8. (c) Discuss the initiatives launched by the Reserve Bank of India (RBI) to promote financial inclusion.

The Reserve Bank of India has adopted a comprehensive, bank-led model to promote financial inclusion, removing regulatory bottlenecks and creating a conducive environment for banks to accelerate their efforts. Its initiatives span across policy formulation, technological enablement, direct supervision, and financial literacy.

1. Regulatory and Policy Frameworks

• Basic Savings Bank Deposit (BSBD) Accounts: In 2012, the RBI advised all banks to offer 'Basic Savings Bank Deposit Accounts' with minimum common facilities, including no minimum balance requirement, deposit and withdrawal of cash, and receipt/credit of money through electronic payment channels. This replaced the earlier 'No-Frills Accounts' to ensure universal access to basic banking.
• Relaxed KYC Norms: To facilitate easy account opening, especially for small accounts, the RBI relaxed and simplified Know Your Customer (KYC) norms. This includes allowing 'small accounts' with balances not exceeding ₹50,000 and aggregate credits not exceeding ₹1 lakh a year, without insisting on full KYC initially, thus lowering entry barriers for vulnerable sections.
• Business Correspondent (BC) Model: The RBI permitted banks to employ Business Correspondents (BCs) as agents to provide banking services at people's doorsteps, particularly in unbanked and remote areas. This model significantly enhanced last-mile access to banking services, allowing for deposits, withdrawals, and remittances without the need for a physical bank branch.
• Branch Expansion Policy: The RBI has consistently incentivized banks to open branches in unbanked rural areas. As per directives, banks are often required to open a certain percentage of their new branches in unbanked rural centers, monitored through their Financial Inclusion Plans (FIPs). The National Strategy for Financial Inclusion (NSFI) 2019-24 had a key objective of providing banking access to every village within a 5 km radius/hamlet of 500 households in hilly areas, which was almost fully achieved by March 31, 2024, covering 99.99% of identified villages/hamlets in 27 states and 8 UTs.
• Lead Bank Scheme: The RBI continues to operationalize the Lead Bank Scheme to ensure coordinated action by banks, government agencies, and other stakeholders for financial inclusion at the district level. Lead District Managers oversee the implementation of Financial Inclusion Plans.

2. Strategic Frameworks

• National Strategy for Financial Inclusion (NSFI): The RBI, in consultation with the government and other regulators, has formulated multi-year strategies. The NSFI 2019-2024 provided a roadmap for universal access to financial services, while the latest NSFI 2025-2030, launched in December 2025, emphasizes a synergistic ecosystem approach. This new strategy outlines five key objectives, known as 'Panch-Jyoti', focusing on improving last-mile access, effective usage, financial safety for households and micro-enterprises, gender-sensitive approaches, leveraging financial education, and strengthening customer protection and grievance redressal. It is supported by 47 action points.
• Financial Inclusion Index (FI-Index): Introduced in August 2021, the RBI's composite FI-Index captures the extent of financial inclusion across the country, incorporating details of banking, investments, insurance, postal, and pension sectors. This index provides a comprehensive measure of progress and helps in identifying areas needing further intervention. The FI-Index rose to 67 in 2025, a 24.3% increase since 2021.
• Payments Vision 2025: This document, released in June 2022, aims to provide safe, secure, fast, convenient, accessible, and affordable e-payment options. It focuses on five anchor goalposts: Integrity, Inclusion, Innovation, Institutionalization, and Internationalization. The vision includes enhancing digital payment infrastructure, expanding card acceptance, and leveraging digital payments for financial inclusion.

3. Technological Advancements and Digital Push

• Unified Payments Interface (UPI): While a National Payments Corporation of India (NPCI) initiative, the RBI provides the regulatory framework and oversight for UPI, which has revolutionized digital payments in India. Its ease of use and interoperability have significantly propelled financial inclusion by enabling instant, low-cost digital transactions for millions, including those with feature phones.
• Payments Infrastructure Development Fund (PIDF): Launched by the RBI in 2021, PIDF aims to subsidize the deployment of Point of Sale (PoS) devices and physical and digital payment acceptance infrastructure in tier-3 to tier-6 cities and the North-Eastern states, promoting digital payment adoption in underserved areas.
• Antardrishti Dashboard: This digital tool provides a granular view of financial inclusion progress, enabling the RBI and banks to identify areas lacking proper banking access and direct targeted interventions.
• Digital Options for Feature Phones: Recognizing that not everyone has a smartphone, the RBI has pushed for solutions that enable digital transactions even for feature phone users, expanding the reach of digital finance.

4. Financial Literacy and Consumer Protection

• Financial Literacy Centres (FLCs): The RBI promotes the establishment of FLCs by banks, which organize financial literacy camps, especially in rural areas, to educate the public on basic banking products, safe digital transactions, credit, insurance, and pensions. Revised guidelines for FLCs ensure more effective outreach.
• Customer Protection and Grievance Redressal: Strengthening customer protection and grievance redressal mechanisms is a continuous focus. The RBI has put in place the Integrated Ombudsman Scheme, 2021, to provide a cost-free and expeditious complaint redressal mechanism for customers of regulated entities.

5. Support for Government Schemes

While schemes like Pradhan Mantri Jan Dhan Yojana (PMJDY) are government-led, the RBI plays a crucial role in their successful implementation by providing guidelines, ensuring bank compliance, and facilitating the underlying banking infrastructure. PMJDY has been pivotal in opening over 56 crore bank accounts, promoting direct benefit transfers, and fostering a cashless economy through RuPay cards and mobile banking.

The RBI's continuous efforts, coupled with government initiatives, have led to substantial progress in financial inclusion. However, challenges persist in ensuring meaningful usage of services, particularly credit and insurance, and addressing the specific needs of vulnerable populations through tailored products and robust financial education.