Financial Literacy and Inclusion in India

Empowering the Middle Class and Reaching Underserved Populations

By Amulya Charan | Blog No 43 | Updated on 5 November 2026

A bank account can receive a pension. A phone can move money in seconds. An insurance policy can help a family through a sudden loss. Yet none of these works quite as intended if the customer cannot understand the conditions, keep control of the account or get help when something goes wrong.

India has made substantial progress in bringing people into formal finance. The next task is to make that access useful in everyday life. For a salaried household, that may mean understanding the full cost of a loan. For a street vendor, it may mean separating business cash from household spending. For an older person, it may simply mean withdrawing a pension without depending on a stranger.

Financial literacy belongs in all these conversations. It should help people make decisions they understand and can afford. Banks, insurers, lenders and public institutions must also make those decisions easier to navigate. We cannot expect a short awareness session to compensate for a confusing product or an inaccessible complaints system. The way a scheme is explained and delivered at the local counter can determine whether its intended beneficiaries receive any practical benefit at all.

Figure 1. Establish whether a product is a loan, insurance or a benefit before discussing its terms. Illustrative guide.

What the evidence tells us

The World Bank’s Global Findex 2025, based on 2024 survey data, shows that roughly 89% of Indian adults aged 15 and above had an account. Its gender data report account ownership of 89.2% among women and 88.8% among men. These are measures of access; they do not tell us whether every account holder saves regularly, uses digital payments independently or controls the money in that account. [1]

The much-quoted figure that only 27% of Indians are financially literate needs a date attached. It comes from the National Centre for Financial Education’s Financial Literacy and Inclusion Survey 2019. NCFE’s 2020–21 annual report describes a sample of 75,000 adults aged 18–80. It is a historical survey finding under a particular assessment method, rather than a fresh estimate for 2026. [2]

These two figures should not be placed side by side as though they measure the same thing. Their years, age groups and questions differ. Together, they point to a useful policy distinction: opening the door to finance and helping people use it confidently require different kinds of work.

Enrolment statistics need similar care. The number of accounts is not necessarily the number of distinct people. Cumulative insurance enrolments do not establish how many people have active cover today. Loan accounts do not tell us how many businesses became profitable. Progress deserves recognition, but the measure must match the claim.

An account must be usable when it is needed

Pradhan Mantri Jan Dhan Yojana provides a basic banking entry point for unbanked people, without a minimum balance requirement. Its features include a RuPay debit card and an overdraft facility of up to ₹10,000 for eligible account holders. The overdraft is credit subject to conditions, with repayment obligations. It is not a grant available automatically to everyone who opens an account. [3]

A working account can make it easier to receive wages, remittances and eligible government benefits. Direct credit into an account can reduce the need to collect a payment in person. But the final journey still matters. If the nearest reliable withdrawal point is far away, or the local banking correspondent has no cash, a credited benefit may remain difficult to use.

The questions worth asking are practical. Can the customer obtain a receipt? Is the balance clear? Are charges explained? Can a failed transaction be traced? Is there an assisted route for someone who cannot use a smartphone? These are service questions, and they should be part of how we judge inclusion.

For women, access should also mean the freedom to operate the account and decide how money is used. A passbook in her name is a beginning. Independent access to information, a secure way to authenticate transactions and a person she can approach for help make that beginning more valuable.

When the last mile becomes a barrier

One caution needs to be stated plainly. Many intended beneficiaries may find even these basic financial explanations difficult to follow. If the bank employee, banking correspondent, agent or local official handling a scheme uses technical language, rushes through consent or sends people from one counter to another, a useful benefit can become practically inaccessible. Staff shortages and inadequate training can create these barriers; pressure to meet enrolment or sales targets can make matters worse. There is also a risk that someone may exploit a customer’s dependence by giving misleading explanations or demanding unofficial payments. These are risks to guard against, rather than accusations against every frontline worker. The responsibility for making a benefit understandable and usable must rest with the institution delivering it. A beneficiary’s limited literacy should never become an excuse for poor service.

