The financial inclusion landscape in India has a long history that can be traced back to the cooperative movement at the turn of the 20th century. However, in the last 15 years, financial inclusion has taken on new dimensions, with the growing realization that access to finance is a critical building block in the economic development of the country. A diversity of stakeholders—government institutions, public and private banks, pension providers, self-help groups, microfinance institutions (MFIs), financial education providers, and support organizations—have played significant roles in driving financial inclusion in recent years. Between 2011 and 2014, account ownership grew from 35 percent to 53 percent of the population aged 15 years and older. The massive mobilization of the financial sector to pursue financial inclusion contributes to our selection of India as an example for the study of the status of financial capability interventions in developing countries. In recent years, the Government of India has been notable in its pursuit of financial inclusion. The current government under Prime Minister Modi launched an ambitious scheme (Pradhan Mantri Jan Dhan Yojana, or PMJDY) to provide all Indian households with access to a basic bank account, connected to a RuPay debit card. The Reserve Bank of India (RBI) has expanded the types of bank licenses it issues to include small finance banks and payment banks, specifically to further the financial-inclusion agenda. The RBI authorizes banks to leverage business correspondents to ensure last-mile connectivity. While dormancy and low account balances have been challenges, it is indisputable that the government has enabled hundreds of millions of people to connect to banks since Prime Minister Jan Dhan Yojana took office in 2014.

Payment banks are the latest category of institutions launched by the RBI to increase financial inclusion. They are allowed to offer small savings accounts and payments services to the migrant workforce, low-income households, and small businesses. Although they cannot make loans, payment banks can: accept deposits, issue debit cards, conduct payments transactions through multiple channels, act as a business correspondent (BC) to a bank, and distribute financial products like mutual funds and insurance policies. Eleven organizations received the first round of payment bank licensees: Reliance Industries, Aditya Birla Nuvo, Paytm, Vodafone, Airtel, Department of Posts, Cholamandalam Distribution Services, Tech Mahindra, National Securities Depository Limited (NSDL), Fino Paytech, and Sun Pharma’s founder Dilip Sanghvi. Although many of these organizations were already operating in the payments space, the experience with payments banks is still very new, and it is too soon to know how successful they will be in increasing financial inclusion.