dependent on BC outlets.
3. There was a lack of standardization in the services offered by BCs, due to absence of any prescribed minimum standard set of services to be provided by BCs, with proper signage and bank linkage. As a result, it was difficult to properly anchor and monitor the customer expectations and the service delivery.
4. The BC ecosystem was marred by a significant proportion of inactive¹⁰ and/or closed BC outlets. The distribution of BCs was skewed in many places, as BCs tends to congregate towards market centres or bank branches, thereby compromising on the need for equitable access to people and also causing a lack of easy access in remote areas.
5. Insufficient and lack of timely remuneration was observed as a major reason for inactivity, service apathy, and certain unscrupulous practices amongst BCs. The lack of a fixed component of remuneration as a constraint was highlighted by several BCs during the survey.
6. Several BC outlets/agents were simultaneously working for multiple banks thereby leading to accountability vacuum from the point of view of customer service. Since banks are responsible for the business conducted by BCs, this was unhelpful from the point of quality of financial services.
7. The survey showed that a majority of BCs did not display fees levied for services. While certain charges are built into the transactions by banks, there were concern relating to upfront unauthorized/unaccounted levying of charges by BC agents.
8. Lack of a standardised mandatory transaction confirmation SMS (in vernacular language) or audio-based confirmation (through the sound-box mechanism) for all transactions impacted the trust in the services rendered by BC agents.
9. The quality of services rendered by BC outlets needed improvement as many BC outlets did not display the details of the grievance redressal mechanism, base branch, banking ombudsman, etc.
10. The service quality at the last mile was also impacted by connectivity issues, operational difficulties, limited inter-operability, and unscrupulous practices like transaction splitting, etc.

Demand Side Impediments and Challenges –

18. To assess the demand side impediments to financial inclusion at a disaggregated level with demographic details, an all-India survey was conducted during March-April 2024. The survey had a total number of 9,147 respondents spread across 34 States/Union Territories¹¹ of the country. With a median respondent’s age of 32 years, and median income of ₹ 1.60 lakh, the survey offered a reasonably representative all- India sample to deep dive into financial inclusion ecosystem and gain the ground level perspectives on the demand-side impediments to the progress of financial inclusion. The following is a summary of key observations of the survey.

19. Access and Usage of Bank Account –

(a) With account ownership at nearly universal level (96% respondents had a bank account), a key demand side impediment to account ownership/usage was lack of source of deposit to bank account, which indicates regularity and sustenance of income as a key demand-side impediment to the usage of financial services for people hailing from relatively lower income groups.

(b) Besides the income, a preference for cash, lack of knowledge, or family members having an account emerged as common impediments to bank account ownership and usage for relatively lower income groups. Awareness about deposit insurance was lower as compared to zero balance bank account facility under BSBDA. Illiteracy or lack of formal education and low income emerged as impediments to the intended level of awareness focused on under financial literacy initiatives.

(c) Non-usage of bank accounts due to lack of regular source of deposit was more dominant for male respondents and was more pronounced in other than semi-urban areas. In case of semi-urban areas, banking fee/charges were reported as major impediments. People’s trust in banks to save money was more pronounced in rural areas. The level of education helped in strengthening trust and retaining customer relationship in the formal financial system. Generally, people with lower education were relatively unable or unwilling to save through banking channels.

(d) Usage of BC outlets was higher in rural/semi-urban areas as compared to urban areas, especially for female respondents vis-à-vis male respondents. The study shows that as one moves up the hierarchy in terms of income and education levels, the preference for transacting through branch or BC mode diminishes and preference for digital transactions enhances. However, transactions at ATMs seem to be not impacted by income or education levels. Hence, income and education emerge as a couple of key demand side determinants of the choice of access points and mode of transactions.

(e) Preference for digital transactions was seen conditioned by gender, education, and income levels. Male respondents and people form higher income groups had higher preference for digital transactions. Having a smartphone did not necessarily translate as a fillip for digital transactions as several respondents felt dissuaded from undertaking digital transactions due to connectivity issues, complex interfaces, language barrier and concerns regarding breach of OTP/PIN, etc.

20. Access and Usage of Credit Facilities –

(a) In the household segment, personal loans, education loans, and home loans were the top three credit facilities in demand, yet about 50 percent of aspirants had unmet credit needs. Lack of awareness about the procedure, unavailability of nearby bank branch, and lack of collateral were cited as top three impediments in that order, for inability to get credit. Interestingly, high cost (interest rate) of credit was the least cited impediment.

(b) Around 16 per cent of the respondents used informal sources of credit mostly for small ticket loans, with its share being higher in rural areas. In general, people may have relied upon informal sources of credit due to ease, timeliness, and convenient access.

21. Access and Usage of Insurance and Pension Facilities –

(a) Income and education levels emerged as key enablers for better usage of insurance and pension facilities (Chart II.11).

(b) While female respondents lagged their male counterparts in access to life insurance, they had an edge in non-life insurance indicating a possibility of gradually increasing asset ownership by female.

(c) Among the respondents who did not have any insurance/pension product, the awareness about the need for insurance and pension products was found to be low. In general, awareness about schemes like PMSBY, PMJJBY, PMFBY, and APY ranged between 30-35%. However, the respondents who knew some beneficiary of insurance claim were generally more likely to opt for it.

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22. Quality of Financial Services: Financial Literacy, Customer Service and Grievance Redressal –

(a) Long wait hours for undertaking financial transactions at branches and high customer burden complaint resolution systems, which puts the primary onus on customers, were highlighted as key impediments. There were hardly any customer complaints at BC points, which was not helpful.