The response should begin at the village help desk or bank counter. Before enrolment, a trained worker should explain, in the person’s language, who qualifies, what the benefit provides, what it costs, when payments or renewals are due and how to claim or complain. A short pictorial sheet or spoken explanation should support this conversation. The worker should then invite the person to explain the essentials back in their own words, gently correcting misunderstandings. This should check the quality of the explanation, never become a test used to deny access. Consent should follow understanding, with credentials kept private and a receipt or enrolment record provided.

Each locality should have an identified help point, with scheduled visits where a permanent desk is impractical, and a named bank or implementing-agency contact responsible for unresolved cases. Authorised charges should be displayed clearly. Assistance should continue through document correction, renewal and claims, including an accessible route for people without smartphones. Supervisors should check a sample of beneficiaries after enrolment: do they know what they joined, what they paid and how to obtain the benefit? Performance reviews should examine unresolved cases and successful delivery, alongside enrolment totals. People must also be able to report obstruction or an unofficial payment demand to someone other than the worker concerned. Otherwise, the person who controls access may also control whether a complaint is heard.

Figure 2. Recommended local delivery practices should make benefits understandable and usable, with accountability after enrolment.

The middle class needs financial literacy too

A regular salary does not remove financial uncertainty. School fees, housing costs, support for parents and medical expenses compete for the same monthly income. Easy credit can hide the pressure for a while. Several manageable-looking instalments can eventually leave very little room for an unexpected bill.

A useful starting point is a household cash-flow review: what comes in, what must go out, which payments fluctuate and what remains after existing debts. Annual expenses deserve space in that calculation. Insurance renewals, repairs and school admissions do not become emergencies merely because they arrive less frequently.

Savings should have a purpose and a time horizon. Money required soon needs dependable access. Money intended for retirement has a different job. A mutual fund, a bank deposit and an insurance policy should be assessed for what each is designed to do, including risk, costs and withdrawal conditions. Tax treatment alone is a poor reason to buy a product.

Consider this illustration, rather than a reported family’s experience. A household has ₹5,000 left after its usual monthly expenses. It commits the entire amount to an investment that is difficult to exit, then faces a ₹12,000 repair bill. The problem is the missing cash buffer. A return calculation would not have solved it.

The size of that buffer depends on income stability, dependants and access to other resources. Someone with irregular earnings needs a plan that allows for lean months. Financial education becomes more useful when it starts with those realities instead of prescribing the same saving percentage to everybody.

Borrowing should begin with the repayment plan

The first question about a loan is whether the household or business can repay it through an ordinary difficult month. Approval by a lender does not answer that question on the borrower’s behalf.

Ask for the Key Facts Statement and repayment schedule where applicable. Compare the annual percentage rate, which captures interest and associated credit costs, alongside the total amount repayable. Check processing deductions, late-payment consequences, insurance charges and early-repayment conditions. A low advertised monthly rate is an incomplete basis for comparison. RBI’s disclosure framework has promoted this approach to understanding the cost of credit. [4]

Small enterprises need access to working capital, but a loan is useful only when the business can support it. Pradhan Mantri Mudra Yojana covers eligible income-generating micro-enterprise activities. Its categories are Shishu, up to ₹50,000; Kishore, above ₹50,000 to ₹5 lakh; and Tarun, above ₹5 lakh to ₹10 lakh. Tarun Plus extends above ₹10 lakh to ₹20 lakh for entrepreneurs who have availed and successfully repaid an earlier Tarun loan. That category took effect on 24 October 2024. [5]

The larger ceiling is not an entitlement for every new applicant. Eligibility, appraisal and repayment capacity still matter. Nor should we assume that a formal loan automatically replaces expensive informal debt. A borrower may end up servicing both. Good counselling should look at the whole debt position before encouraging another application.

