From Social and Development Banking to Digital Financial Inclusion: the Journey of Banking in India

Abstract

The Indian banking and financial sector has endured a long journey from social and development banking to digital banking and financial inclusion. In recent years, there has been a growing consensus in support of digital financial inclusion. Several influential international entities argued strongly in favor of digitization of banking and expansion of digital finance. We tried to understand the journey of Indian banks through the lens of historical and economic changes, ranging from social and developmental banking to digital financial inclusion. In particular, the journey has been analyzed in the context of the changing role of the state, data-driven banking, and the infrastructural base required for a digital banking and payment system. Further, drawing experiences from other emerging nations, an attempt has been made to understand how far digital financial inclusion would be successful in India in reaching the unbanked and marginalized.