Barriers to Financial Inclusion in Rural India: A Quantitative Analysis of Demographic and Socioeconomic Factors

Abstract

Financial inclusion remains a critical challenge in rural India, where demographic and socioeconomic factors often create significant barriers to accessing formal financial services. The study  investigates   the challenges to rural financial inclusion in India by analysing demographic characteristics, socioeconomic factors, and demographic characteristics. The findings showed a positive relationship between literacy levels and account holding, and improved education levels increased the use of financial products. The study also found that education has a significant impact on the chances of having a bank account, with respondents in the 'Higher Education' bracket having an increase in their chances. However, the affordability of loans and digital payments was a significant issue in informal households. The study also found a significant relationship between family income and the type of loan granted by financial institutions. This research helps identify the layers of challenges faced by rural areas in relation to financial inclusion and provides insights for policymakers and stakeholders in developing the right interventions and strategies. Financial service awareness creation through educational programs, financial literacy programs, employment, and business opportunities can help extend inclusive financial services, enhance the operational abilities of rural communities, and ensure the sustainability of economic growth.

This study contributes to the existing literature with empirical evidence on specific barriers evolving around the rural population of India. It also highlights the importance of policy intervention in expanding financial inclusion in rural India. Policy implications include revising socioeconomic dynamics region-wise and identifying key determinants of exclusions. This study has actionable insights for all stakeholders.