Before you sign or agree

Ask the person helping you: “Is this a loan I must repay, insurance I must renew, or a government benefit? What will I receive? What must I pay, and when? Are there any other charges? Who will help me if something goes wrong?” Ask them to explain in your own language and give you a copy of the terms and a receipt for any payment. Do not sign blank forms or share your PIN or OTP. If the explanation remains unclear, seek help from the branch manager or the organisation’s designated grievance officer before agreeing.

These questions cannot place the entire burden on the beneficiary. The bank or implementing agency should provide patient assistance, explain any refusal or missing requirement clearly, and offer a way to complain without depending on the same person whose conduct is being questioned.

Figure 3. Questions to ask before agreeing. The institution remains responsible for explaining the terms and providing assistance.

Affordable insurance needs clear explanations

Two widely used schemes offer a low-cost starting point. Their full annual premiums are ₹436 for Pradhan Mantri Jeevan Jyoti Bima Yojana and ₹20 for Pradhan Mantri Suraksha Bima Yojana. The earlier premiums of ₹330 and ₹12 were revised with effect from 1 June 2022. They should appear only in clearly dated historical discussion. [6–8]

Scheme	Annual premium and entry age	Main protection
PMJJBY	₹436 Entry ages 18–50	₹2 lakh on death from any cause, subject to scheme conditions. Renewal can continue up to age 55.
PMSBY	₹20 Entry ages 18–70	₹2 lakh for accidental death or specified permanent total disability; ₹1 lakh for specified permanent partial disability.

Scheme details and conditions: Department of Financial Services. [6, 7]

Both schemes require valid enrolment and renewal, with sufficient money for premium auto-debit. PMJJBY has a 30-day waiting period for non-accidental death for new enrolments and rejoining, under its rules. PMSBY covers specified accident-related events; it is not health insurance and does not cover every illness or disability. [6, 7]

For a family with little protection, ₹2 lakh can provide meaningful immediate help. It may still be insufficient to replace years of lost earnings or clear a substantial housing loan. Households should assess additional life and health cover against their needs and ability to keep paying premiums.

The less visible work matters as much as signing up: checking the nominee details, keeping enrolment records, confirming renewal and making sure the family knows where to begin a claim. Insurance cannot serve its purpose if the people entitled to claim do not know it exists.

Retirement planning must account for inflation

Atal Pension Yojana is available to eligible Indian citizens joining between ages 18 and 40, with a savings bank or post-office account. From 1 October 2022, a person who is or has been an income-tax payer is not eligible to join. The scheme provides a government-guaranteed minimum monthly pension of ₹1,000 to ₹5,000 after age 60, depending on the chosen pension and required contributions. [9]

That pension can form part of an old-age income plan. Its fixed rupee amount also has a limitation: purchasing power can fall as prices rise. A younger worker should understand both the contribution commitment and what the selected pension may buy decades later. Other pension and savings options should be assessed on their own rules, costs, risks and withdrawal conditions.

Digital payments need confidence and control

UPI has made everyday payments easier for many people. Ordinary bank-linked UPI connects to a bank account. Eligible full-KYC prepaid wallets can also operate through UPI under the applicable arrangements. It is therefore misleading to describe all UPI use as requiring no bank account, or to treat every payment app as the same kind of wallet. [10]

Convenience should come with a few habits that are easy to remember. Check the recipient’s name and amount before paying. Never share an OTP or UPI PIN. You do not need to enter a UPI PIN merely to receive an ordinary incoming payment. Pause if someone asks you to scan a code or approve a request to obtain a refund. Use customer-support details from the bank’s or app’s official channels. [10, 11]

If financial cyber fraud occurs, notify the bank or payment provider immediately, call 1930 and report it through the National Cyber Crime Reporting Portal at cybercrime.gov.in. Keep transaction references and complaint acknowledgements. Prompt reporting can help the response; recovery is not assured. [12]

Training should let people practise safely, in a language they understand, and repeat a task until they are comfortable. A person who needs help should still be able to keep their credentials private. An assisted service is most valuable when it increases the customer’s control.

