Financial Inclusion – Jan Dhan, MUDRA, SHGs
🟠 Topic 82: Financial Inclusion – Jan Dhan, MUDRA, SHGs
📌 Introduction
Financial inclusion refers to the delivery of affordable financial services – such as banking, credit, insurance, and pensions – to all sections of society, particularly the unbanked, underbanked, and marginalised populations. It is a key driver of inclusive growth because access to finance empowers individuals, reduces poverty, and boosts economic participation.
India’s financial inclusion journey has been shaped by flagship schemes like Pradhan Mantri Jan Dhan Yojana (PMJDY), MUDRA Yojana, and Self-Help Groups (SHGs). These initiatives have brought millions into the formal banking system, enhanced credit access, and promoted financial literacy.
🔹 What is Financial Inclusion?
📖 Definition
Financial Inclusion refers to the process of ensuring access to appropriate financial products and services to all individuals and businesses, particularly the poor and marginalised, at affordable cost and in a fair and transparent manner.
Objectives of Financial Inclusion
✔️ Provide universal access to financial services.
✔️ Promote savings habits and credit access.
✔️ Facilitate direct benefit transfers (DBT).
✔️ Ensure social security coverage (insurance & pensions).
✔️ Empower women, farmers, and micro-entrepreneurs.
🔹 Key Components of Financial Inclusion
1️⃣ Banking Services
✔️ Savings and deposit accounts.
✔️ Affordable credit for productive purposes.
✔️ Digital banking through mobile apps and payment systems.
2️⃣ Credit Facilities
✔️ Microcredit for small businesses.
✔️ Crop loans for farmers.
✔️ Affordable finance for women entrepreneurs.
3️⃣ Insurance Services
✔️ Life and health insurance for all.
✔️ Microinsurance for unorganised sector.
4️⃣ Pension Coverage
✔️ Low-cost pension schemes for informal workers.
✔️ Example: Atal Pension Yojana (APY).
5️⃣ Financial Literacy
✔️ Financial awareness campaigns in rural areas.
✔️ Capacity building for SHGs and MSMEs.
🔹 Pradhan Mantri Jan Dhan Yojana (PMJDY)
📖 Launched
- August 2014.
📖 Objective
To provide universal access to banking services and promote financial inclusion for the unbanked population.
Key Features
✔️ Zero-balance accounts for all eligible individuals.
✔️ RuPay debit card with accidental insurance cover.
✔️ Overdraft facility up to ₹10,000 for eligible accounts.
✔️ Linked to Aadhaar and mobile (JAM Trinity).
✔️ Facilitates direct benefit transfer (DBT) of government subsidies.
Achievements (As of 2023)
| Parameter | Data |
|---|---|
| Total Accounts | Over 50 crore |
| Rural Accounts | ~67% |
| Women Account Holders | ~55% |
| Deposits Mobilised | ₹2 lakh crore+ |
Impact
✔️ Boosted savings habits in rural areas.
✔️ Enabled DBT payments for LPG subsidy, pensions, scholarships.
✔️ Improved financial resilience during COVID-19 through emergency cash transfers.
🔹 MUDRA Yojana (Micro Units Development and Refinance Agency)
📖 Launched
- April 2015.
📖 Objective
To provide collateral-free microcredit to non-corporate small businesses and entrepreneurs, promoting self-employment and small-scale entrepreneurship.
Loan Categories under MUDRA
| Category | Loan Amount |
|---|---|
| Shishu | Up to ₹50,000 |
| Kishor | ₹50,001 to ₹5 lakh |
| Tarun | ₹5 lakh to ₹10 lakh |
Features
✔️ Loans provided through: ✔️ Scheduled Commercial Banks. ✔️ Regional Rural Banks (RRBs). ✔️ Microfinance Institutions (MFIs). ✔️ No collateral required. ✔️ Focus on women, SC/ST, minorities.
Achievements (As of 2023)
| Parameter | Data |
|---|---|
| Total Loans Sanctioned | Over ₹23 lakh crore |
| Beneficiaries | ~40 crore |
| Women Beneficiaries | ~68% |
Impact
✔️ Supported first-time entrepreneurs.
✔️ Promoted micro-enterprises in rural areas.
✔️ Reduced dependence on informal moneylenders.
🔹 Self-Help Groups (SHGs)
📖 Definition
Self-Help Groups (SHGs) are informal groups of 10-20 rural women who pool their savings and provide internal loans to members. They are linked to banks for formal credit under the SHG-Bank Linkage Programme (SBLP).
Role in Financial Inclusion
✔️ Micro-savings & internal lending at low interest rates.
✔️ Access to bank loans without collateral.
✔️ Platform for financial literacy and skill development.
✔️ Promotes women’s empowerment and community leadership.
Achievements (As of 2023)
| Parameter | Data |
|---|---|
| Total SHGs linked to banks | 1 crore+ |
| Cumulative Bank Loans | ₹5 lakh crore+ |
| Women SHG Members | 90%+ |
Impact
✔️ Increased household incomes.
✔️ Empowered women as financial decision-makers.
✔️ Created rural micro-enterprises (tailoring, food processing, handicrafts).
Case Study – Kudumbashree in Kerala
- Largest women SHG network in India.
- Over 4.5 million women members.
- Facilitated livelihood promotion, social empowerment, and financial inclusion.
- Runs enterprises like: ✔️ Community kitchens. ✔️ Tourism services. ✔️ Agri-processing units.
🔹 Financial Inclusion Index (FI-Index)
Launched
- By RBI in 2021.
Objective
To measure the level of financial inclusion across the country.
Key Parameters
✔️ Access (Bank branches, ATMs, banking correspondents).
✔️ Usage (Credit, deposits, insurance, pension).
✔️ Quality (Consumer awareness, grievance redressal).
India’s FI-Index (2023)
- Stood at 60.1 (out of 100), showing steady improvement.
🔹 Challenges in Financial Inclusion
1️⃣ Digital Divide
✔️ Limited smartphone access in remote areas.
✔️ Digital illiteracy among elderly and rural women.
2️⃣ Dormant Accounts
✔️ High share of infrequent transactions in Jan Dhan accounts.
3️⃣ Credit Exclusion
✔️ Formal credit reach to small & marginal farmers, informal workers remains low.
✔️ Dependence on informal moneylenders continues.
4️⃣ Financial Literacy Deficit
✔️ Many account holders lack awareness of banking services.
📚 Practice MCQ
1️⃣ Under Pradhan Mantri Jan Dhan Yojana (PMJDY), which of the following services are provided?
- Zero-balance savings account.
- RuPay debit card with accident insurance.
- Overdraft facility.
✅ Options:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1, 2, and 3
(d) 1 only
2️⃣ What is the maximum loan amount under Shishu category of MUDRA Yojana?
✅ Options:
(a) ₹25,000
(b) ₹50,000
(c) ₹1 lakh
(d) ₹5 lakh