(b) While high level of service satisfaction from bank services was expressed by respondents, it did not match with the relatively lower satisfaction with attention and sensitivity shown by the bank staff, and comparatively lesser awareness about complaint process, etc. This could imply that the overall feedback about customer satisfaction may not be properly anchored to its underlying parameters.

23. NSFI: 2025-30 leverages the gains and progress made during the period of pervious strategy and strives to put in place a strategic vision and pathway to mitigate demand and supply impediments while further deepening and strengthening the financial inclusion ecosystem.

CHAPTER - III

VISION OF NSFI (2025-30):
AN INCLUSIVE FINANCIAL SYSTEM TOWARDS WELLBEING OF PEOPLE

Financial inclusion initiatives generally begin with supply initiatives to provide affordable, easy, trusted, and fair access to regulated financial services, namely, savings, payments, investments, credit, remittances, insurance, and pension to hitherto excluded and marginalized segments of society. Though financial inclusion falls within the ambit of the financial sector, financial inclusion policies have far and wide positive impacts and correlations in the socioeconomic domain. Financial inclusion is referred in the targets of eight out of the seventeen United Nations Sustainable Development Goals (SDGs)¹², namely, SDG-1 on eradicating poverty, SDG-2 on ending hunger, achieving food security, and promoting sustainable agriculture, SDG-3 on promoting health and well-being, SDG-5 on achieving gender equality and economic empowerment of women, SDG-8 on promoting economic growth and jobs, SDG-9 on supporting industry, innovation and infrastructure, SDG- 10 on reducing inequality, and SDG-17 on strengthening the means of implementation (Table III.1).

2. Financial inclusion being an aspirational journey starts from creating opportunities for access to the formal financial system for the hitherto excluded and underserved segments, but its mandate goes beyond access to ensure effective usage of financial services to the benefit of people. Effective usage requires that people have an economic case for using the formal financial services which primarily comes from their capacity to have regular income/cash flow through employment, livelihood, etc., and have a perceptible economic incentive for using formal financial services.

3. The sustenance and growth of usage also require continued trust of the people, suitability of products and services, sound financial literacy, a pro-active/quick grievance redressal mechanism, and a positive perception of being heard, which are some of the quality aspects of financial inclusion.

4. Seen in the above context and in accordance with the role of financial inclusion in the achievement of sustainable development goals, it is obvious that financial inclusion is not just an end in itself but a means to a greater end of ensuring the overall wellbeing of people.

Definition of Financial Inclusion

5. The Committee on Financial Inclusion (Chairman: Dr C Rangarajan, RBI, 2008) defined financial inclusion as “the process of ensuring access to financial services, timely and adequate credit for vulnerable groups such as weaker sections and low- income groups at an affordable cost”.

6. Further, the Committee on Medium-Term Path to Financial Inclusion (Chairman: Shri Deepak Mohanty, RBI, 2015) viewed financial inclusion as, “convenient access to a basket of basic formal financial products and services that should include savings, remittance, credit, government-supported insurance and pension products to small and marginal farmers and low income households at reasonable cost with adequate protection progressively supplemented by social cash transfers, besides increasing the access of small and marginal enterprises to formal finance with a greater reliance on technology to cut costs and improve service delivery.”

7. The NSFI (2019-24) aimed at broadening, deepening, and accelerating financial inclusion alongside promoting financial literacy and consumer protection, with a view to promoting economic wellbeing, prosperity, and sustainable development.

8. Continuing the journey and leveraging the substantial gains during the last decade in the bank account ownership to near saturation, robust expansion in physical and digital access infrastructure, and improvements in customer awareness and protection measures, it is desirable to upscale the focus of financial inclusion by adopting a synergistic ecosystem approach. This would ensure integrated and seamless involvement of stakeholders for developing a truly inclusive financial system towards wellbeing of people by minimization of inequality of opportunities for people to reap the benefits of access to formal financial system, while substantially improving the quality and consistency of last mile reach.

9. Financial inclusion policies duly integrated with livelihood support, market linkages, financial education, and customer protection initiatives are great enablers of an improved state of the economic wellbeing of people. Pursued holistically, financial inclusion can lead to desirable outcomes in form of a quadrangle of financial safety, financial security, financial resilience, and financial discipline, in turn contributing towards overall wellbeing of people.

10. Hence, the objectives and intended outcome of financial inclusion to be pursued under NSFI: 2025-30 are presented below. Figure III.1 provides a diagrammatic presentation of components and outcome of financial inclusion.

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11. To explain, the usage of terms regarding access to a bouquet of financial services in the above definition would generally mean the following –

a) Equitable – The access infrastructure should be available across the geographic strata in a reasonably homogeneous manner.

b) Responsible – The financial service providers should ensure that their products/ services do not manipulate or impede customers’ free choices, interests, and right to product suitability, and do not leave customers’ worse off in terms of the economic, behavioural, and social outcomes.

c) Suitable – Financial products and services should be appropriate to customers need and based on customers’ financial circumstances and understanding. Differentiated/customised services should be available to enable people to choose what is best for them.

d) Affordable – The basic minimum financial services (basic transaction account, basic savings and investment account, small value remittances, small value digital payments, etc.) should be offered free of cost. Pricing of other services should have an essential element of affordability keeping in mind the marginal cost of services.

12. The quadrangle of financial safety, security, resilience, and discipline positioned as the outcome of financial inclusion rests on specific anchors presented in Table III.1.

FI Ecosystem

13. As already discussed, an ecosystem approach to financial inclusion is required for ensuring an integrated and synergistic involvement of stakeholders for effectiveness in financial inclusion initiatives and outcomes. Hence, a clear understanding and definition of financial inclusion (FI) ecosystem could be helpful for a seamless working towards achieving the shared goals.

