With countries wanting to achieve an equitable growth and development two concepts are gaining popularity- Social Inclusion and Financial Inclusion. These concepts which were once considered secondary to economic planning are now becoming defining pillars to demonstrate development of a country. An intuitive question that may arise would be “are these concepts interconnected or there is no intersection?”. To simply answer, these concepts seem to be 2 sides of the same coin. These concepts overlap in many facets and for a country to truly develop both these facets need to be given similar importance.
Let us first try to understand the meaning of the concepts before we come to this conclusion. Financial inclusion as defined by the world bank, extends far from mere accessibility to banking services. The definition clearly integrates access to savings, credit, insurance and remittances services for all. The policies launched in India tries to provide these facilities especially for historically marginalized sections of the society. Numerous efforts like nationalization of banks in 1969 or the launch of Pradhan Mantri Jan Dhan Yojana in 2014 have been introduced to make financial inclusion a reality.
Despite these efforts, empowerment is not guaranteed. This can be observed when we closely look at the case of Microfinance institutes. Originally envisioned as institutes of empowerment for women, can now be seen reinforcing age-old practice of hierarchy. As pointed out in research by Jayita Ghosh, women despite receiving loans often lack true agency and decision-making power within households. Exploitative practices which include exorbitant interest rates, strict repayment schedules and coercive recovery practices can be observed. Due to these practices, many households are facing financial distress and eventually debt traps. This has also resulted in an increase in borrower suicides in states Andhra Pradesh and Tamil Nadu. From these incidents one can make a fair observation to understand how financial inclusivity cannot be achieved without adopting a multidimensional approach.
This brings us to the second pillar of development- Social Inclusion. By definition this concept seeks to socially integrate historically marginalized communities to social, political and economic fabric of the country. It means fighting against systemic barriers based on caste, gender, disability, religion etc. Despite constitutional protections in place, inequalities still persistent. This testifies how deeply entrenched exclusionary practices are. As described by Amartya Sen in his capability approach exclusionary practices are not merely lack of resources but deprivation of freedom and agency. To achieve development in its true form, countries must focus on expanding people’s capabilities and agency and not just accessibility to banking services.
At a policy level, The Reserve Bank of India explicitly recognizes the link between financial and social inclusion. RBI notes that access to savings, credit, insurance and pension services contributes to poverty alleviation, reduced inequalities and eventually gender equality. RBI recognizes socio-cultural, psychological and infrastructural barriers- such as lack of trust, ensuring grievance redressal and enhancing financial literacy among marginalized populations.
In countries like Kenya, Latin America, technological innovations for facilitating financial inclusivity are taking centre. Innovations like BanQu which are using blockchain technology to create digital economic identities are seen emerging. Integration of technology is playing a pivotal role to provide formal access to financial services. BanQu is able to achieve dual motive of financial inclusivity and social inclusivity through economic empowerment.
Closer home a recent study conducted by Live Love Laugh foundation and NIMHANS in Karnataka showcases how integrated financial and community based mental health support can lead to genuine inclusivity. Through small grants for livelihood generation, persons with mental illness were able to gain economic independence, community acceptance and social dignity. This is the perfect example which illustrates how dedicated financial interventions when embedded in socially inclusive structures yield transformative results.
Organizations like SEWA (Self-employed Women’s Association) launched in 1972 in Gujarat are a testament to improving financial and social empowerment. SEWA organizes informal sector women into cooperatives that ensure employment opportunities along with healthcare, insurance, savings and pensions. SEWA’s multidimensional approach establishes how financial inclusion must go hand in hand with social inclusion.
Project Dignity, an initiative by Grameen Bank furthers this notion. In this initiative, collateral free loans were given to those require it. This initiative enabled to transition into dignified economic activities.
A common theme in all these cases showcase how financial inclusion is not an end in itself rather it is a means to achieve social inclusion. These initiatives reiterate that financial inclusion when rooted in upliftment of society can truly transform lives. Facilitating accessible banking services to marginalized individuals is important but without addressing the societal barriers, these efforts may have limited to no success.
India’s progress in financial inclusion has been significant, but the true test lies in translating access into empowerment and equity. This requires a fundamental shift in how inclusion is approached—not as isolated programs or policy checklists, but as an integrated framework that links financial systems to structural social reform. Government policies must go beyond account openings and microloans to include measurable social outcomes: improved decision-making power for women, access to social protections for informal workers, and the dismantling of systemic discrimination in economic participation.
Technology, while a powerful enabler, must be accompanied by institutional accountability and regulatory safeguards that prevent exploitation. Financial literacy campaigns must evolve to build long-term capability, not just awareness. And most importantly, success metrics must reflect impact on lives, not just inclusion on paper.
The path forward is clear: unless financial inclusion is intentionally designed to be socially inclusive, its benefits will remain shallow and short-lived. India has the policy momentum, institutional experience, and technological tools to lead globally on this front. What it needs now is cohesive implementation, cross-sector collaboration, and an unwavering focus on dignity, equity, and agency. Only then can inclusion, in its truest sense, become both a national reality and a development model worth replicating.
The writer is Jigyasha Anand, a passionate learner currently pursuing a Post Graduate Program in Financial Economics from Gokhale Institute of Politics & Economics, Pune. She holds a deep interest in gender economics, inclusivity, and their broader impact on societal structures.
