RU-14-02-0057-14022022/FACTSHEET
Budget Series #4
UNION BUDGET 2022: PUSH TO FINANCIAL INCLUSION & DIGITAL BANKING
Proposal to introduce Central Bank Digital Currency (CBDC)
75 Digital Banking Units (DBUs) to be set up in 75 districts
Post Offices to come under Core Banking System; to help farmers & senior citizens
(Ministry of Finance)
February 14, 2022
“I dream of a digital India where mobile & e-banking ensures Financial Inclusion”
- Prime Minister Shri Narendra Modi1
The Government of India is committed to strengthening the abilities of the poor to tap all
opportunities. Since 2014, it has been focusing on empowerment of citizens, especially the
poor and the marginalized. Through the budget announcements, the government has shown a
strong resolve towards further developing ease of payments through digital payments and
digital banking. This will also aid in boosting financial inclusion in the country, specifically
in the rural areas. Further, linking post offices to the core banking system will be beneficial in
increasing penetration.
The Union Budget 2022-23 focuses on the roadmap to universal financial inclusion based on
the following thrust areas:
● Digital Payments: The financial
support for digital payment
ecosystem announced in the
previous Budget will continue in
2022-23. This will encourage
further adoption of digital
payments. There will also be a
focus to promote use of payment
platforms that are economical and
user friendly.
● Digital Banking: In recent years,
digital banking, digital payments
and fintech innovations have grown
at a rapid pace in the country.
1
Financial Inclusion in Rising India ([Link])
Government is continuously encouraging these sectors to ensure that the benefits of
digital banking reach every nook and corner of the country in a consumer-friendly
manner. Taking forward this agenda, and to mark 75 years of our independence, it is
proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by
Scheduled Commercial Banks.
● Anytime – Anywhere Post Office Savings: In 2022, 100 per cent of 1.5 lakh post
offices will come on the core banking system enabling financial inclusion and access
to accounts through net banking, mobile banking, ATMs, and also provide online
transfer of funds between post office accounts and bank accounts. This will be
helpful, especially for farmers and senior citizens in rural areas, enabling inter-
operability and financial inclusion.
● Digital Rupee: Introduction of Central Bank Digital Currency (CBDC) will give a
big boost to digital economy. Digital currency will also lead to a more efficient and
cheaper currency management system. Therefore, it has been proposed to introduce
Digital Rupee, using blockchain and other technologies, to be issued by the Reserve
Bank of India starting 2022-23.
● Venture Capital and Private Equity Investment: Venture Capital and Private
Equity invested more than Rs 5.50 lakh crore last year facilitating one of the largest
start-up and growth ecosystems. Scaling up this investment requires a holistic
examination of regulatory and other frictions. An expert committee will be set up to
examine and suggest appropriate measures.
Financial Inclusion:
Financial Inclusion is a national priority of the Government as it is an enabler for inclusive
growth. It is important as it provides an avenue to the poor for bringing their savings into the
formal financial system, an avenue to remit money to their families in villages besides taking
them out of the clutches of the usurious money lenders. The Government is committed to
providing financial inclusiveness and support to the marginalized and hitherto socio-
economically neglected classes. The Government of India, led by Prime Minister Narendra
Modi, has resolved to give special emphasis on the financial inclusion of every person of the
country.2
Some of the initiatives taken in this regard are mentioned below:
Pradhan Mantri Jan Dhan Yojana: Nearly 45 Crore PMJDY accounts in 7 years;
currently having deposits of 1.57 Lakh Crore; 55 % account holders are Women
The Government initiated the National Mission for Financial Inclusion (NMFI), namely,
Pradhan Mantri Jan Dhan Yojana (PMJDY) in August, 2014 to provide universal banking
services for every unbaked household, based on the guiding principles of banking the
unbanked, securing the unsecured, funding the unfunded and serving unserved and
underserved areas.3 This major push to financial inclusion has resulted in opening of 44.58
Crores accounts of beneficiaries under the scheme with a cumulative deposit of Rs
2
Financial Inclusion in Rising India ([Link])
3
Financial Inclusion_annual report_material31.[Link] ([Link])
1,57098.63 Crores as on 26/01/2022. The average deposit in an account has also gone up
from Rs 1065 per account in March 2015 to Rs 3449 by March 2021.
A digital pipeline has been laid for the implementation of PMJDY through linking of Jan-
Dhan account with mobile and Aadhaar [Jan Dhan-Aadhaar-Mobile (JAM)]. This
infrastructure pipeline is providing the necessary backbone for DBT flows, adoption of social
security/pension schemes, facilitating credit flows and promoting digital payments through
use of Rupay Cards and thereby accelerating the pace of attaining the goal of a secured,
insured, digitalized and a financially empowered society.
As on 31st October 2021, the Unique Identification Authority of India (UIDAI) Authority has
issued 131.68 crores (almost 90 per cent) Aadhaar numbers to the residents of India.4
Out of total savings accounts, there were overall 27 per cent female accounts in March 2014.
However, under PMJDY, women accounts constitute 55.40 per cent of the total Jan Dhan
accounts as on 31.3.2021. Thus, PMJDY has also gone a long way in bringing women under
the ambit of financial inclusion in a major way.