Figure 4. Digital payment safety and immediate reporting routes. Sources: references 10–12.

Knowing how to complain is part of financial literacy

Customers should keep statements, receipts, policy details and copies of correspondence. For a service problem, begin with the provider’s official grievance process and obtain a complaint number. State what happened, the relevant dates, the amount involved and the remedy being requested.

For eligible complaints against covered RBI-regulated entities, the RBI Complaint Management System at cms.rbi.org.in provides a route to the Integrated Ombudsman process, subject to the scheme’s prerequisites, exclusions and time limits. Readers should use the current scheme and guidance when filing. Insurance and securities complaints follow their respective sectoral channels. [13]

A financial-literacy programme should demonstrate how to make a complaint. Showing people where to seek help is useful; institutions then have to provide a response that resolves the problem.

What the next phase should deliver

India’s next phase of inclusion should be judged by outcomes people can recognise: dependable access to their money, an affordable repayment plan, insurance that stays in force and assistance when a transaction fails. Account opening remains important wherever people are excluded, but the relationship must continue after enrolment.

Financial education should be available when decisions are made, such as before taking a first loan or renewing insurance. It should distinguish guidance from a sales pitch. Frontline workers need training, time and support to explain conditions and help resolve problems. Institutions should reward that work and check whether beneficiaries can actually use the services for which they have enrolled.

Households can begin with a modest review. List debts and recurring payments. Check nominees and insurance renewals. Keep a record of important accounts and official contact points. Discuss the plan with the family members who would need to act during an emergency.

None of this requires every citizen to become a financial specialist. It requires a system in which ordinary people can understand a decision, ask a question and get a fair answer. That is the standard by which financial literacy and inclusion should earn their place in everyday life.

References

Sources checked for this revision on 5 November 2026. Survey findings retain their original data years. Numbered references correspond to citations in the article.

[1] World Bank. India Gender Data Portal and Global Findex 2025 data for 2024. Account ownership by sex and definition, ages 15 and above. Open source

[2] National Centre for Financial Education. Annual Report 2020–21, page 26. Financial Literacy and Inclusion Survey 2019, sample and 27% finding. Open source

[3] Department of Financial Services. PMJDY scheme details. Basic account features and conditional overdraft facility. Open source

[4] Reserve Bank of India. Key Facts Statement for Loans and Advances, 15 April 2024, RBI/2024-25/18. Historical foundation for the loan-cost explanation; reproduced circular. Open source

[5] Department of Financial Services. Pradhan Mantri MUDRA Yojana. Categories, eligible purposes and Tarun Plus conditions. Open source

[6] Department of Financial Services. PMJJBY frequently asked questions. Premium, benefit, entry and termination ages, renewal and waiting-period rules. Open source

[7] Department of Financial Services. PMSBY frequently asked questions. Premium, specified accident benefits and cover conditions. Open source

[8] Ministry of Finance via Press Information Bureau. First ever revision of premium rates of PMJJBY and PMSBY with effect from 1 June 2022. Release dated 31 May 2022. Open source

[9] Pension Fund Regulatory and Development Authority. Atal Pension Yojana. Eligibility, income-taxpayer restriction and guaranteed minimum pension slabs. Open source

[10] National Payments Corporation of India. UPI frequently asked questions. Bank-linked UPI, PIN security and full-KYC prepaid instruments on UPI. Open source

[11] Rajkot Nagarik Sahakari Bank. UPI Transactions Safety Checklist. Receiving payments, PIN secrecy and official support channels. Open source

[12] Indian Cyber Crime Coordination Centre. National Cyber Crime Reporting Portal. Financial-fraud reporting and helpline 1930. Open source

[13] Reserve Bank of India. Integrated Ombudsman Scheme 2026 frequently asked questions and Complaint Management System. Check current filing conditions before submitting a complaint. Open source

Related original article:

Financial Literacy and Inclusion in India published 11 September 2024