Until 2014, India’s performance in terms of financial inclusion was dismally low. Even after 60 years of independence, nearly 50% of the Indians were without bank accounts. 2014 served as a watershed movement in the economic history of independent India. The newly elected Modi government realised the issue of financial exclusivity very early on and took steps to address the problem.
Pradhan Mantri Jan Dhan Yojana (PMJDY), the biggest financial inclusion initiative in the world, was announced by Prime Minister Narendra Modi on 15th August 2014 from the ramparts of the Red Fort.
In the run-up to the launch of PMJDY on August 28, 2014, PM Modi sent emails to bank employees, encouraging them to help reach the target and bring freedom from the financial untouchability of the poor.
At the launch of the scheme, PM Modi described the occasion as a festival to celebrate the liberation of the poor from a the vicious cycle of poverty. Prime Minister quoted ancient Sanskrit verse: ‘Sukhasya Moolam Dharma, Dharmasya Moolam Artha, Arthasya Moolam Rajyam’, which means ‘Happiness comes from righteousness, righteousness is supported by wealth, and wealth comes from the State’. This meant that the duty of bringing people within the fold of financial inclusion was of the sState. And the sState did not disappoint. In a single week of August 2014, nearly 1.81 crore accounts were opened. The poor who had no papers, the Indian migrant whose address was not permanent, and the deprived who had no references were now able to open a bank account for the first time. He now had a unique identity in the form of Aadhaar; he also had a financial identity.
Today, there are 55 crore Jan Dhan account holders with deposits exceeding Rs. 2.5 lakh crore. The Jan Dhan phenomenon has even penetrated deep into the rural areas. According to the World Bank, India achieved its financial inclusion targets in just six years, a feat that would have taken 47 years otherwise. The majority of PMJDY account holders today are women, empowering them financially. It provided a financial safety net, especially during crises like the COVID-19 pandemic, ensuring that women had access to government benefits and could manage emergencies.
Through Jan Dhan, the journey of financial inclusion began. The poor were given access to various financial services, including basic savings bank accounts, need-based credit through overdraft facilities, insurance, and pension schemes.
Jan Dhan is a part of the JAM (Jan Dhan Accounts – Aadhaar – Mobile) Trinity, which was being strengthened side by side. Jan Dhan accounts were linked to Aadhaar cards and mobile numbers to plug leakages and help the government transfer benefits to the poor directly into their bank accounts. Quantum-wise, to date, more than Rs. 43 lakh crore has been transferred through DBT to the poor with sizeable savings of Rs. 3.4 lakh crore by removing fake and duplicate beneficiaries. The old theory that when a state sends 1 rupee, only 15 paise reaches the poor was demolished forever. Now, if a state sends a rupee, the poor get a rupee, and the poor multiply it several times and contribute it towards nation-building. JAM is the biggest component of Digital India. Many laughed at the idea of Digital India, few argued that it was impossible, and some found it to be too difficult, but now all agree that Digital India has changed the way the world looks at us. Today, nearly 50% of the world's digital transactions are happening in India, enabling the democratisation of financial inclusion.
If Jan Dhan led to financial accessibility, the year 2015 saw the launch of Pradhan Mantri Mudra Yojana (PMMY), leading to credit availability. Micro and sSmall enterprises faced the biggest issue in obtaining credit for their businesses. They had to rely on private money lenders for liquidity in times of need. But the credit came at an exorbitant cost. Even if they were willing to go to the bank, they lacked the courage to ask for a loan. PMMY changed this forever. It enabled loans to MSME borrowers up to Rs. 10 lakhs without any collateral. In the 2024 budget, the limit has been increased to Rs. 20 lakhs. The government thus pushed MSMEs towards formalisation. To date, more than 52 crore loans have been sanctioned, creating 11 crore new entrepreneurs, designing India’s identity as the world's manufacturing hub.
Over the past 10 years, the average ticket size of Mudra loans has nearly tripled, rising from Rs. 38,000 in FY16 to Rs. 72,000 in FY23, and further to Rs. 1.02 lakh in FY25—reflecting the growing economies of scale and a deepening of both market depth and width. The government became a stakeholder in the balance sheet of small businesses, helping them generate high dividends. Many critics argued that PMMY would be a failure and zealously cautioned against it, but the truth is stranger than fiction. The rate of NPA (non-performing assets) for Mudra loans is less than 3%, making it the lowest default rate in this kind of segment across the world.
The Mudra initiative-built government confidence in micro-entrepreneurs, particularly street vendors, leading to the launch of the PM SVANidhi scheme in 2020. This program provided affordable working capital loans to help vendors recover from the COVID-19 crisis and promote self-reliance. Sustained beyond the pandemic, the scheme has deeply connected with vendors, disbursing nearly 96 lakh loans worth Rs. 13,700 crore. It has become a vital support system for “Streetpreneurs.” A Centre for Analytical Finance (CAF) study at ISB revealed that the initial Rs. 10,000 loan increased beneficiaries’ annual income by Rs. 23,460. The street dreams were turning into sweet dreams, and those dreams were translating into reality.
In its eleven years of transformative governance, the Modi administration has relentlessly dismantled the barriers to financial exclusion, establishing financial inclusion as a cornerstone of India's progress. Guided by the principle of ‘Sabka Sath, Sabka Vikas,’ this unwavering commitment has ensured universal access to banking, credit, and insurance, empowering millions and striking at the roots of poverty with unprecedented resolve. By fostering equitable economic growth, these efforts have not only redefined the financial landscape but also laid a robust foundation for a more inclusive and prosperous India.