Are Digital Financial Services a Panacea for Financial Inclusion in India

Digital financial inclusion has occupied an important space in the discourse on financial inclusion and acquired greater importance after demonetisation. The present paper is an attempt to understand the various reasons for financial exclusion and its consequences on rural and semi-urban areas. The study also delves deeper into the various initiatives taken by the government and banks under the digital finance space and the role of new-age financial technology entities in driving financial inclusion in the country. Further, the paper also highlights the relationship between digital technology and financial inclusion, and the various constraints in accessing and using the digital financial services in India. The study finds that efforts should be made to increase the level of digital financial literacy, more so, in the states with higher incidences of poverty. The government may take up the digital finance initiatives in scale and encourage public-private partnership to eliminate the cost, distance and complex regulatory barriers.