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  1. Digital Financial Inclusion: Budget 2024's Agenda for the Unbanked

Digital Financial Inclusion: Budget 2024's Agenda for the Unbanked

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5 min read • Updated: January 29, 2024, 3:47 PM

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Budget 2024 aims to enhance digital financial inclusion for India's unbanked sector, building on previous initiatives like UPI and PMJDY. The country has seen significant progress, with rising digital payment volumes and increased mobile phone adoption. Initiatives like AEPS and PMJDY have expanded financial access, yet there's room for improvement. Expectations include allocating funds for digital transaction platforms, expanding agent networks, and promoting digital literacy. Leveraging digital identity systems can further enhance financial access. Ultimately, fostering financial inclusion is key to driving GDP growth and bringing the unbanked into the formal financial system.

Key Takeaways

  • The government allocated resources for extending digital financial services to the underbanked and unbanked segments of the society.
  • It also focused on strengthening digital infrastructure and promoting financial literacy among marginalised communities.
  • In the upcoming Budget 2024, the government is expected to continue its efforts to enhance digital financial inclusion for the unbanked sector in India.

Digital financial inclusion is also known as the process of providing digital access to formal financial services for excluded and underserved populations. It involves offering financial services to unreached audiences, that are suited to customers' needs, delivered responsibly, and at a cost that is affordable to all.

Financial Inclusion

Financial inclusion is everyone having access to affordable financial products and services so that they can improve their financial well-being and build wealth.

According to the International Monetary Fund (IMF), financial inclusion in India was very low as recently as 2011, with only 35% of adults had a bank account. Since then, India has come a long way. The government has initiated numerous schemes to make our country a more financially inclusive nation.

The Indian government's initiatives such as the Unified Payments Interface (UPI) and the Bharat Bill Payment System (BBPS) have contributed to the expansion of digital payment infrastructure across the country. The Reserve Bank of India (RBI) also introduced a Financial Inclusion Index (FI-Index) to monitor progress in terms of access, usage, and quality of financial inclusion.

Digital Payments

The digital payment ecosystem in India has witnessed a huge growth over the years. According to the National Payments Corporation of India (NPCI) data, the total volume of digital payment transactions reached over 4.71 billion in September 2021, thus indicating a significant shift towards digital financial transactions.

Adding to the digitisation of payments, UPI has emerged as a popular digital payment system in India. The total UPI transaction volume crossed 3.29 billion in September 2021. This means there is an increasing acceptance of digital modes of payment among Indian consumers.

True Digitisation: Mobile Devices, AEPS and PMJDY

India has witnessed a significant rise in the use of mobile phones, especially in rural areas. According to the Telecom Regulatory Authority of India (TRAI), the number of wireless subscribers in India stood at over 1.15 billion as of September 2021. This shows the potential for leveraging mobile devices for financial transactions.

The Aadhaar-enabled payment system has played an important role in advancing financial inclusion in India. As of September 2021, the total transactions through AEPS stood at over 143.5 million, indicating an increasing adoption of digital financial services among the unbanked and underserved populations.

The Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched in 2014. It aimed to ensure financial inclusion for all households in India. As of September 2021, over 437 million PMJDY accounts had been opened. Thus, greater access to formal financial services, especially in remote areas.

2023’s Budget

Last year's budget laid the foundation for financial inclusion initiatives with a focus on digital means. According to the Reserve Bank of India (RBI), the number of Basic Savings Bank Deposit Accounts (BSBDAs) opened under the PMJDY reached 43.04 crore by the end of the fiscal year 2020-21. This was to extend financial services to the unbanked population. The increase in the number of BSBDAs signifies a big step toward financial inclusion.

Budget Expectations for a more Financially Inclusive Nation

There was a notable increase in the adoption of digital financial services among the unbanked population. Yet, the inclusivity could be better. Allocating funds for the expansion and improvement of digital transactional platforms, such as mobile-based payment systems, can help reach a larger segment of the unbanked population. Similarly, investing in the expansion of retail agent networks equipped with digital devices helps the conversion of cash into electronically stored value and vice versa - in short, greater financial access for the unbanked. Plus, introducing programs and campaigns to promote digital literacy and educate the informal population about the benefits and responsible use of digital financial services. The government may also consider leveraging digital identity systems and innovative technologies to enhance access to formal financial services for the unbanked population. Thus, creating a broader vision of a more inclusive and digitally empowered financial ecosystem.


In the upcoming years, there is an expectation to continue to focus on the unbanked sector in India. The expansion of digital financial inclusion initiatives should be a fundamental goal. This could involve addition to the infrastructure for digital banking services and promoting digital literacy among the unbanked population. This could be achieved through allocating funds for the development of digital banking infrastructure, financial literacy campaigns, and enhanced accessibility to banking services in remote areas. India's GDP is projected to grow at 6.3% by FY 2024-25 and this could be largely attributed by promoting greater accessibility to digital banking services. All aimed at bringing the unbanked population into the formal financial system.