FINTECH

INTRODUCTION
FINTECH SECTOR IN INDIA
GROWTH OF FINTECH

• As on 30th April 2023, 3,085 recognised startups are engaged in the finance technology (fintech) sector
• The Indian fintech sector was the second biggest recipient of VC funds between 2014 and June 2023 and
accounted for 19% of the total $141 Bn raised by Indian startups during the period.
• Going forward, the Fintech market is estimated to grow to a market size of $2.1 Tn by 2030, clocking a
compounded annual growth rate (CAGR) of 18%.
• The Fintech sector in India has witnessed funding accounting to 14% share of Global Funding.
• Indian fintechs were the 2nd most funded startup sector in India in 2022. Indian Fintech startups raised $ 5.65 Bn
in 2022.
• The total number of unique institutional investors in Indian fintech almost doubled between 2021 and 2022,
rising from 535 to 1019 respectively.
 BENEFITS OF FINTECH
• Financial Inclusion

It enables all individuals and businesses to get access to appropriate and affordable financial products and services in a timely manner.
• Economical
The services are provided through apps and other such digital modes. With each innovation comes a potential reduction in cost as there are no
physical branches, which means no overheads to pay.
• Speed
The automated process not only saves cost but also helps get access to services in a timely and quick manner.
• Efficiency Enhancement
The FinTech, because of their speed and economical ways of rendering services played a key role in making the financial sector more efficient.
• Flexibility
FinTech companies allow you to carry out all kinds of operations from whenever and wherever you want in a very simple way.
• Personalized Customer Service
If there is one thing that Fintech products have been able to enhance, it is their ability to meet the particular needs of the user and the company in a
personalized way.
CHALLENGES OF FINTECH

• Cyber-Attacks

Automation of processes and digitization of data makes fintech system vulnerable to attacks from
hackers. Recent instances of hacks at debit card companies and banks are illustrations of the ease with
which hackers can gain access to systems and cause irreparable damage.
• Data Privacy Issue
The most important questions for consumers pertain to the responsibility of cyber attacks as well as
misuse of personal information and important financial data.
• Difficulty in Regulation
Regulation is also a problem in the emerging world of FinTech, especially cryptocurrencies. In most
countries, they are unregulated and have become fertile ground for scams and frauds. Due to diversity of
offerings in FinTech, it is difficult to formulate a single and comprehensive approach to these problems.
 FACTORS LEADING TO FINTECH
• Advancements in digital technologies- Penetration of internet, smart phones, 5G technology, Internet of things,,
blockchains, AI etc has given a boost to FinTech
• Favorable Indian Demography is another enabler as the Indian market is blessed with a higher proportion of young
population, who are more likely to trust and adopt FinTechs.

• Changing customers’ needs and expectations- customers’ requirements for the financial services provided by the
traditional banking system have changed. Customers have become more autonomous for basic transactions and more
demanding of banks’ role for sophisticated ones. Furthermore, with the help of new search and social media tools,
consumers have become increasingly connected, informed, empowered, and active. Nowadays, consumers are
shifting their purchases to online stores, and digital touch points have become essential in the customer journey,
affecting both online and offline sales. In addition, the fintech era has brought 24/7 access to financial services
instead of being just limited to banking hours.
• The impact of Covid-19- The COVID-19 pandemic underlined the need to accelerate the digitalization of many
aspects of people’s daily activities due to a lack of physical presence at the usual places of business. Millions of
people worldwide were forced to work from home due to the spread of coronavirus.
• Reduced Barriers for Market Entry- One of the factors that allowed fintech companies to enter the
financial services market is the lower regulation for financial services provided by non-banks. The
increased capital requirements and stricter lending conditions that banks faced following the financial
crises of 2008 made it hard for small businesses and individuals to secure credit, thus creating an unmet
demand for financial services.

