- India
- Dec 03
RBI releases five-year National Strategy for Financial Inclusion
• Reserve Bank Governor Sanjay Malhotra released the ‘National Strategy for Financial Inclusion (NSFI): 2025-30’ on December 1.
• The five-year period covered under the earlier strategy — NSFI: 2019-2024, had witnessed significant improvements across the access, usage, and quality dimensions of financial inclusion.
• It 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.
• The strategy lists out five objectives called ‘Panch-Jyoti’ that are aimed at elevating the state of financial inclusion in the country and 47 action points to achieve.
The five strategic objectives are:
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.
• 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 per hamlet of 500 households, in more than 99.9 per cent of the 1.21 lakh identified villages.
• 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.
• By leveraging the gains made, there is scope for further expanding the digital footprints for discharge of a range of financial services.
• It is recommended to improve the equity, reach, consistency, and quality of last mile access by strengthening the network of business correspondents and expanding the delivery of safe and cost-effective digital financial services at the last mile.
2) Adopting a gender-sensitive approach for women-led financial inclusion and differentiated strategies for improving financial resilience of households, especially for the underserved and vulnerable segments.
• 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 a gender sensitive approach is needed to augment and promote women agency in the financial inclusion 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.
• Adoption of a gender sensitive approach is recommended to strengthen women led financial inclusion and extension initiatives for the improved outcomes, besides following a differentiated approach towards delivery of financial services for underserved and vulnerable segments.
3) Synergising livelihood, skill development and support ecosystem and its linkages with financial inclusion.
• 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.
• Leveraging Skill India Digital Hub and local community organisations is recommended for augmenting synergy and convergence in the skilling and livelihood ecosystem to plug gaps in credit/market linkages and mitigate demographic/geographic inequalities to improve employability, and entrepreneurial opportunities to facilitate better income earning capabilities, in turn leading to effective access and usage of financial services.
4) Leveraging financial education as a tool for promoting financial discipline.
• Financial discipline as an integral element of well-being 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
e) Diversification of savings/investments.
• Accordingly, financial education could be leveraged to work on the above markers.
5) Strengthening the quality and reliability of customer 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.
• In order to cater to the various segments of populations in a cost-effective manner, banks have leveraged digital/fintech platforms to curate and deliver financial services/products.
• The extension of financial services has to be duly supported by easy, reliable, trusted, and effective customer protection and grievance redressal measures, as the effectiveness of customer protection remains at the core of the demand for financial services.
The five-year strategy has been framed under the aegis of Technical Group on Financial Inclusion and Financial Literacy (TGFIFL) following country-wide discussions with various stakeholders by the RBI and consultations involving the Department of Economic Affairs and Department of Financial Services, Ministry of Finance, Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA), National Bank for Agriculture and Rural Development (NABARD), National Skill Development Corporation, and National Centre for Financial Education.
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 well-being of people.
Additional Read:
The importance of financial inclusion and financial literacy
In the Indian context, financial inclusion is the process of ensuring access to appropriate financial products and services needed by vulnerable groups, such as weaker sections and low income groups, at an affordable cost in a fair and transparent manner by mainstream institutional players. Financial inclusion provides an avenue to the poor for integrating with the formal financial system.