14. FI ecosystem refers to a synergised network of stakeholders working and/or connected with financial inclusion initiatives and its outcome in form of wellbeing of people in terms of quadrangle of financial - safety, security, resilience, and discipline. Seamless and synergised functioning of the ecosystem comprising of stakeholders, namely, banks/ financial institutions including NABARD, SIDBI etc., central government, state governments, financial sector regulators, SROs/IBA, private players including fintech companies, think tanks, academia, community organizations, centres for financial literacy and NCFE, livelihood opportunity providers¹³, and skilling institutions, is essential for effectiveness and outcome orientation in financial inclusion policies (Figure III.2).
 

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Vision of NSFI (2025-30)

15. Following the above discussions, the vision of NSFI is as under –
 

16. The current iteration of the National Strategy for Financial Inclusion for the period 2025-30 (NSFI: 2025-30) is an outcome of wide-ranging stakeholder consultations. The strategy is informed of the achievements of the NSFI 2019-24 and focusses on further deepening, sustaining, and synergising financial inclusion initiatives.

CHAPTER - IV

NSFI (2025-30): STRATEGIC OBJECTIVES AND ACTION POINTS

As discussed in Chapter III, National Strategy for Financial Inclusion (NSFI) intends to achieve integrated, seamless, and synergised working of stakeholders of the FI ecosystem to augment the effectiveness of financial inclusion policies through the availability and use of equitable, responsible, and affordable financial services along with skilling/livelihood opportunities, duly supported by Digital Public Infrastructure, effective financial literacy, robust consumer awareness and protection measures.

2. The timeline of NSFI: 2025-30 is synchronized with the 2030 Agenda for Sustainable Development adopted by 193 Member States at the UN General Assembly Summit in September 2015, and which came into effect on January 01, 2016. The principle of universality: ‘Leave No One Behind’ and omni-dimensional development as the global agenda for 2030, fits perfectly well with the outcome- oriented financial inclusion goals intended towards ensuring wellbeing of people.

3. As India’s contribution is critical to the global achievement of SDGs, the strategy intends to meet the national priorities and assist in the achievement of targets as a part of the transformative agenda, which recognizes that it is no longer sufficient to focus on economic growth, but on fairer and more equal societies, and a safer and more prosperous planet. NSFI’s ecosystem approach as discussed in the Chapter-III bodes well with the SDG’s philosophy, namely, coordinated efforts by all the stakeholders to achieve the developmental agenda of leaving no one behind, seeking participation of everyone - everywhere, especially the vulnerable and marginalised.

NSFI Strategic Objectives: Elevating the State of Financial Inclusion through Panch Jyoti (पंच ज्योति)¹⁴

4. As discussed in Chapter-III, a quadrangle of financial safety, security, resilience, and discipline towards well-being of people is positioned as the outcome of financial inclusion. NSFI: 2025-30, learning from the impediments and leveraging upon the gains during 2019-24, sets up the following five strategic and synergised objectives (Panch-Jyoti), which would help in elevating the state of financial inclusion in the country.

1. Improving the availability and use of Equitable, Responsible, Suitable, and Affordable Bouquet of Financial Services to achieve Financial Safety and Financial Security for households and micro enterprises.
2. Adopting Gender-Sensitive Approach for Women-led Financial Inclusion and Differentiated Strategies for Improving Financial Resilience of Households, especially for the Underserved and Vulnerable segments.
3. Synergizing Livelihood, Skill Development and Support Ecosystem and its linkages with Financial Inclusion.
4. Leveraging Financial Education as a tool for promoting Financial Discipline.
5. Strengthening the Quality and Reliability of Customer Protection and Grievance Redressal Measures.

5. Linkages of the above strategic objectives and related action points with the impediments and challenges as discussed in Chapter-II, as also the stakeholder wise action points are presented in Table IV.1 and IV.2, at the end of this chapter. FI- dimensions wise distribution matrix of the action points is presented in Table IV.3. A detailed description of the strategic objectives in terms of recommendations and action points follows.
 

Under the NSFI: 2019-24, with emphasis on the last mile delivery of formal financial services, significant progress has been made in providing some form of banking access, within a radius of 5 KM/ hamlet of 500 households, in more than 99.9 percent of the 1.21 lakh identified villages. Besides, a slew of measures was undertaken towards strengthening the Business Correspondent (BC) channel for the last mile access. However, a supply side assessment reveal that the quality, consistency, and breadth of services available at the last mile, uniformly, may not be as expected due to low population density in certain pockets, geographical remoteness, relatively lesser economic potential, and lack of economic viability for financial services providers, and infrastructural bottlenecks (connectivity, electricity, roads, etc.), hence, requiring improvements.

Digital financial services operating on the backbone of Digital Public Infrastructure (DPI) have provided a significant fillip to financial inclusion initiatives across a wide spectrum ranging from account ownership, social benefit transfers, quicker and efficient remittances/payments, and access to credit. DPI, as interoperable, open, and inclusive systems supported by technology, serves to provide essential public and private services for the common good. The India Stack exemplifies this approach, combining digital ID, interoperable payments, a digital credentials ledger, and account aggregation framework. By leveraging the gains made, there is scope for further expanding the digital footprints for discharge of a range of financial services.