• Fintech and Bank Collaboration- FinTech firms are no longer viewed by banks as disruptive forces but as
enablers of banking and finance. Banks are relying on a number of strategies to embrace technological
innovation ranging from investing in FinTech companies to collaborating with FinTechs for various
operational functions.
The indigenous set of technologies and policies also act as enablers to innovation.
 FINTECH INNOVATIONS
• Mobile and web-based payment applications- One of the most common applications of fintech is mobile payment applications and gateways. Furthermore, such
programmes enable users to transact without visiting a bank.
• Digital Currency- Digital currency is a form of currency that is available only in digital or electronic form, and not in physical form. It is also called Digital Money or
Electronic Money. Digital currencies are digital representative of value, currently issued by private developers and denominated in their own unit of account. • They
are obtained, stored, accessed and transacted electronically and neither denominated in any sovereign currency nor issued or backed by any government or central
bank.
A cryptocurrency is another form of digital currency which uses cryptography to secure and verify transactions and to manage and control the creation of new
currency units.
• Distributed Ledger- A distributed ledger can be described as a ledger of any transaction or contract maintained in decentralized from across different locations and
people. Unlike traditional databases, distributed ledgers have no central data store or administrative functionality.
• Blockchain- A blockchain is a type of database. A database is a collection of information that is stored electronically on a computer system. Information or data, in
databases is typically structured in table format to allow for easier searching and filtering of specific information.
A blockchain collects information together in groups, also known as blocks, that hold sets of information. • Blocks have certain storage capacities, and when filled, are
chained onto the previously filled block, forming a chain of data known as the “Blockchain” • All new information that follows will be freshly added in any block which
is also added to the chain once filled.
It is the record-keeping technology behind the Bitcoin network.
In Bitcoin’s case, blockchain is used in a decentralized way that no single person
or group has control – rather, all users collectively retain control.
• Crowd Funding- Crowd funding is a way of raising debt or equity from multiple investors via an internet-based platform across the world. It refers to the solicitation of funds (small
amount) from multiple investors through a web-based platform or social networking site for a specific project, business venture or social issue.

• Peer to Peer Lending- Peer-to Peer lenders connect lenders and borrowers using advanced technologies to speed up loan acceptance. These technologies are designed to increase the
efficiency and reduce the time involved in accessing the credit. P2P platforms are different from banks because they do not take position in loans. These platforms more directly match
the risk appetite of lenders with the profile of borrowers.

• Smart Contracts- Smart contracts are computer protocols that can self-execute, selfenforce, self-verify and self-constrain the performance of a contract. Development of smart
contracts in relation to financial services could have a large impact on the structure of trade finance or derivatives trading and could also be integrated into robo-advice wealth
management service.

• E-Aggregators- E-Aggregators provide internet-based venues for retail customers to compare the prices and features of a range of financial and nonfinancial products such as
standardized insurance, mortgages, and deposit account products. E-Aggregators also provide an easy way to switch between providers and may become a major distributor for a
variety of financial products.

• Cloud computing- Cloud computing is the delivery of different services through the internet. These resources include tools and applications like data storage, savers, databases,
networking, and software.

• Robo Advice- Robo-advisors are digital platform that provide automated, algorithm driven financial planning services with little to no human supervision. A typical robo-advisor
collects information from clients about their financial situation and future goals through an online survey and then uses the data to offer advice and automatically invest client assets.

• E-Trading- E-trading refers to a method of trading securities, financial derivatives or foreign exchange electronically. Both buyers and sellers use the internet to connect to a trading
platform such as an exchange-based system or e-communication network.

• Big Data- Big data refers to the large, diverse sets of information that grow at ever increasing rates. As more business activity is digitized, new sources of information are becoming
available, By combining these data sources with the availability of increased computing power is delivering faster, cheaper, and more comprehensive analysis for better informed
decision-making.
 DIGITAL PAYMENTS
• Volume of UPI transactions increased 200x from January 2017 (4.5 Mn) to January 2023
(10 Bn), and the Value increased 600x during the same period

• UPI recorded the highest ever volume of transactions in April 2023 – 8.8 Bn
• Daily transactions on the UPI platform can touch 1 Bn by 2025
• Digital Payments increased by 76% in transactions and 91% in value (2022)
• A pan-India digital payments survey (covering 90,000 respondents) revealed that 42% of
respondents have used digital payments
• Acceptance of digital payments infrastructure has increased from 170 Mn touch points to
260 Mn touch points (increase of 53%)
 GOVT INITIATIVES
• Jan Dhan Yojana- Jan Dhan Yojana has enabled fintech startups to build technology products to penetrate the large untapped consumer base in India
• Licensing of payments banks to enhance financial inclusion and expand access to payments and remittance services
• Payment Mechanism and Interface

