Financial inclusion is increasingly recognized as a pivotal enabler for achieving multiple Sustainable Development Goals (SDGs), particularly those related to poverty reduction, gender equality, and economic growth. It underscores the need for policy interventions to accelerate access to financial services, particularly for marginalized populations. Bank account ownership, a primary indicator of financial inclusion, reflects significant progress in India but also highlights persistent gender disparities and regional variations.

Progress in Women’s Financial Inclusion

The proportion of women independently operating a bank or savings account increased from 53% in NFHS-4 (2015–16) to 79% in NFHS-5 (2019–21), reflecting a notable improvement in financial empowerment. However, women’s access to credit remains limited, with only 11% availing themselves of microcredit programs despite improved awareness (51% in NFHS-5 compared to 41% in NFHS-4). Utilization of microcredit is higher in rural areas (12%) than in urban regions (9%). Despite the progress, approximately 20% of women in India still lack access to a bank account, and even among account holders, there are gaps in usage for savings and credit (Observer Research Foundation, December 2022).

India’s Pradhan Mantri Jan Dhan Yojana (PMJDY) played a key role in reducing the gender gap in bank account ownership from 20 percentage points in 2014 to just 6 percentage points by 2017. While this demonstrates commendable strides, there remains a need to address the gendered barriers that limit women’s financial autonomy and access to credit facilities.

Regional Disparities in Financial Inclusion

State-wise data from NFHS-5 reveals stark disparities in financial inclusion across India. Puducherry records the highest rural financial inclusion at 96.7%, while Tamil Nadu leads in urban areas at 92.7%. Puducherry also demonstrated the highest overall financial inclusion (92.6%) while the most significant improvement of (50.3%), indicating effective policy implementation is shown by Bihar. Conversely, Nagaland exhibits the lowest rural inclusion (55.4%), and Lakshadweep has the lowest urban inclusion (66.9%). Lakshadweep also experienced the steepest decline in financial inclusion (-7.5%), emphasizing the need for targeted interventions to reverse this trend.

Bihar’s financial inclusion improvement of 50.3% reflects substantial progress, while Punjab reported an above-average increase of 22.8%, contributing positively to the national trends. These regional patterns underscore the critical role of state-specific policies and interventions in achieving equitable financial access.

Nexus Between Financial Inclusion and Household Decision-Making

Women’s participation in household decision-making is a significant indicator of empowerment in India’s patriarchal society. NFHS-5 data reveals that only 18% of married women with earnings independently make decisions regarding expenditures, while 67% participate in joint decision-making with their spouses. Financial inclusion plays a pivotal role in enhancing women’s decision-making power, particularly in regions with high inclusion rates.

The urban-rural divide in women’s access to deposit accounts is minimal, with 80.7% of rural women and 81.3% of urban women holding accounts. However, men consistently report higher account ownership rates, at 88.1% in rural areas and 89% in urban areas, highlighting a persistent gender gap.

On average, the share of women participating in household decisions increased by 4%, from 84% to 88%. NCT Delhi showed the largest increase (18.2%), likely driven by urbanization and socio-economic changes, while Ladakh saw a 7.2% decline, pointing to entrenched socio-cultural barriers. Mizoram reflected a median change of 2.8%, showcasing stability in women’s empowerment metrics.

Conclusion

While India has made substantial progress in financial inclusion, gender disparities and regional inequalities remain key challenges. The success of states like Puducherry, Nagaland, and NCT Delhi provides valuable lessons, but the declining trends in regions like Ladakh highlight the need for targeted interventions. The digital gender divide persists as a significant issue, manifesting in both access and digital literacy. The digital divide plays a critical role in perpetuating financial exclusion. Awareness programs aimed at promoting the use of digital access to bank accounts have the potential to significantly mitigate this gap, thereby enhancing financial inclusion. Strengthening financial inclusion and empowering women through access to credit and decision-making authority is essential for achieving inclusive growth and sustainable development. Empowering women requires transformative social and structural changes, as financial and household decision-making often remain contingent upon spousal consent. Mere ownership of bank accounts does not equate to empowerment, as women frequently lack autonomy in operating these accounts and making independent financial and household decisions.