Financial Inclusion in India and Its Challenges

Enabling financial inclusion


From UPSC perspective, the following things are important :

Prelims level: JAM trinity

Mains level: Paper 3- Digital payment boom in India

The article takes an overview of the progress made by India in the financial inclusion and role played by JAM trinity in it.

What is financial inclusion?

Financial inclusion is defined as the availability and equality of opportunities to access financial services. It refers to a process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products.

Growing adoption of digital payment in India

  • India overtook China to register the highest number of countrywide digital payments.
  • Real-time transactions crossed 25 billion, much higher than China’s 15 billion in 2020, as per the report of ACI Worldwide.
  • The report also stated that digital payments in India are set to account for 71.7 per cent of all payments by volume by the year 2025.
  • The digital payment boom is indicative of a larger paradigm shift in the ease of access to financial services.

What are the contributing factors

  • More and more people, across all strata, are adopting digital payments as it is convenient, safe and limits exposure.
  • It is also a result of the nudges and diligent policy and technology frameworks created by the central government in the last few years.
  • By building the Jan-Dhan-Aadhar-Mobile (JAM) and Universal Payment Interface (UPI) platform, the government has been creating the ground for greater financial inclusion.

Significance of JAM trinity

  • While Jan Dhan was the first pillar of the ambitious JAM trinity, Aadhaar card seeding and bank account linkages to mobile numbers have empowered people in hitherto unimagined ways.
  • The JAM trinity has helped people know their account status, receive scholarships and fellowships, get fertiliser and LPG subsidy, disability pensions and farm income support — directly into their accounts.
  • The trinity also helped eliminate middlemen, frauds, and leakages due to corruption.
  • In the past one year alone, Rs 4.3 lakh crore was transferred, in over 477 crore transactions under 319 schemes.
  • With an estimated saving of Rs 1.8 lakh crore, the success of DBT is a big thumbs up for the central government.
  • The aid that reached people during the pandemic under the PM Garib Kalyan package is indicative of the success of the government’s financial inclusion and digitisation efforts.


The unmissable digital and financial revolution that has been unleashed is hard to miss for anyone. The digital journey, however, is long and one hopes to see the positive trends sustaining given their transformative impact on the lives of Indians.

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