• Aadhar Enabled Payment System (AePS) was launched in 2010 to deliver the 4As for financial inclusion in rural areas:
1. Authentication of customer
2. Availability of services
3. Accessibility
4. Affordability
• Cheque Truncation System was launched in 2011 to enable faster clearance of cheques.
• National Automated Clearing House was launched in 2012. It is a web-based platform for inter-bank electronic transactions that are repetitive and of high volumes.
• Rupay is a global card payment network launched by the NPCI in 2012
• National Unified USSD Platform (NUUP) or *99# is a mobile based banking service that work on USSD channel. It was launched in 2014.
• Bharat Bill Payment System (BBPS) started in 2014

• BHIM or Bharat Interface for Money is a mobile wallet app developed by NPCI based on the UPI. It was
launched in 2016.
• E-RUPI is a digital payments instruments that provides cashless and contactless payment solutions. It is a
person and purpose-specific solution. It was launched in 2021.
 FINTECH REGULATION
• RBI Regulations- The primary regulator for FinTech is RBI. There is no universal regulatory body for FinTech entities in India. Depending on the product or service
different regulatory bodies govern such entities. However, RBI currently regulates the majority of FinTech companies dealing with account aggregation, Peer-to-
Peer lending etc. The EPT Directions and the PAPG Guidelines govern intermediaries such as a Payment Aggregators (PA(s)) and Payment Gateways
(PG(s)).Intermediaries are entities that collect money from customers through electronic payment methods for goods and services and then transfer it to
merchants as final payment. PA(s) facilitate e-commerce sites and merchants to accept payments, while PG(s) provides technology for online payment
processing. Beyond PAs and PGs, the EPT Directions apply to a wide range of entities including electronic commerce (e-commerce) and mobile commerce (m-
commerce) service providers facilitating electronic payments, and merchants accepting payments through electronic or online payment methods. The PAPG
Guidelines set eligibility criteria, capital requirements, and technology-related recommendations for PAs.
• SEBI- The SEBI (Alternative Investment Funds) Regulations, 2012 govern securities trading in the fintech space, particularly concerning Alternative Investment
Funds (AIFs). These regulations provide guidelines for the establishment and operation of AIFs, including various types such as venture capital funds, private
equity funds, and similar investment vehicles. The regulations impose registration criteria, restrictions on investments, disclosure obligations and norms for
investor protection on AIFs operating in India. Such regulations aim to ensure transparency, responsible practices and investor confidence within the fintech-
driven AIF sector.
• IRDAI- With the rise of InsurTech, the IRDAI has been proactive in encouraging the adoption of fintech in the insurance sector, while also ensuring that
policyholders' and insurance product buyer's interests are protected. In that regard, the IRDAI's regulations in the insurance fintech sector broadly govern
corporate agents, web aggregators and insurance brokers
• The National Payments Corporation of India (NPCI) Regulations- TheNPCI is responsible for managing several notable payment systems in India, such as the
Unified Payment Interface (UPI), RuPay card payment network and payment aggregators. The NPCI oversee the operation and functioning of these payment
systems, ensuring their efficiency and effectiveness in facilitating transactions.
• The Companies Act, 2013- Fintech businesses operating in India are subject to various laws and regulations that govern their operations. Under the Companies
Act 2013, fintech businesses are required to register and comply with all applicable laws and regulations like any other business in the country.
 FINANCIAL INCLUSION
• Financial Inclusion is described as the method of offering banking and financial solutions and services to every individual in the society without any form of
discrimination. It primarily aims to include everybody in the society by giving them basic financial services without looking at a person's income or savings. Financial
inclusion chiefly focuses on providing reliable financial solutions to the economically underprivileged sections of the society without having any unfair treatment. It
intends to provide financial solutions without any signs of inequality. It is also committed to being transparent while offering financial assistance without any hidden
transactions or costs.
• The economically underprivileged people of the society may also not have proper documents to provide to the banks for verification of identity or income. Every bank has
certain mandatory documents that need to be furnished during a loan application process or during a bank account creation process. Many of these people do not have
knowledge about the importance of these documents. They also do not have access to apply for government-sanctioned documents.