Action Points:

1. Improving equity, reach, consistency, and quality of last mile access

To bring about substantial improvements in the equity, reach, consistency, and quality of last mile access to financial services, there is a need to ensure availability of at least one banking outlet – branch /digital banking unit (DBU)/ fixed point business correspondent outlet (FBC)¹⁵ in each revenue centre¹⁶, so that financial services are fairly and equitably available across the depth and breadth of the country. Such outlets, under adequate control and oversight of banks, are expected to provide a minimum standard set of financial services, namely, deposits, withdrawals, remittances, account opening and servicing, Jan Suraksha Schemes, loan leads/applications, pension schemes, etc. This would be a substantial value addition to the work on ‘universal access’ wherein access to some form of banking services has been provided to 99.9 per cent of the targeted villages within 5 KM radius/ hamlets with 500 households in hilly areas.

SLBCs/UTLBCs should put in place an action plan and allocate goals to banks in a phased manner to achieve the action point during the period of the strategy, with suitable mid-term goals.

2. Incentive mechanism for BC agents from hilly and rural areas

With inadequacies of bank branches¹⁷ in the north eastern (NE)/ hilly states, and rural areas, banking services are mostly dependent upon the BC outlets. Further, owing to topographic conditions of hilly regions, the distribution of FBCs, especially in the NE region is skewed with only 165 FBCs per thousand square kilometres vis-à-vis 379 FBCs per thousand square kilometres at the national level¹⁸. Skewed population density and sparse availability of access points is also reflected in lower number of transactions at BC points. Since, remuneration of BCs depends on the volume of transactions, viability of BC business in the region gets impacted due to sparse population and difficult terrain leading to high level of inactivity and consequent negative impact on financial inclusion outcomes. Accordingly, to improve the availability and consistency of last mile access in hilly and rural areas, the existing scheme of incentives, under Financial Inclusion Fund (FIF), to BCs operating in Tier V & Tier VI centres in NE States and other Hilly States/UTs (Himachal Pradesh, Jammu & Kashmir, Ladakh & Uttarakhand) may be extended in a calibrated manner to all Fixed-Point BCs¹⁹ operating in Tier VI centres.

3. Strengthening the Remuneration Structure of BCs.

To ensure quality and consistency in delivery of financial services at the last mile, fair and reasonable remuneration structure for BC agents is a must. Notwithstanding the regulatory prescriptions, and in view of the prevailing varied practices, a fair remuneration structure of BC agents relating to banking products and services may be worked out under the aegis of Indian Banks Association (IBA).

4. Expanding the scope of services and improve the sustenance of BC operations.

(a) To augment the scope of services offered by FBCs²⁰ and to improve their sustenance in terms of earning potential, financial services providers should consider offering additional/value-added services through well-functioning BCs, based on an objective and transparent performance criterion, while meeting regulatory norms.

(b) The network of well-functioning FBCs may be leveraged for offering additional basic financial services, namely, basic mutual fund, pension and insurance products and related services, subject to meeting requisite criteria and regulatory norms.

5. Strengthening of BC Registry

The existing BC registry portal being maintained by IBA provides a dynamic and comprehensive dataset to monitor the operations of BCs with a view to ensuring quality and last mile reach. IBA should further strengthen and develop additional capabilities in the registry portal to improve periodic updation of the data, location mapping, de-duplication, certification status, etc. This would enhance the functionalities and effectiveness of the portal.

6. Expanding Digital Financial Services

(a) Reaching one billion users in digital payments

UPI recorded nearly 16.7 billion transactions during the month of December 2024²¹. There were 424 million unique UPI users in June 2024²². In this backdrop, it is desirable that the coverage of digital payments, led by UPI, is expanded to cover most of the population. Therefore, the goal of reaching one billion users in digital payments ecosystem by December 2029 may guide further efforts in expanding the reach of such payment modes.

(b) Expanding and Deepening Digital Payment Ecosystem (EDDPE)

Expanding and Deepening of Digital Payments Ecosystem (EDDPE) programme, which aims at providing every eligible individual in identified districts at least one mode of digital payments namely, debit/rupay cards, net banking, mobile banking, UPI, USSD, AEPS etc., is underway. Considering the ongoing work, EDDPE should aim to achieve – (i) 100% coverage in 80% of districts by March 2026, and (ii) 100% coverage in all identified districts by March 2027.

(c) Programmable CBDC to Facilitate Targeted Credit Flow and Expand Access

Programmability feature in Central Bank Digital Currency (CBDC) could help in tying up the end use. For example, agriculture credit by banks using CBDC can be programmed to ensure its use only at input store outlets. Similarly, for MSMEs etc., programmability may take care of the issue of diversion of funds and ensure optimum utilisation. This may help in ensuring the end-use which banks have to continuously grapple with across the globe.

Accordingly, programmable CBDC may be leveraged to facilitate credit flow to underserved segments like tenant farmers, micro enterprises, etc., by conducting pilots of programmable CBDC across various borrower segments. Offline functionality in use cases may also be explored to make CBDC accessible to individuals in areas with limited or no connectivity.

(d) Unified Lending Interface (ULI)

With rapid progress in digitalisation, India has embraced Digital Public Infrastructure (DPI) which has enabled convenience, transparency, and enhanced efficiency for all citizens across digital identity, payments, and other financial and non-financial services. While diverse sources of financial and non-financial data required by lenders for digital credit delivery may exist, it often lies in silos across different entities, which lenders, as part of their credit underwriting, need to individually connect with all these data sources, making it highly cumbersome and costly.

Unified Lending Interface (ULI), as a DPI, has been conceptualised to enable delivery of frictionless credit by facilitating seamless flow of required digital information to lenders through conduct of pilots on various loan journeys, while onboarding of more and more lenders and data service providers. ULI may be rolled out in a phased manner.

(e) Onboarding of all banks and insurance companies to Jansuraksha Portal and improving coverage of Atal Pension Yojana (APY).

Jansuraksha portal provides access to Social Security Insurance Schemes introduced by the Government of India. It is an end-to-end portal for enrolments and claims under Pradhan Mantri Suraksha Bima Yojana (PMSBY), and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).

