The paper attempts to measure the financial inclusion across 32 states of India for the period 2005-2020 using Index of Financial Inclusion (IFI). The measurement of IFI applies multidimensional approach based on three dimensions viz. banking penetration (BP), availability of the banking services (BS) and usage of the banking system (BU). The study provides an updated comprehensive index of financial inclusion and tries to fulfill the research gap of lack of efficient measure of financial inclusion for each state of India for the period under study. The states such as Goa, Chandigarh and NCT of Delhi showed impressive results with respect to financial inclusiveness. The states that fall under low financial inclusion category belong to north-eastern region of the country. The social backwardness and slow economic progress seem to be the important cause of low financial inclusion in the states of Bihar, Chhattisgarh and Rajasthan. The region-wise analysis of financial inclusion status showed that Northern region has performed better over other regions while the North-Eastern Region has performed poorly during the sample period.

Financial inclusion, measurement, access indicators, usage indicators, quality indicators

Financial Inclusion is the roadmap to bring the population from the unbanked and unreached segments in the society into the ambit of formal financial system. The Government of India has initiated diverse steps to improve the status of financial inclusion in our society. However, empirical results suggest a very low level of financial inclusion for most of the states in India. The impressive results with respect to financial inclusiveness are depicted by the states such as Goa, Chandigarh and NCT of Delhi. It can be observed that the states having high SDP (State Domestic Product) per capita have shown high value of index of financial inclusion. Most of the states that fall under low financial inclusion category belong to north-eastern region of the country. The social backwardness and slow economic progress seem to be the important cause of low financial inclusion in the states of Bihar, Chhattisgarh and Rajasthan. The analysis of region-wise financial inclusion status revealed that the highest level of financial inclusion is shown by Northern Region while the North-Eastern Region has performed poorly. Therefore, the Government policy framework should target the states with low degree of financial inclusion and accelerate financial services for the rural poor and ensure improved access of cost-effective banking products and services

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Anupama Rajput and Bhawna Rajput (2023). Financial Inclusion Status in India. International Journal on Emerging Technologies, 14(2): 64–68