• Financial inclusion aims to eliminate these barriers and provide economically priced financial services to the less fortunate sections of the society so that they can be
financially independent without depending on charity or other means of getting funds that are actually not sustainable. Financial inclusion also intends to spread awareness
about financial services and financial management among people of the society. Moreover, it wants to develop formal and systematic credit avenues for the poor people.
• For several years, only the middle and high classes of the society procured formal types of credit. Poor people were forced to rely on unorganised and informal forms of
credit. Many of them were uneducated and did not have basic knowledge about finance and hence, they got cheated by the greedy and rich people of the society.
 NEED OF FINANCIAL INCLUSION IN INDIA
• Financial inclusion enhances the financial system of the country comprehensively. It strengthens the
availability of economic resources. Most importantly, it toughens the concept of savings among poor people
living in both urban and rural areas. This way, it contributes towards the progress of the economy in a
consistent manner.
• Many poor people tend to get cheated and sometimes even exploited by rich landlords as well as unlicensed
moneylenders due to the vulnerable condition of the poor people. With the help of financial inclusion, this
serious and hazardous situation can be changed.
• Financial inclusion engages in including poor people in the formal banking industry with the intention of
securing their minimal finances for future purposes. There are many households with people who are farmers
or artisans who do not have proper facilities to save the money that they earn after putting in so much effort.
 OBJECTIVES OF FINANCIAL INCLUSION IN INDIA
• Financial inclusion intends to help people secure financial services and products at economical prices such as deposits, fund transfer services, loans,
insurance, payment services, etc.
• It aims to establish proper financial institutions to cater to the needs of the poor people. These institutions should have clear-cut regulations and should
maintain high standards that are existent in the financial industry.
• Financial inclusion aims to build and maintain financial sustainability so that the less fortunate people have a certainty of funds which they struggle to
have.
• Financial inclusion also intends to have numerous institutions that offer affordable financial assistance so that there is sufficient competition so that
clients have a lot of options to choose from. There are traditional banking options in the market. However, the number of institutions that offer
inexpensive financial products and services is very minimal.
• Financial inclusion intends to increase awareness about the benefits of financial services among the economically underprivileged sections of the
society.
• The process of financial inclusion works towards creating financial products that are suitable for the less fortunate people of the society.
• Financial inclusion intends to improve financial literacy and financial awareness in the nation.
• Financial inclusion aims to bring in digital financial solutions for the economically underprivileged people of the nation.
• It also intends to bring in mobile banking or financial services in order to reach the poorest people living in extremely remote areas of the country.
• It aims to provide tailor-made and custom-made financial solutions to poor people as per their individual financial conditions, household needs,
preferences, and income levels.
 ORIGINATION OF FI IN INDIA
• In the Indian subcontinent, the concept of financial inclusion was first familiarised in the year 2005 by the Reserve Bank
of India by releasing the Annual Policy Statement. Soon, the concept started to spread in every part of the nation. It was
chiefly introduced to touch every corner of the country without ignoring any remote area. The concept addressed the
absence of a formal financial system and banking system for catering to the monetary requirements of the poor people.
• In the year 2005, the Khan Committee Report was released which mainly discussed rural credit and microfinance. It
spoke about how many people in the nation are missing out on the benefits of a professional and licensed banking system.
• The Khan Committee report laid an emphasis on providing access to essential financial services by helping them to open
a bank account that does not come with any frills or complicated elements. All banks were asked to minimise regulations
regarding account creation processes for the economically weaker sections of the society. Several banks were asked to
work together towards 100% financial inclusion by taking part in campaigns started by the RBI.
• The Indian government also initiated the 'Pradhan Mantri Jan Dhan Yojna' with the sole purpose of motivating and
encouraging poor individuals to open bank accounts. This programme targeted at least 75 million individuals to open
bank accounts by the year 2015.
 FINANCIAL INCLUSION SCHEMES IN INDIA
• Pradhan Mantri Jan Dhan Yojana (PMJDY)
• Atal Pension Yojana (APY)