Accordingly, all banks and insurance companies should be onboarded to the Jansuraksha portal to provide a seamless digital journey for the subscribers for enrolments, issuance of policy certificates and claims processing. Improved efficiency and transparency of transactions through the portal would augment trust in the schemes and help increasing the coverage level in a systematic manner. Further, sectoral regulator and FSPs should make concerted efforts to improve the coverage of APY by strengthening its distribution network and creating awareness.

(f) Simpler Digital Interface and Use of AI

Complex and confusing digital interfaces coupled with language barriers may deter fair customer choices and impede the uptake of usage. Accordingly, financial service providers should improve and simplify interfaces of digital channels to facilitate ease of use and address the language barrier by supporting digital transaction interfaces in vernacular languages.

For this, awareness of the AI powered language translation platform like Bhashini may be developed among users and financial service providers for its integration into financial services.

7. Micro Enterprises to receive focussed attention

New-to-credit micro enterprises, especially those onboarded through Udyam Assist Platform, should be supported by financial services providers to mitigate their difficulties in access to credit due to insufficient financial records/history by adopting innovative solutions such as digital credit platforms, simplified application processes, automated business plan generation, alternative data for credit assessments and tailored repayment schedules.

8. Role of Self-Regulatory Organisations

Self-Regulatory Organisation (SRO) in the fintech sector (SRO-FT), microfinance sector and other domains may endeavour to promote the extension of responsible, suitable, and affordable financial products/services and adoption of financial inclusion policies by their member entities, by incorporating suitable provisions in the code of conduct for members.

Over the past several years, the Government and financial service providers in India have made significant strides in creating opportunities to increase women's financial inclusion. Adoption of gender sensitive approach is needed to augment and promote women agency in the FI ecosystem to take advantage of women-led financial inclusion and extension initiatives.

One of the demand side impediments to the usage of financial services stem from the fact that people from different geographic/demographic/economic strata have varying needs and sensitivities regarding usage of financial services, and hence, to be effective, financial inclusion policies must facilitate a differentiated approach towards suitable customization and delivery of financial products and services in accordance with the needs and preferences of the end-users.

Action Points:

1. Increasing the share of women business correspondents

Going beyond greater participation of women in the financial services as users of financial services, there is a need to promote and encourage women as facilitators of financial services by increasing their numbers as business correspondent agents.

The goal would be to ensure at least 30% share of women BCs in the medium term from the current level of around 15%²³. SLBCs/UTLBCs should put in place a voluntary action plan adopted by member banks to deploy women as business correspondents in a phased manner to achieve the milestone by December 2028.

2. Identification of Vulnerable / Underserved Segments for focused services

With a view to providing suitable and timely financial services to the underserved and vulnerable segments, there is a need to develop suitable markers/matrix to be followed by financial services providers in dealing with such customers. Accordingly, financial sector regulators may develop an identification matrix both based on a combination of categorical and circumstantial factors²⁴.

3. Differentiated products and delivery channel for vulnerable segments

(a) Going beyond the approach of offering low-cost universal financial products and services to promote financial inclusion, there is a need to focus on product suitability and personal suitability, especially for underserved and vulnerable segments. Accordingly, financial services providers should develop suitable basket of products (such as, basic MF products, calamity insurance, etc.) to meet the requirements of such segments. Financial sector regulators may appropriately mandate the development of such products.

(b) To strengthen financial security and financial resilience of people, suitable bundled products may be developed in the investment, pension, and insurance domains (e.g., a single insurance product offering life, health, accident, and property cover).

(c) To strengthen financial resilience of people, suitable and fair credit products with easier documentation process and quick disbursals should be launched especially for small ticket loans to prevent people from having to access informal sources of finance/ unauthorized digital lenders, etc. for small and urgent credit requirements.

(d) To further strengthen the institutional means for provision of fair and easy emergency credit, an overdraft facility²⁵ charged at a reasonable interest rate may be made a default product feature in all Aadhar-seeded BSBD Accounts (to avoid duplication) after regular operation of the account for at least six months.

One of the significant demand-side attributes of effective financial inclusion is sustenance, regularity, and sufficiency of income to smoothly meet basic subsistence needs and the ability to make some savings. The sustenance and basic sufficiency of income are core elements of financial safety. This, in turn, depends upon meaningful employment, entrepreneurial pursuits, market linkages, etc. for which livelihood and skilling opportunities are of utmost importance.

Sustenance and deepening of the skilling for livelihood ecosystem requires backward and forward linkages in the financial inclusion ecosystem, and integrated efforts to improve the outcomes. The nature of the tasks in financial inclusion initiatives is such that there is a need for interconnectedness and synergy amongst various stakeholders for the sustenance of employment, market linkages, suitable funding, awareness, and handholding.

Action Points:

1. Content Development and Delivery for Skill Training

(a) NSDC, with its mandate of catalysing the skilling ecosystem for last mile participation and as the strategic implementation and knowledge partner to Skill India Mission, may act as the nodal agency for developing content and arranging skill training across the skilling and livelihood ecosystem. New content development and/or updation of existing content on financial literacy included in the skill development programme may be undertaken in consultation with NCFE.

(b) NSDC may steer the adoption of National Skills Qualifications Framework (NSQF) by all skill training institutions to enable individuals to acquire desired competency levels, to enhance employability potential. Skill training curriculum should be made available in all scheduled languages on the Skill India Digital Hub and be readily accessible to all.

