A Revolution in Access
The scale of India's achievement in financial inclusion is staggering. Spearheaded by the Pradhan Mantri Jan Dhan Yojana (PMJDY), launched in 2014, the country has opened the doors of formal banking to hundreds of millions of citizens. As of July 2026,
the Ministry of Finance reported that 99.92% of India's inhabited villages are covered by a banking outlet, be it a traditional branch, a Business Correspondent (BC), or an India Post Payments Bank (IPPB) centre. This network includes over 1.81 lakh bank branches and a massive force of 17.36 lakh Business Correspondents. The number of Jan Dhan accounts has swelled to over 58 crore, holding significant deposits. This has created an unprecedented infrastructure for delivering financial services and direct benefit transfers (DBT) to the most remote corners of the country, marking the successful completion of the first chapter of India's inclusion story.
The Dormancy Dilemma
Despite this incredible success in opening accounts, a persistent challenge looms: account usage. An account is considered dormant or inoperative by the RBI if it sees no customer-initiated transactions for over two years. Recent data from 2025 and 2026 reveals a significant and growing number of these inactive accounts. Reports indicate that the dormancy rate at state-run banks, which hold the vast majority of PMJDY accounts, has risen to 26% as of March 2026. Other reports from mid-2025 placed the overall inoperative rate at around 23%, translating to over 13 crore dormant accounts. This gap between access and activity suggests that for a large portion of the rural population, the bank account remains a passive receptacle for government benefits rather than an active tool for saving, borrowing, or building financial health. Often, money from DBT is withdrawn in a single transaction, leaving the account unused until the next credit.
Barriers at the Last Mile
So why are so many accounts underutilised? The reasons are a complex mix of structural and behavioural challenges. Despite the 5km-radius coverage, geographical barriers and transport costs can still make frequent bank visits impractical. More importantly, a persistent digital divide and low financial literacy hinder the adoption of modern banking tools. Many rural customers are not comfortable with ATMs or mobile banking and prefer cash-based transactions. There's also an issue of trust in formal institutions and a fear of hidden charges or complex procedures. Furthermore, the financial products offered often don't align with the specific needs of rural life, which is characterized by small, irregular income streams and the need for frequent, small-ticket loans for both consumption and emergencies, a space often still filled by informal lenders.
The Human Link: Challenges for Business Correspondents
Business Correspondents, or BCs, are the foot soldiers of this financial inclusion drive, acting as the primary point of contact for many rural customers. However, the BC model itself is under strain. Many agents struggle with low and unstable income, as their commissions are often transaction-based and haven't kept pace with inflation. They face operational hurdles like poor connectivity, a lack of adequate technological and infrastructural support from banks, and security concerns when handling cash. This has led to high attrition, with many experienced agents leaving for better-paying opportunities, weakening the very network designed to foster trust and provide last-mile support. Sustaining this human infrastructure is critical for bridging the gap between the bank and the villager.
From Access to Empowerment
The 'case for review' is not about questioning the success of expanding access, but about building the next, more crucial stage: fostering active and meaningful engagement. The RBI's Financial Inclusion Index reflects this, giving 'Usage' the highest weightage (45%) in its metric. While the overall index continues to improve, showing progress, the focus is now shifting from the quantity of accounts to the quality of their use. This requires a multi-pronged approach. Banks need to design simpler, need-based products, such as micro-credit for consumption and flexible savings instruments. A renewed, large-scale push for financial and digital literacy is essential to build confidence and capability among users. Finally, strengthening the BC network by ensuring their viability through better compensation structures and support is paramount to making everyday banking a trusted and accessible reality for rural India.