• Pradhan Mantri Vaya Vandana Yojana (PMVVY)

• Stand Up India Scheme
• Pradhan Mantri Mudra Yojana (PMMY)
• Pradhan Mantri Suraksha Bima Yojana (PMSBY)
• Sukanya Samriddhi Yojana
• Jeevan Suraksha Bandhan Yojana
 FINANCIAL INCLUSION GROWTH IN INDIA
• The value of Financial Inclusion (FI) Index, which captures the extent of financial inclusion across the
country, improved to 60.1 in March 2023 vis-à-vis 56.4 in March 2022, with growth witnessed across
all sub-indices, according to the Reserve Bank of India.
• Improvements in FI Index were mainly contributed by usage and quality dimensions, reflecting
deepening of financial inclusion, per a central statement.
• When FI Index was first published in August 2021, the Index for FY ending March 2021 was at 53.9.
This index was at 43.4 for the period ending March 2017.
• The FI Index has been conceptualised as a comprehensive index incorporating details of banking,
investments, insurance, postal as well as the pension sector in consultation with Government and
respective sectoral regulators.
 FINANCIAL PRODUCTS OFFERED
Under financial inclusion, the main aspect is access to financial sources. This can be broadly divided into credit, wealth creation, and contingency planning.
• According to the concept of financial inclusion, under the credit aspect, a low-income individual needs proper access to emergency loans, consumer loans, housing loans, and business
livelihood loans at affordable rates.
• Under the wealth creation aspect, a poor individual should be able to make excellent savings and have access to reliable investment options that generate good returns. Every low
• -income household should also have basic financial literacy and understand the concept of risk in finance clearly.
• Under the contingency planning segment of the financial inclusion system, a poor person should have access to funds that can be utilised exclusively in the future. It is not enough if
these people have only means to improve their income and enhance their lifestyle. They should also have the right resources to be prepared for the future, especially when they get old.
Many of the poor people may not be aware of retirement plans. They should be provided with affordable retirement plans that will give them good returns in the later stages of their
lives.
Due to their lack of access to instant credit facilities, banks were instructed to issue cost-efficient credit cards to the low-income groups of the society. Some of the special financial products
provided to them include:
• General Credit Cards (GCC): Banks were asked by the RBI to launch and offer General Credit Card facilities with an amount of up to Rs.25,000 at their branches located in semi-urban
and rural areas.
• Kissan Credit Cards (KCC): The Reserve Bank of India also instructed banks to provide Kissan Credit Cards exclusively to small farmers who earn very low incomes and who have very
limited funds due to which they cannot invest in proper farming tools, fertilisers, pesticides, crop seeds, tractors, land for farming, storage warehouses, etc. They are forced to rely on
other wealthy landlords for getting land to sow crops. These Kissan Credit Cards are intended to help farmers make instant purchases whenever required. Many a time, farmers give up
on purchasing things required for their occupation due to lack of funds.
• ICT-Based Accounts via BCs: The Reserve Bank also devised a plan to help banks to reach out to the unbanked individuals of the society by offering information and communications
technology (ICT)-based bank accounts with the help of business correspondents (BCs). These accounts allow users to make withdrawals of cash, create deposits, and apply for loans and
other forms of credit through electronic forms. This type of account makes banking inexpensive and simple.
• Increase in ATMs: The Reserve Bank of India also reported that many rural parts of the nation do not have enough automated teller machines (ATMs) and this is hampering many buying
and selling operations of the people residing in those areas. In order to increase the availability of physical cash for these people, the number of ATMs increased massively.
 FINANCIAL INCLUSION WITH FINTECH SUPPORT
• With the introduction of financial technology or fintech, financial inclusion is improving extensively across the whole world. Fintech
companies have also been successful in offering financial services and products at minimal costs and in a simplified manner. This is very
helpful to customers as their expenses are low and they can distribute their savings to their other needs also.
• Financial technology companies are enabling people in rural areas to apply for loans or open bank accounts by using mobile phones. Several
people in Indian rural places have mobile phones and some of them have access to mobile internet and hence, they can make use of fintech
services to get reliable financial services.
• A few of the latest fintech options that are used by individuals include crowdfunding, digital payment systems, peer-to-peer (P2P), electronic
wallets, etc. Many people in both rural and urban areas are utilising these advanced options of banking. However, there are still many
untouched people who have not had any experience with a banking or any other financial institution. For such people, it is tough to use any
mobile-based financial service.
• When many of these poor people engage in financial transactions via cheques or cash, they tend to get cheated by financial scammers. Also,
when they visit bank branches to open a deposit or to apply for a loan, they may end up paying high fees at the branch. These fees or charges
can be processing fees, transaction fees, money order fees, etc. In order to save poor people from such high expenses for availing financial
services, banks, NBFCs, and fin tech companies are collaborating together to come up with simpler and quicker banking processes which
will eliminate unnecessary fees and charges. The evolvement of such processes will help in including the underbanked or unbanked people
of the society.
 FINANCIAL INCLUSION THROUGH DIGITAL PAYMENT SYSTEMS