(c) NSDC may lead the efforts to synergize the resources of all skill training entities (RSETIs, JSS, PMKVY, NISEBUD, Skill India Centers, ITIs, Skill and Vocational Colleges, etc.) through onboarding and data sharing on the Skill India Digital Hub. A gender-sensitive approach may be adopted by all the skilling and livelihood institutions to help in achieving the national target under SDG-2030 (SDG-5).

2. Data Sharing and Reporting

NSDC may leverage Skill India Digital Hub to collate and publish periodic reports on numbers and types of skill training conducted by various skilling/training entities and their settlement. Skilling and settlement initiatives under other Government programmes such as NRLM and NULM, including financial literacy focused training for SHG members, may be integrated into the database in due course, to have complete pan-India data on the skilling and livelihood ecosystem.

3. Funding and Financial Support to Skill Trained Individuals

(a) Information on skill loan schemes of NSDC, Government of India and State Governments may be made available widely, including by participating financial sector entities, to encourage individuals to enroll for suitable skill training with financial support.

(b) Potential Linked Plan (PLP) of each district under respective State/UTs should have a suitable allocation for the individuals trained by recognised skill training institutions (R-SETIs, PMKVY, JSS etc.) to enable credit support to such individuals by banks. Trained candidates must be provided with the necessary support through handholding arrangements in approaching financial institutions for credit facilities.

4. Leveraging Local Community Organizations

To involve local communities for social intermediation by way of a structured mechanism to synergise the efforts made by various stakeholders through a trusted- assisted middle layer of social infrastructure in form of Community Resource Entities (CREs). CREs refer to locally rooted community organizations, such as cooperatives, trusts/societies, and NGOs, that would provide social intermediation within skilling for livelihood ecosystem.

The purpose of CREs is to create synergy in the financial inclusion ecosystem by offering community-oriented intermediation and localized support for facilitating access to skilling/livelihood, market linkages, and bank credit. It would create a trusted-assisted middle layer in form of a social infrastructure to undertake the following functions.

1. Assessment of training gap - CREs will collect data of unemployed, underemployed, school dropouts and other in need for skill training via survey or through participatory identification process.
2. Liaison with skill training entities – CREs should have appropriate linkages with relevant skill training agencies, potential employers, and banks.
3. CREs should map training needs of the locality with respective skill development institutions.
4. Handholding of trained individuals after completion of training and providing support for employment/entrepreneurship and funding.

CREs being locally rooted will have the capacity to mobilize individuals and gain the trust of the local communities. By engaging with the community, CREs would act as a bridge between the skilling centers, banks, and livelihood providers/ employers on one end, and aspirants on the other end, thereby providing a broader spectrum of forward and backward linkages while reducing information asymmetry in the FI ecosystem.

A small-scale pilot on operationalizing CREs may be undertaken to assess workability of the concept. Further action on implementation may be decided based on findings and evaluation of the pilot phase.

Financial Discipline as an integral element of wellbeing of people is manifested in their financial behaviour, namely, knowledge and awareness, decision-making, choices and outlook, dependence, influence, etc. To some extent, financial discipline depends on the innate cognitive characteristics of individuals, however, to a large extent financial discipline could be a learned behaviour with identifiable markers, namely, a) financial knowledge, b) sustainable indebtedness, c) realistic goal setting, d) financial planning, and e) diversification of savings/investments. Accordingly, financial education could be leveraged to work on the above markers.

Action Points:

1. Sustaining and deepening financial literacy initiatives.

To sustain efforts of financial literacy through constant policy review of dissemination channels such as Centres of Financial Literacy (CFL) and Financial Literacy Centres (FLCs) along with supplementing efforts in capacity building, content updation, etc.

2. Targeted Financial Literacy Initiatives

(a) Differentiated content and focused delivery channels could make the dissemination of financial literacy more meaningful by involving entities connected with the target segments with functional linkages and could further boost the quality and effectiveness of financial literacy extension initiatives. Accordingly, National Centre for Financial Education (NCFE) may conceptualise and execute an appropriate delivery model for targeted FL content to cater to the needs of students, elderly, migrants, differently abled, and other similar groups on a sustained basis.

(b) In addition to existing CFL mechanism, financial literacy units may be established at select schools, colleges, farmer-producer organizations (FPOs), community organisations, etc., to disseminate contextualised and focused FL content.

3. Improving Digital Literacy

Expansion in digital footprints of financial services requires upgrading the digital skills of the people, as lack of experience and comfort with digital devices and applications could make people vulnerable to frauds and hamper the progress of digital financial inclusion. Accordingly, NCFE and financial service providers may run focussed and innovative campaigns to augment digital literacy to enable people to identify attempts to defraud, while allaying the concerns of people relating to safety and security of digital transactions.

4. Development and dissemination of content on areas of emerging relevance

NCFE may develop suitable content on the following aspects for dissemination through Centers for Financial Literacy (CFLs), Financial Literacy Centers (FLCs), and other channels –

(a) Promoting sustainable indebtedness and guarding against over-indebtedness in households.

(b) Developing understanding about realistic financial goal setting, need for financial planning, and diversification of savings/investments.

5. Periodic Assessment of the state of financial literacy.

(a) NCFE may conduct periodic surveys (including limited surveys covering specified segments) to assess the state of financial literacy and financial inclusion.

(b) Based on the gaps assessed through the survey findings, NCFE may conceptualise and execute awareness initiatives for specific regions/ groups.

6. Developing AI & ML-based public query systems on common banking and finance-related aspects.

Considering the need for access to quick, correct, and authenticated information relating to financial services/products to protect customers from falling prey to grapevine, it is recommended that financial service providers should -

(a) make available a duly authenticated public query systems for clarifying doubts and seeking information through their websites and social media extensions.

