Financial inclusion
Also written Financial inclusion in India
Government and RBI efforts to bring every household into the formal banking system — zero-balance accounts, low-cost demat accounts and schemes like Jan Dhan Yojana are the booklet's three examples.
In plain language
Financial inclusion means making sure ordinary banking and investing are not out of reach for anyone — not the poor, not someone in a remote village, not a first-time investor with very little money.
The booklet gives three concrete examples of what this looks like in practice. A bank account that needs no minimum balance and no initial deposit. A demat account with little or no annual charge for someone holding only a small portfolio. A nationwide scheme that gives every unbanked household a free, no-minimum-balance account with a debit card and insurance cover attached.
The common thread is cost and access: financial inclusion removes the balance requirements, fees and paperwork that would otherwise keep a low-income household or a small investor outside the formal system.
How it works
Three products the booklet ties directly to financial inclusion:
- Basic Savings Bank Deposit Account (BSBDA) — "Introduced to promote financial inclusion." A zero-balance account needing no initial deposit, open to individuals and minors through a guardian, with relaxed limits on monthly deposits and withdrawals, and a free ATM card and passbook.
- Basic Services Demat Account (BSDA) — SEBI made this available "with a view to achieve wider financial inclusion," to "reduce the cost of maintaining securities in demat accounts for retail individual investors." Its Annual Maintenance Charge is nil for equity holdings up to Rs 50,000 and debt holdings up to Rs 1,00,000.
- Pradhan Mantri Jan Dhan Yojana (PMJDY) — launched August 2014, "to ensure financial inclusion of every individual who does not have a bank account in India." It gives a zero-balance account, a RuPay debit card, accidental insurance and life cover, an overdraft facility, and Direct Benefit Transfer for government scheme beneficiaries.
A worked example
Geeta, a domestic worker in Lucknow earning Rs 9,000 a month, has never had a bank account because she could never maintain the minimum balance most accounts require.
Under PMJDY, launched in August 2014, she opens a zero-balance account at a nearby Business Correspondent point — she needs no initial deposit at all. She receives a RuPay debit card and an accidental insurance cover at no separate cost.
A year later, wanting to start investing small amounts, she opens a Basic Services Demat Account. Her holdings stay under Rs 50,000, so her Annual Maintenance Charge is nil — without BSDA, a regular demat account's annual charge could have eaten a meaningful share of her small portfolio every year, exactly the barrier financial inclusion is designed to remove.
Why NISM asks about it
The term recurs across three chapters — Chapter 4's BSBDA and BSDA, and Chapter 9's PMJDY — so the exam can draw a question from any of them. Expect a question naming a scheme or account type and asking whether its purpose is financial inclusion, and a question on PMJDY's launch year (2014).
Common exam traps
- A BSBDA account holder cannot also hold another savings bank deposit account at that same bank — the booklet states this restriction explicitly.
- PMJDY's overdraft facility is available against only one account per household, not per individual.
- BSDA eligibility depends on holding only one demat account across all depositories — someone with accounts at both NSDL and CDSL does not qualify, even if each individually is small.
- Do not treat financial inclusion as a single named scheme — the booklet uses it as an objective that several different products (BSBDA, BSDA, PMJDY) are each separately designed to serve.
Check yourself
1.Which of the following is a feature of a Basic Savings Bank Deposit Account (BSBDA)?
- a)It requires a minimum initial deposit of ₹1,000
- b)It is a zero balance account introduced to promote financial inclusion, and its holder cannot open any other savings bank deposit account in that bank
- c)It may be opened only by individuals above 18 years of age
- d)It charges for the ATM card and passbook
Show the answer
Answer: (b) It is a zero balance account introduced to promote financial inclusion, and its holder cannot open any other savings bank deposit account in that bank
The chapter lists five features: "Introduced to promote FINANCIAL INCLUSION. ZERO BALANCE savings account WITHOUT ANY REQUIREMENT OF AN INITIAL DEPOSIT can be opened for individuals AND ALSO MINORS (through their guardian). Relaxed conditions for number of deposits/withdrawals in a month. ATM Card, passbooks are issued FREE OF CHARGE. BSBDA account holders are NOT ELIGIBLE FOR OPENING ANY OTHER SAVINGS BANK DEPOSIT ACCOUNT IN THAT BANK." Options (a), (c) and (d) each contradict one of those. The last feature is the most examined, and its boundaries matter: it bars another savings account in that bank — it does not bar a fixed deposit, a recurring deposit, or a savings account at a different bank. The logic is that a free, no-minimum account exists so that someone with very little money can be banked at all, not as a cheaper second account alongside a regular one.
