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Financial inclusion and inclusive growth: Twin engines for sustained growth


Financial inclusion is a process of providing access to different types of formal financial services like banking, insurance, and timely and adequate credit facilities, especially to the weaker section/ low-income group of society, at an affordable cost.   

India is an economically diverse country and must pay serious attention to financial inclusion. Financial inclusion or including the economically weaker section of the society in the formal financial system has a critical role in the overall economic growth of the nation.  

As our nation’s central bank, the Reserve bank of India (RBI) plays a crucial role in making financial inclusion one of the prime national objectives. Reserve Bank of India (RBI) released the “National Strategy for Financial Inclusion (2019-2024)’’ on 10th January 2020, which highlighted the vision, framework, and objectives of financial inclusion policies.  

This report indicates that financial inclusion plays a significant role in improving the nation’s overall economic development, lessening income inequalities, and reducing poverty. Hence, financial inclusion plays a two-fold role in improving socio-economic growth. 

Schemes implemented by the government to promote financial inclusion


The Indian policymakers started to understand the importance of financial inclusion for social and economic growth. In the 1950s, the government of India took the first initiative to promote financial inclusion by nationalizing commercial banks and life insurance companies Later, it started many other initiatives, such as introduction of the National Strategy for Financial Inclusion (NSFI) in June 2017. This was backed by the Financial Inclusion Advisory Committee (FIAC). 

Few of the other prominent programs/ schemes are: 

Pradhan Mantri Jan Dhan Yojana (PMJDY) 

This is one of the major programs launched by the government of India in the year 2014. The primary objective of this scheme is to cover those citizens who are not having any savings and deposit accounts, pension, insurance, insurance in financial inclusion, and providing credit facilities at reasonable rates are a few of the major highlights of this scheme. 

Pradhan Mantri Mudra Yojana (PMMY) 

PMMY was introduced in the year 2015. This plan has proven very helpful in promoting small-scale businesses. Under this scheme, short-term capital loans or working capital loans, or term loans of INR 3000 crores are provided to the firms dealing in manufacturing, trading, service, and agriculture sectors as well. 

In this scheme, three types of loans are provided- 

‘Shishu’ is a category for loans up to Rs. 50,000, ‘Kishore’ is a category for loans up to INR 5,00,000, and the highest category is ‘Tarun,’ which offers loans up to INR 10,00,000.  

For easy access to the provided fund, the member lending institution (MLIs) issues a MUDRA card. Borrowers can use this MUDRA card to withdraw sanctioned working capital loans from any ATM or can utilize the card at other outlets also for making business purchases. 

Stand Up India                      

This scheme was introduced in the year 2016 with the objective of encouraging entrepreneurship, especially among women and scheduled castes/scheduled tribes.   

Under this scheme, a bank loan ranging between INR 10 lakhs to INR 1 crore is offered to at least one SC/ ST borrower and one female borrower per bank branch of the scheduled commercial bank. The loans provided are composite loans, including both term loans and working capital loans. 

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) 

PMJJBY scheme was started in the year 2015 with the objective of promoting financial inclusion by providing affordable insurance services to the underprivileged section of society.  

This plan is offered by LIC, as well as all other life insurers who are willing to offer the product and are following the required terms. Under this scheme, coverage of INR 2 lakhs is given for one year period, from 1st June to 31st May, and will be renewed after completion of tenure. This 2-lakh life cover will be provided in the event of the death of the insured. The premium for this coverage is INR 436 per annum. 



Financial deepening and broadening are critical factors for financial inclusion, and they can be attained.by targeting the bottom of the pyramid only. Financial inclusion plays an important role in the socioeconomic growth of the nation, and undoubtedly, our policymakers are working on it. Considering the schemes and programs launched by our government, it is clear that institutions like banks, non-banking financial companies (NBFCs), and insurance companies have a dominant role to play. These financial institutions must have significant presence in the rural sector to promote financial inclusion and hence reduce income inequality. They must offer financial services to underprivileged people in an easy and affordable manner. 

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Information related to companies and external organizations is based on secondary research or the opinion of individual authors and must not be interpreted as the official information shared by the concerned organization.

Additionally, information like fee, eligibility, scholarships, finance options etc. on offerings and programs listed on Online Manipal may change as per the discretion of respective universities so please refer to the respective program page for latest information. Any information provided in blogs is not binding and cannot be taken as final.

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Blog Date April 28, 2024
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