• People can make payments for products and services in their residential regions with the help of electronic
payment wallet systems. The Government of India has launched several electronic wallet systems through
smartphone apps such as Bharat Interface for Money (BHIM), Aadhaar Pay, and lots more!
• Electronic wallets or e-wallets refer to wallets that can be used with the help of electronic means such as
mobile phones. These wallets replace physical wallets. A user can make cashless payments through online as
well as offline means. He or she will need to download the e-wallet app on their mobile phone and utilise it
to make transactions. These e-wallets can be utilised for mobile recharges, utility bill payments, grocery
stores, e-commerce portals, etc.
• Many digital financial tools offer attractive offers and discounts when people make use of these tools. These
are very helpful and new to the economically underprivileged sections of the society. They can enjoy offers,
receive cashback options, and rewards. These incentives will help a user save a lot of money.
 IMPACT OF DEMONETIZATION ON FINANCIAL
INCLUSION
• With the implementation of the demonetisation process in India in the year 2016, the need for
digital financial services has risen. The ban on usage of the notes of Rs.500 and Rs.1,000 led to
the increasing demand for alternative modes of payment for goods and services. Hence, the
number of digital wallets increased extensively in the country.
• With the objective of making India completely cashless in a few years, the government has
introduced inexpensive e-wallet options so that the less fortunate people of the nation are not
excluded from going cashless. These e-wallets have regional languages apart from English.
The user can select the language that he or she knows and make use of the app conveniently.
Some of these e-wallets not only allow a user to make payments, but also enable them to make
fund transfers from one bank account to another.
 FINANCIAL INCLUSION THROUGH DIGITIZED
MONETARY TRANSACTIONS
• The government of India intends to carry out crores of digital financial transactions for the present and
upcoming years with the help of Unified Payment Interface (UPI), Unstructured Supplementary Service Data
(USSD) banking methods, Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT),
Aadhaar Pay, debit cards, BHIM, and credit cards.
• These digital financial apps will help in eliminating corruption apart from achieving financial inclusion. These
apps aim to attain financial inclusion by offering interesting and attractive bonuses for both users and
merchants. Customers who make use of these cashless payment tools will be able to enjoy referral bonus
schemes and meanwhile, merchants will get cashback rewards and points when they allow customers to transact
through these cashless systems.
• Apart from introducing digital financial systems to the poor people, a few banks have released mobile banking
vans or trucks to reach the interior parts or untouched parts of the country. In these parts, people do not have
access to transport, communication, or financial services.
FINANCIAL INCLUSION THROUGH
MICROFINANCE
• Microfinance is a very effective way of offering funds to the economically underprivileged sections
of the society. Microfinance refers to giving micro loans or micro credit to the less fortunate
entrepreneurs and small-scale business enterprises.

• This mode of financing has helped India extensively in achieving financial inclusion in a cost-
effective manner. It has impacted the lives of the poorest people in the nation. It includes the
provision of loans, savings instruments, and other financial instruments for the purpose of making
more money and saving it proficiently for multiple purposes.
• There are several impoverished people in the nation who do not have access to financial sources and
who have no idea how to get out of their hopeless financial condition. With basic microfinance, they
will be given opportunities to start some form of business or get a better job and improve their
lifestyles as it gives them a chance to borrow money, utilise it for lucrative purposes, and repay it
conveniently over a fixed period of time. They will also learn to manage their hard-earned money
meticulously.
 PRIVATE COMPANY’S CONTRIBUTION
• Private companies have also initiated programmes in order to contribute towards achieving financial inclusion in
the nation. These private companies planned and implemented projects in order to make the low-income groups
of people be engaged in developmental projects.
• Some of these programmes include Haryali Kisan Bazaar by DCM, EChoupal or E- Sagar by ITC, Project Shakti
by Hindustan Unilever, and many more.
• Over the past few years, financial inclusion has become a very prominent public policy aspect in order to develop
the economy in a sustainable manner. It plays a significant role in keeping institutions that provide finance in a
very steady and firm condition. Banks can enjoy excellent stability when financial inclusion is attained.
• It also helps in minimising the distance between financial institutions and customers, and this, in turn, assists in
maintaining a healthy relationship. With financial inclusion, every economic agent in the nation will have the
ability to make use of formal financial services and move towards the overall development of the economy.
 CHALLENGES OF FINANCIAL INCLUSION
• Bank services do not have enough support for scalability.
• The technology adoption is limited.
• The lack of the availability of documents for the purposes of banking activities.
• Almost minimal financial literacy.
• In the case of rural areas, telecom connectivity and infrastructure are poor.