(b) conduct suitably positioned social media campaigns for effective dissemination of engaging content on consumer protection and grievance redressal measures.

Consumer protection forms one of the core elements of the quality of financial inclusion, which instills trust and confidence amongst users of financial services. Robust consumer protection measures are needed so that users of financial services have adequate safeguards towards protection of their rights and interests. Hence, specific measures are needed to strengthen the customer protection edifice.

Action Points:

1. Improving Grievance Redress Mechanism - Reducing High Customer Burden in Redress Mechanism

(a) Simpler Solutions

In order to strengthen the demand for formal financial services and boost people’s trust in the system, grievance redressal processes at FSP’s end need to be made simpler so as to reduce the customer’s time and resources. In addition to existing grievance redressal portals and helpline numbers, simpler solutions may be adopted whereby an aggrieved customer only needs to dial a missed call service number without the need to go through a long winded and queued process. Such a missed call may prompt a call back from the service provider from a designated number to register and record the grievance to be acknowledged and progress updated through SMS in a time-bound manner. Simple apps/solutions may also be developed, which support filing of complaints in regional languages for resolution by FSPs.

(b) Effective use of Citizen Financial Cyber Frauds Reporting and Management System (CFCFRMS) to attend cyber fraud complaints.

To deal with the rising menace of financial frauds, a common integrated platform in the form of Citizen Financial Cyber Frauds Reporting and Management System (CFCFRMS) has been created, where all concerned stakeholders, namely, law enforcement agencies, banks, financial service providers, etc. work in tandem to ensure that quick, and system-based effective action is taken to prevent flow of money siphoned off from innocent citizens to the fraudsters. CFCFRMS receives complaints through helpline number 1930 or on National Cybercrime Reporting Portal (NCRP). Banks should put in place a designated mechanism available in near real time for withholding/blocking the flow of funds against which a complaint ticket is raised in CFCFRMS.

(c) Board approved Customer Grievance Redress Policy

Financial sector regulators may ensure that all FSPs have a well-documented Board approved Customer Grievance Redress Policy, widely publicised and prominently displayed on their respective websites and a direct link to lodge a complaint may be provided at all customer interface points/media. Such information may also be made available in vernacular languages, and timeline and quality of resolution may be monitored by top management of the respective FSPs.

2. Strengthening Customer Protection Measures

(a) Digital Payments Intelligence Platform to Mitigate Payment Frauds

Sustaining confidence in digital services requires minimizing incidence of frauds. Since, many frauds occur by influencing unsuspecting victims to make the payment or share credentials, besides measures on an ongoing basis to protect customers from such frauds, there is a need for network-level intelligence and real-time data sharing across payment systems. Accordingly, advanced technologies may be harnessed to mitigate payment fraud risks through a special platform designed for the purpose, which may be operationalized by December 2026.

(b) Protection against dark patterns

With a view to protecting customers against dark patterns, which manipulate or impede customers’ choices and autonomy to their detriment, regulators may issue guidelines requiring financial service providers not to resort to dark patterns in their conduct and operations.

(c) Guardrails against Tech Innovations

Technological innovations while facilitating access and usage of financial services also bring to fore unintended customer protection issues such as data breaches, manipulations, frauds, and unfair practices, etc., requiring suitable guardrails.

Regulators may leverage supervisory processes to bolster customer protection to ensure fair treatment of customers in the financial sector by adopting focussed supervisory methods, in tandem with the evolving financial landscape, as well as strict supervisory action in cases of non-adherence to regulatory framework for customer protection.

(d) Use of pre-intimated official phone numbers by banks

One of the common modes used by fraudsters is to impersonate bank employees by phone calls/e-mails/SMSes targeting unsuspecting customers. Inability of customers to distinguish between a genuine phone call/SMS from bank and that from a fraudster impersonating a bank staff poses a serious risk to customer protection.

Therefore, mechanism should be put in place requiring financial service providers to designate specific phone numbers/ email IDs from which customers/potential customers to be contacted. Such details should be prominently displayed in all their commercial channels as well as notified to customers. Use of any other phone/mobile numbers/e-mail should be prohibited.

(e) Conduct of regular customer awareness campaigns

Financial sector regulators may prescribe conduct of regular awareness campaigns for customers on suitable themes by financial services providers.

The recommendations and action points for addressing various impediments and challenges and achieving strategic objectives under Panch Jyoti offer a holistic and synergistic approach towards financial inclusion. Table IV.1 provides a snapshot of challenges/ impediments, recommendations/ action points aimed at addressing them and also identifies the stakeholders responsible for implementation.

CHAPTER - V

MONITORING AND MEASUREMENT MECHANISM

The NSFI envisions an ecosystem approach towards achieving universal financial inclusion. A set of milestones encompassing various areas where specific actions are required on the part of stakeholders are also laid down. Periodic evaluation and measurement are integral to the strategy as they provide the evidence needed to gauge the impact of the measures taken under its ambit. For this, it is necessary to identify suitable indicators so that the progress in the intended direction can be assessed, and impact of policy formulations and focus areas can be identified, as the adage goes - ‘If you can measure it, you can improve it.’

2. Indicators related to financial inclusion are typically classified under ‘Access’, ‘Usage’ and ‘Quality’ with associated disaggregation to allow for detailed evaluation based on geography and demography (gender, age, income, etc.). While supply side assessment can be facilitated trough regulatory returns and other such readily available data points, the demand side assessment necessitates conduct of studies/surveys to gain insights into the quality of financial inclusion at the ground level and identify enablers for advancing financial inclusion.

3. As such, it is recommended that the state of financial inclusion be measured and monitored to cover both the supply side of financial inclusion (type of financial products and services, and delivery channels) and the demand side of financial inclusion (factors that affect the usage of financial services).

