Q.Why availability of formal financial institution is considered the most important determinant of financial inclusion?

Availability of a formal institution is the gateway condition — no other dimension of financial inclusion (access, usage, quality) is possible without it.

Financial inclusion is usually assessed along dimensions such as access (availability of banking outlets), usage (actual use of accounts/credit/insurance) and quality (affordability, convenience, reliability of services). Among these, availability of a formal financial institution (a bank branch, business correspondent, or banking access point within reasonable reach) is considered the single most important determinant because it is the precondition for everything else — a person cannot open a savings account, take a loan, buy insurance, or receive government benefits through Direct Benefit Transfer unless there is a formal institution physically or digitally accessible to them. In its absence, people — especially in remote and rural areas like much of Manipur — are forced to depend on informal and often exploitative sources such as moneylenders. This is why expanding the physical/digital presence of banks (branches, ATMs, business …