By Anil Padmanabhan
Eleven years ago, 56.16 crore people did not have a bank account. Today, thanks to the Jan Dhan scheme launched on 15 August, 2014, they do. Indeed, this achievement, bringing a cohort that is nearly one-and-a-half times the population of the United States into the financial mainstream, is unprecedented and staggering.
Tagged to Aadhaar, the 12-digit unique identity, these bank accounts have provided the newly banked an economic identity, dignity, and agency.In the last decade, financial inclusion has reshaped how government subsidies are delivered, changed the way howhouseholds managemoney, and inspired greater participation of women in the economy.
But, access is only the beginning. The real challenge is ensuring that these accounts become instruments of financial empowerment—transforming savers into investors, households into wealth-builders, and communities into economic engines. This will demand an even more audacious ambition in the next decade.
Financial inclusion 2.0 will be about enabling financial literacy, and thereby spurringinvestments in financial instruments to create resilience in newly bankedhouseholds to withstand the growing frequency of abrupt economic shocks. In short, the challenge is to convert access into prosperity.
The Achievement
According to a study by the Bank for International Settlements (BIS)—the Basel-based institution, often called the bank of central banks—what India pulled off with the Jan Dhan Yojana should have taken nearly half a century.
Normally, it takes a country 47 years, and a rise in per capita income from $5,000 to $20,000, to bring this level of financial inclusion. India did it in just nine years, with incomes rising only from $1,500 to $2,700.
The BIS paper argues that this wasn’t just about opening bank accounts. It was about dismantling exclusion. The gender gap in account ownership shrank from 17% in 2011 to 6% in 2017. The gulf between those inside and outside the labour force halved, from 18% to 9%. For those with or without secondary education, the divide collapsed from 29% to 10%. Even the rich-poor gap narrowed sharply, from 14% to 5%.
The political economy of this is profound. In just a decade, over 50 crore people crossed the threshold—from standing outside the formal economy, peering in, to becoming stakeholders in India’s growth story.
The Triangulation of India
The government was able to fast-track this empowerment by fusing three powerful tools: Jan Dhan accounts, Aadhaar, and individual mobile phones. Together, they became the much-talked about JAM trinity.
JAM acted like an economic GPS. It allowed welfare benefits to be mapped directly to an individual, and then transferred straight into their bank account. Over the past decade, this system has moved a staggering Rs 38.49 lakh crore to citizens.
The impact has been twofold. Direct Benefit Transfers (DBTs) cut out the middlemen, plugging leaks, and saving the exchequer about Rs 3 lakh crore—almost twice the size of the first Covid-19 relief package. Equally important, it restored trust in government social welfare schemes.
JAM has not just expanded the scope of the formal banking system. Instead, they have rewired the social contract, turning millions from passive recipients of welfare into active participants in India’s growth story.
As the unbanked begin to operate their accounts, they begin building credit history. This, in turn, opens the door to access to formal credit—laying the foundation for financial mobility.Unfortunately, an overwhelming number lack financial literacy. Bridging this gap will ensure that the next 50 crore peoplecan transition from inclusion to economic empowerment.
Building Money Muscle
Walk into any small town in India today and almost every adult has a bank account, thanks to Jan Dhan. But, the missing piece in India’s otherwise impressive financial inclusion story is financial literacy.
According to the NCFE (National Centre for Financial Education)-(FLIS) Financial Literacy andInclusion Survey, 2019, 27% of Indian adults are financially literate–lower than the global financial literacy average of 35%.
A more recent study published by Research and Information Systems in 2023, measures financial inclusion on the ownership of financial assets.It estimates that close to 43% remain at an elementary leveland just a tiny fraction, 4.2%,can be called truly financially literate.
At the same time, India is witnessing a boom in retail investing. On 30 June, the National Stock Exchange reported 11.6 crore unique registered investors—an astonishing 72% of those who entered the market in the last five years, are largely from India’s Tier-2 and Tier-3 towns.
Millions of new investors are entering the markets sans the capacity to navigate volatility and scrutinise investments adequately, making India’s financial inclusion story as much about opportunity as it is about vulnerability.Spreading financial literacy can resolve the challenge. It is a once in a lifetime opportunity to reshape social and economic mobility in India.
(The writer is a journalist who writes on the intersection of politics and economics)
