As India celebrates its 77th Republic Day, it’s worth examining how far we’ve come in bringing banking services to every citizen—and where we’re still falling short.

The numbers look impressive on paper. The Pradhan Mantri Jan Dhan Yojana (PMJDY) has opened over 500 million bank accounts since 2014. Digital payment volumes through UPI crossed 12 billion transactions monthly in late 2025. Financial literacy campaigns reach millions through government and RBI initiatives.

But spend a week in rural Bihar or eastern Uttar Pradesh, and you’ll see a different picture. Many of those PMJDY accounts sit dormant. In villages more than 10 kilometers from the nearest bank branch, people still rely on local moneylenders charging 3-4% monthly interest. The digital divide isn’t just about smartphones—it’s about connectivity, literacy, and trust.

The Last Mile Problem

Here’s what doesn’t make headlines: India added only 847 new rural bank branches in 2024-25, down from over 2,000 annually in the early 2010s. Banks find rural expansion unprofitable despite regulatory nudges. The BC (business correspondent) model that was supposed to bridge this gap? It’s struggling with high attrition and poor economics.

A BC in Jharkhand I spoke with last month earns around ₹8,000-12,000 monthly for serving 15-20 villages. The commission structure doesn’t justify the travel costs and time investment. When transactions fail due to network issues—which happens often—customers blame the BC, not the system.

The Aadhaar-enabled payment system (AePS) helped initially, but fraud cases have made both BCs and customers wary. Biometric authentication fails more often than banks admit, especially for manual laborers whose fingerprints wear down.

Digital Isn’t Always The Answer

There’s an assumption that digital banking solves accessibility problems. It does—for those with smartphones, data plans, digital literacy, and reliable electricity. That’s not everyone.

Women in many communities still don’t control their own bank accounts, even if their names are on the paperwork. Elderly customers can’t navigate mobile banking apps designed by 25-year-old developers in Bangalore who’ve never watched their grandmother struggle with a smartphone.

Some banks have started addressing this. Team400 worked with a mid-sized private bank to redesign their mobile app specifically for first-time digital banking users, incorporating vernacular language support and voice navigation. But these efforts remain exceptions rather than the rule.

What’s Actually Working

The Account Aggregator framework launched in 2021 is quietly revolutionizing credit access for small businesses and salaried workers. By allowing customers to share their financial data digitally across institutions, it’s helping people without traditional credit histories get loans. Over 3 million consents were registered in 2025, up from barely 200,000 in 2023.

The RBI’s push for alternative credit scoring is also paying off. Fintech lenders using UPI transaction data, GST returns, and utility payments to assess creditworthiness have disbursed over ₹45,000 crores in small-ticket loans to previously unbanked segments.

Regional rural banks deserve more credit than they get. Yes, they’re inefficient and loss-making by commercial standards. But they’re often the only formal financial institution within 50 kilometers for millions of Indians. The proposed merger wave might improve balance sheets, but it’ll also reduce physical presence where it’s needed most.

The Road Ahead

Financial inclusion isn’t just account opening numbers. It’s about usage, access to credit, savings behavior, and insurance penetration. India’s done well on the first metric, but the others lag significantly.

Here’s what would actually move the needle: incentivize rural branch expansion through tax breaks rather than just regulatory requirements. Pay BCs a fixed retainer plus transaction commissions to improve economics. Mandate vernacular language support and accessibility features in all banking apps. Create separate credit evaluation frameworks for rural borrowers instead of forcing urban models on rural realities.

The government’s DigiLocker integration with bank KYC processes has reduced documentation burden—that’s good. The expansion of PMFBY (crop insurance) enrollment to 36 crore farmers provides crucial risk protection. But we need to acknowledge that full financial inclusion won’t come from top-down technology pushes alone.

As we celebrate Republic Day 2026, let’s recognize both the progress and the gaps. India’s financial inclusion journey has covered significant distance, but the hardest miles are still ahead—and they won’t be solved by smartphone apps and government press releases alone.