Supply Side Measurement:

4. While there would always be a need for the traditional data sets related to banking outlets, ATMs, basic savings bank deposit accounts, credit, digital payments, investments in mutual funds, insurance, and pension products, awareness initiatives, etc., to have more detailed and granular assessment, the disaggregated data based on geography, gender, age, etc. are also vital. In addition, to evaluate the quality of inclusion and understand the barriers to financial access, data on new-to-credit entrants, cost of accessing financial services at the last mile, inoperative accounts, inactive business correspondents, etc., assume significance.

5. Based on the above, the following approach may be adopted towards data collection and dissemination by all financial sector regulators, going forward.

a) Data collection efforts may ensure coverage of formal financial institutions in the financial inclusion ecosystem, in totality.

b) Data should be captured at the district level with gender and age disaggregation so as to facilitate assessment of geographical, gender, and age-related dimensions in access and usage of financial products and services and gain cross-sectional insights. An indicative list of datapoints pertaining to the banking sector is placed in the appendix to this chapter. The same may be made available in public domain.

c) Customer data captured by financial services providers should include broad categories such as income level, education, occupation, purpose, etc. to enable analysis and better positioning of policy measures.

d) Widely acceptable and harmonized data definition should be developed for select terminologies, namely, Vulnerable Consumers, Migrants, etc., which can be used across the financial sector for suitable interventions.

e) The current FI-Index reflects the advances made in the financial inclusion space at the country level. With a view to assessing the extent of financial inclusion at the regional level, there is a need for developing disaggregated FI Index, preferably at State/UT level. To begin with, during the period of NSFI:2025-30, a new series of FI-Index with broader coverage and State/UT level disaggregation may be constructed and published.

Demand Side Measurement - Conduct of Studies/Surveys

6. In conjunction with supply side data collection, to gather details about the barriers to access and usage of financial services, and quality of inclusion, especially at the last mile, demand side measurement is necessary. This can be done through demand side surveys/ focus group studies, which can reveal the drivers of financial inclusion and help identifying impeders in the form of socio-economic factors, suitability of products and services, debt vulnerabilities at household level, level of financial literacy and capability, state of grievance redress, etc.

7. Arguably, focusing on the end user’s perspective, the demand side measurement has the potential to throw light on aspects such as alignment of need and demand, bottlenecks in delivery of financial services at the last mile, regional inadequacies, evolving preferences, etc.

8. It is recommended that a mechanism of conducting regular studies/ surveys to assess the state of financial inclusion to be put in place by financial sector regulators.

Way Forward

9. Financial inclusion policies duly integrated with financial education, customer protection, skill development, livelihood support, entrepreneurship, and market linkages, with a multi-stakeholder approach, can be enablers of desired outcomes reflected in an improved state of financial safety, financial security, financial resilience, and financial discipline, in turn contributing towards wellbeing of people. Hence, adoption of a holistic and synergistic approach to financial inclusion is the way forward.

Appendix: District wise data points pertaining to the banking sector:

ANNEX I – NSFI: 2019-24 MILESTONES AND ACHIEVEMENTS

Annex II – NSFI 2025-30 – ACTION POINTS, STAKEHOLDERS AND TIMELINE

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23. https://www.iba.org.in/
24. RBI guidelines - DOR.SOG (LEG).REC/64/09.08.024/2023-24 dated January 1, 2024, on Inoperative Accounts /Unclaimed Deposits in Banks- Revised Instructions
25. https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=2812
26. https://jss.gov.in/
27. RBI Master Direction FIDD. MSME & NFS. 12 / 06.02.31 / 2017-18 dated July 24, 2017 (last updated on July 23, 2025) on Lending to Micro, Small & Medium Enterprises (MSME) Sector
28. RBI Master Direction DoR. FIN. REC. 95 / 03.10.038 / 2021-22 dated March 14, 2022 (last updated on October 10, 2024) on Regulatory Framework for Microfinance Loans
29. https://www.nabard.org/
30. https://ncfe.org.in/
31. https://cybercrime.gov.in/
32. https://www.pfrda.org.in/
33. Gazette Notification dated December 27, 2013 - https://egazette.gov.in/
34. https://www.rbi.org.in/commonman/English/scripts/FAQs.aspx?Id=274
35. https://www.niesbud.nic.in/
36. https://npscra.nsdl.co.in/
37. https://nrlm.gov.in/
38. https://nsdcindia.org/
39. https://www.msde.gov.in/
40. https://www.nabard.org/
41. https://jansuraksha.in/pmjjbyScheme
42. https://fintech.rbi.org.in/FT_RegSandbox
43. https://nirdpr.org.in/rseti/aboutus.aspx
44. Omnibus Framework for recognising Self-Regulatory Organisations (SROs) for Regulated Entities (REs) of the Reserve Bank of India – dated March 21, 2024
45. https://www.sidbi.in/
46. https://www.skillindiadigital.gov.in/
47. RBI Master Circular on lead Bank Scheme - FIDD.CO.LBS.BC. No.03/02.01.001/2025-26 dated April 1, 2025
48. https://www.undp.org/sustainable-development-goals
49. RBI Master Direction DoR. FIN. REC. 95 / 03.10.038 / 2021-22 dated March 14, 2022 (last updated on October 10, 2024) on Regulatory Framework for Microfinance Loans
50. RBI guidelines on Section 23 of the Banking Regulation Act, 1949 - Master Circular on Branch Authorisation - Census data 2011- DBR.No. BAPD.BC.12/22.01.001/2016-17 dated September 1, 2016
51. https://udyamassist.gov.in/

List of Abbreviations