Context

• India has made remarkable progress in financial inclusion, with millions gaining access to formal banking services.
• However, access alone cannot guarantee economic security or improve living standards.
• The next phase of development should focus on financial health, enabling individuals to manage daily expenses, withstand financial shocks, save for future goals, and retire with dignity.
• Strengthening financial health is essential for inclusive growth and long-term national prosperity.

The Story of Nar: A Symbol of Financial Transformation

• Nar, a golf club caddie with 45 years of service, had a bank account but lacked the means to save for retirement because of family responsibilities.
• Learning about the National Pension System (NPS) enabled him to begin saving, giving him confidence about his future.
• His journey shows that bank account ownership alone is insufficient.
• Long-term security depends on access to pensions, insurance, investments, and responsible credit, which together promote financial stability and dignity.

Understanding Financial Health

• Financial health refers to the ability to manage everyday expenses, remain resilient during emergencies, save and invest for short- and long-term goals, access suitable financial products, and maintain confidence about the future.
• Unlike financial inclusion, which focuses mainly on access to banking, financial health ensures that financial services genuinely improve people's lives and strengthen household resilience.

India's Achievements in Financial Inclusion

• India has achieved significant success in expanding financial access.
• According to the World Bank Global Findex, adult account ownership increased from 56% to 89% within a decade.
• Initiatives such as the Pradhan Mantri Jan-DhanYojana (PMJDY), Direct Benefit Transfers (DBTs), and digital payment systems have created a strong foundation for improving household financial well-being.

Financial Health and National Development

• Financially secure households contribute to resilient growth by coping better with economic shocks, investing in education and businesses, and improving productivity.
• Advancing financial health also supports the vision of Viksit Bharat 2047, which aims to shift the country from welfare dependence to wealth creation through stronger household financial resilience.

Examples of Financial Health in Practice

• Informal workers in New Delhi have gained retirement security through Universal Pensions, reducing dependence on family members in old age.
• Nurses in Mumbai have improved financial stability through workplace financial wellness programmes offering financial health scores, responsible credit, and insurance.
• Banks, regulators, and fintech companies are using Artificial Intelligence (AI) and digital innovation to improve financial decision-making, increase savings, expand insurance coverage, and reduce financial fraud.

Four Key Recommendations

• Strengthen Jan Dhan 2.0
  • Transform PMJDY accounts into comprehensive financial resilience platforms by integrating them with schemes such as PM-KISAN, MGNREGA, e-Shram, Atal Pension Yojana (APY), PMJJBY, and PMSBY.
  • This would particularly benefit women, informal workers, migrants, and gig workers.
• Expand Digital Public Infrastructure
  • Leverage DigiLocker, Unified Lending Interface (ULI), Account Aggregators, MahaVISTAAR, and AI to improve financial capability, consumer choice, and informed financial decision-making.
• Improve Financial Health Data
  • Use household surveys, administrative records, and digital infrastructure to collect financial health data.
  • Better information will strengthen policymaking, improve consumer protection, and enhance accountability across the financial sector.
• Promote Public-Private Partnerships
  • Collaboration among the government, regulators, financial institutions, employers, and private firms is essential to expand responsible financial products and services.
  • International experiences demonstrate that such partnerships significantly improve household financial well-being. 

Conclusion

• Achieving universal financial health requires moving beyond financial inclusion to provide every household with access to pensions, insurance, responsible credit, savings opportunities, and digital financial services.
• Strengthening these systems through innovation, effective policies, and public-private collaboration will create a financially resilient society and accelerate progress toward Viksit Bharat 2047, ensuring security, dignity, and prosperity for all.