Banking Services and Financial Inclusion

Banking is one of the oldest and most important components of the tertiary sector, because it performs the essential economic function of mobilising savings from households and channelling them, as credit, towards investment by businesses, farmers and government. India's banking system consists of the Reserve Bank of India (RBI) as the central bank and regulator, commercial banks (public and private sector), regional rural banks, cooperative banks, and, more recently, small finance banks and payments banks.

Over the last decade, two developments have significantly widened the reach of banking services as a part of the tertiary sector's contribution to the economy:

1. Financial inclusion drives, most notably the Pradhan Mantri Jan Dhan Yojana (PMJDY, launched 2014), which has brought a very large number of previously unbanked households into the formal banking system through zero-balance basic savings accounts.
2. Digital banking and payments, including the Unified Payments Interface (UPI), which has made instant, low-cost digital transactions available even to small traders and individuals, sharply reducing dependence on cash for everyday transactions. …