4
About - Unique Identification Authority of India | Government of India ([Link])
5
Pradhan Mantri Jan-Dhan Yojana | Department of Financial Services | Ministry of Finance ([Link])
Direct Benefit Transfer: Nearly 10-fold increase in beneficiaries in last 7 years
With the aim of reforming Government delivery system by re-engineering the existing
process in welfare schemes for simpler and faster flow of information/funds and to ensure
accurate targeting of the beneficiaries, de-duplication and reduction of fraud Direct Benefit
Transfer (DBT) was started on 1st January, 2013.6
JAM - Jan Dhan, Aadhaar and Mobile are DBT enablers providing a unique opportunity to
implement the mechanism in all welfare schemes across country including States & UTs.
DBT will bring efficiency, effectiveness, transparency and accountability in the Government
system and infuse confidence of citizen in the governance. Use of modern technology and IT
tools will realize the dream of MAXIMUM GOVERNANCE MINIMUM GOVERNMENT.
DBT is the high priority and focus area of the Government.
Over the period of last seven years ie from 2014 onwards, the number of beneficiaries has
increased nearly 10-fold from 10.80 crores in 2013-14 to 98.0 crores in 2020-21 ( for cash
schemes) in addition to 81.90 crore beneficiaries under In-kind schemes ( which were
introduced in the year 2017-18) in 2020-21.
Direct Benefit Transfer Details (FY-2021-22) are as follows:
6
[Link]
e-RUPI:
e-RUPI7 is a cashless and contactless instrument for digital payment. It is a QR code or SMS
string-based e-Voucher, which is delivered to the mobile of the beneficiaries. The users of
this seamless one-time payment mechanism will be able to redeem the voucher without a
card, digital payments app or internet banking access, at the service provider. It has been
developed by National Payments Corporation of India on its UPI platform, in collaboration
with the Department of Financial Services, Ministry of Health & Family Welfare and
National Health Authority.
It is expected to be a revolutionary initiative in the direction of ensuring a leak-proof delivery
of welfare services. It can also be used for delivering services under schemes meant for
providing drugs and nutritional support under Mother and Child welfare schemes, TB
eradication programmes, drugs & diagnostics under schemes like Ayushman Bharat Pradhan
Mantri Jan Arogya Yojana, fertilizer subsidies etc. Even the private sector can leverage these
digital vouchers as part of their employee welfare and corporate social responsibility
programmes.8
NPCI has partnered with 11 banks for e-RUPI transactions. They are Axis Bank, Bank of
Baroda, Canara Bank, HDFC Bank, ICICI Bank, Indian Bank, IndusInd Bank, Kotak
Mahindra Bank, Punjab National Bank, State Bank of India and Union Bank of India. The
acquiring Apps are Bharat Pe, BHIM Baroda Merchant Pay, Pine Labs, PNB Merchant Pay
and YoNo SBI Merchant Pay. More banks and acquiring Apps are expected to join the e-
RUPI initiative soon.9
7
Press Information Bureau ([Link])
8
Press Information Bureau ([Link])
9
[Link]
Picture Source: Social_Vouchers_and_the_Indian_Experiment-e-RUPI_Sep_1-.pdf ([Link])
Social Security Schemes:10
10.65 Crore enrolments under PMJJBY; 24 Crore cumulative enrolments under
PMSBY in last 7 years – Insuring the Insured
The huge push towards financial inclusion since 2014 resulting in opening of such a large
number of bank accounts has enabled the government to launch universal social security
schemes such as the Pradhan Mantri Jeevan Jyoti BimaYojna (PMJJBY) and Pradhan Mantri
Suraksha Bima Yojna (PMSBY) in the year 2015. These Schemes have gone a long way in
providing insurance to the uninsured poor and underprivileged people of the country.
In the last seven years, 10.65 Crore enrolments (as on 28.07.2021) have been done under
PMJJBY of which nearly 3 crores are female beneficiaries. Nearly 24 crore cumulative
enrolments have been done under PMSBY of which 9.27 Crore are female beneficiaries.
10
[Link]
Growth of Digital Payment Systems:11
Over the past few years, India has been witnessing an unprecedented level of digitization and
digital disruption, which has completely transformed the way in which public services are
delivered. Digitization has become a prominent theme which is driving inclusion across the
financial services, education and healthcare ecosystem for all the citizens of India.
Unified Payments Interface (UPI) recorded over 4.2 billion transactions worth over ₹ 7.7
trillion in just October 2021. The platform approach taken by the government in
conceptualizing UPI has resulted in top class payments products being developed on top of it,
as a result of which payments can be made with the click of a mobile phone not just at retail
outlets but also peer to peer, completely redefining the way in which money is transferred
between individuals.12
Some of the milestones in digital payment systems in India are as follows:
Unified Payments Interface:
There has been an exponential growth in UPI transactions over the last 4-5 years. In FY
2020-21, a value of over Rs. 41 Lakh Crore were transacted via almost 2.23 lakh transactions.
UPI constituted almost 40 per cent of all financial transactions taking place in FY 2020-21 as
opposed to only 17 per cent in FY 2018-19.
As of August 2021, 249 banks have been integrated under the UPI system with a total of 22
Crore customers. Today there are almost 100 apps in the market that can make UPI based
transactions.
The following charts show a detail of the growth of UPI in India:
11
[Link] ([Link])
12
[Link]
Regime-for-India.24.11_0.pdf
Growth in number of operational branches of Banks:
Boosted by the government’s commitment of universal financial inclusion, there has been a
massive growth in opening of new bank branches especially in the rural areas and in the
private space.
Further there has been a rise of small finance and payments banks in the last five years.
Data for charts sourced from: Reserve Bank of India.
AG/HP/RC/PPD/MK/PB