2.An investor holds equity worth ₹45,000 in a Basic Services Demat Account. What annual maintenance charge applies, and how does BSDA differ from BSBDA?
- a)₹100, and BSDA is another name for BSBDA
- b)Nil, because equity holdings up to ₹50,000 attract no AMC — and BSDA is a demat account with a DP, while BSBDA is a bank savings account
- c)Regular demat charges, since BSDA has no concession for equity
- d)Nil, and both BSDA and BSBDA are held with a Depository Participant
Show the answer
Answer: (b) Nil, because equity holdings up to ₹50,000 attract no AMC — and BSDA is a demat account with a DP, while BSBDA is a bank savings account
The booklet's slab table sets AMC at NIL for equity holdings up to ₹50,000 (or debt holdings up to ₹1,00,000), a maximum of ₹100 for equity between ₹50,001 and ₹2,00,000, and charges as applicable to regular demat accounts above ₹2,00,000. Note the asymmetry candidates miss — the first equity threshold is ₹50,000 while the first debt threshold is ₹1,00,000. The BSDA exists because "SEBI with a view to achieve WIDER FINANCIAL INCLUSION... In order to REDUCE THE COST of maintaining securities in demat accounts for RETAIL INDIVIDUAL INVESTORS", and its other benefits are free periodic transaction and holding statements, two free physical statements per billing cycle and at least two Delivery Instruction Slips at account opening. The acronym trap is deliberate: BSDA holds securities with a Depository Participant; BSBDA from Chapter 4 holds money at a bank.
3.Which statement about Pradhan Mantri Jan Dhan Yojana is correct?
- a)It requires a minimum balance of ₹500 and offers a cheque book free of cost
- b)It is a zero balance account with no minimum balance mandated, though a cheque book requires fulfilling minimum balance criteria; the overdraft facility is available against one account per household
- c)Accounts can only be opened at a bank branch, not through a Business Correspondent
- d)It was launched in 2018 to replace all existing savings accounts
Show the answer
Answer: (b) It is a zero balance account with no minimum balance mandated, though a cheque book requires fulfilling minimum balance criteria; the overdraft facility is available against one account per household
PMJDY was "launched in AUGUST 2014... to ensure FINANCIAL INCLUSION OF EVERY INDIVIDUAL WHO DOES NOT HAVE A BANK ACCOUNT IN INDIA." The facilities include a "Zero balance account", "Not mandated to have a minimum balance in the account", a RuPay debit card, accidental insurance cover and a life cover, mobile banking, interest earned on the deposits, Direct Benefit Transfer and easy access to pension and insurance products — with two qualifications that are exactly what examiners test: "Overdraft facility up to a certain amount. THIS FACILITY IS AVAILABLE AGAINST ONE ACCOUNT PER HOUSEHOLD", and "To get a cheque book, the individual will have to fulfil MINIMUM BALANCE CRITERIA." Option (c) is wrong on a stated fact: "Accounts can be opened with ANY BANK BRANCH OR BUSINESS CORRESPONDENT (BANK MITRA)" — which is how the scheme reached villages without branches.
Where this is taught
Free preparation for NISM Series SEBI-ICERelated terms
- Basic Services Demat AccountA low-cost demat account for a small investor who holds only one demat account and whose holdings stay within Rs 2 lakh of debt and Rs 2 lakh of non-debt securities — its annual charge can be nil.
- Basic Savings Bank Deposit AccountA zero-balance bank savings account, needing no opening deposit, introduced to bring everyone into the banking system. A holder cannot open any other savings account in the same bank.
- Pradhan Mantri Jan Dhan YojanaThe Government's financial inclusion scheme launched in August 2014: a zero-balance bank account with a RuPay debit card, insurance cover, an overdraft facility and direct benefit transfers.
- Payment BankA new category of bank that offers savings and current accounts, debit cards and remittances, but cannot give loans, issue credit cards, or accept fixed or recurring deposits.
- Stand Up IndiaA government scheme facilitating bank loans to SC, ST and women entrepreneurs above 18 for setting up a new manufacturing, trading or services enterprise.