The IUP Journal of Applied Economics
Financial Inclusion Through Payments Banks in India: A Qualitative Modeling of Drivers and Challenges#

Article Details
Pub. Date : April, 2021
Product Name : The IUP Journal of Applied Economics
Product Type : Article
Product Code : IJAE30421
Author Name : Afaf Akhter, Mohammad Hasan and Saboohi Nasim
Availability : YES
Subject/Domain : Economics
Download Format : PDF Format
No. of Pages : 21



Financial inclusion is the availability and equality of opportunities to access financial services to the economically disadvantaged groups. In India, the Reserve Bank of India (RBI) and the government have undertaken various measures and introduced several schemes for financial inclusivity, including the setting up of a new category of bank called the payments bank in 2014. Payments banks aim to provide services to the unbanked, mainly for the migrant workers and those from lower income households. This paper tries to study the reasons behind the need for payments banks and the challenges to payments banks with regard to financial inclusivity in India, and accordingly proposes a framework for payments banks to ensure financial inclusion more effectively in India. For this purpose, variables or factors for 'Drivers of payments banks for financial inclusion in India' and factors for 'Challenges to payments banks in financial inclusivity in India' were identified from the available literature. Then, the dependencies of the factors on each other were established using Interpretive Structural Modeling (ISM), where the relationships between these factors were determined through experts' inputs via a template to understand the importance of the factors. On the basis of the output of ISM, Crossimpact matrix multiplication applied to classification, i.e., MICMAC, analysis has been used to categorize the factors based on their capacity to affect other factors.


Financial inclusion means ensuring ease of access of banking and credit services for people of all income groups. It focuses on the unbanked population and aims to include them in the banked group. In the last few decades, despite many measures taken by different countries all over the world to promote financial inclusion, vast segments of population are still not