Annual Report

The Reserve Bank continued with its efforts to strengthen credit delivery and deepen financial inclusion in the country as envisaged under the National Strategy for Financial Inclusion (NSFI). The Financial Inclusion Index (FI-Index) improved to 67.0 in March 2025 from 64.2 a year ago.

IV.1 The Reserve Bank continued with its focus on ensuring availability of banking services to all sections of society across the country, including strengthening the credit delivery system to cater to the needs of the productive sectors of the economy, particularly agriculture, and micro and small enterprises (MSEs). During 2025-26, a number of initiatives were taken in terms of spreading financial literacy, campaigning for saturation of financial inclusion schemes and renewal of know your customer (re-KYC), campaigning to facilitate efficient and faster settlement of unclaimed funds, conducting a comprehensive review of Lead Bank Scheme (LBS), expanding and deepening of digital payments ecosystem (EDDPE)¹, and launch of National Strategy for Financial Inclusion (NSFI) for 2025-30.

2. Agenda for 2025-26

IV.2 The Department had set out the following goals for 2025-26:

• Review of FI-Index (Paragraph IV.3);

• Strengthening micro, small and medium enterprises (MSMEs) outreach and inclusion (Paragraph IV.4 - IV.5); and

• Achieving 100 per cent coverage in 80 per cent districts across the country by March 2026, under EDDPE programme (Paragraph IV.6).

Implementation Status

IV.3 A comprehensive review of FI-Index has been conducted by the Department on completion of five years of its launch. In this regard, consultation with concerned stakeholders is under process to finalise its framework.

IV.4 With a view to facilitating improved access to formal credit, supporting entrepreneurial activity and strengthening last mile credit delivery for MSEs with limited collateral, the limit for collateral free loans to MSEs was enhanced from ₹10 lakh to ₹20 lakh, effective April 1, 2026.

IV.5 Regional Offices of the Reserve Bank have been conducting MSME town hall meetings as an outreach initiative to facilitate engagement with MSMEs, improve awareness of banking facilities and address issues relating to access to formal finance. In view of significant developments in the financial landscape and evolving needs of MSMEs, the MSME town hall meeting framework has been revised to incorporate an additional decentralised outreach mechanism through district-level MSME SAMVAAD meetings, enabling more granular engagement with stakeholders at district and regional level.

IV.6 As on March 31, 2026, 100 per cent coverage has been achieved under the EDDPE programme in more than 80 per cent of the districts (710 districts) across the country.

Major Developments

Credit Delivery

Priority Sector

IV.7 Scheduled Commercial Banks’ (SCBs) priority sector lending (PSL) as on March 31, 2026 stood at 45.0 per cent² of adjusted net bank credit (ANBC)/credit equivalent of off-balance sheet exposure (CEOBSE), whichever is higher. Each of the bank groups, has achieved the prescribed 40 per cent overall PSL target during 2025-26 (Table IV.1).

Flow of Credit to Agriculture

IV.8 The Kisan Credit Card (KCC) is a single window facility for providing working capital as well as investment credit to farmers for cultivation, animal husbandry and fisheries. The number of operative KCCs declined by 11.7 per cent and the outstanding amount has decreased by 4.9 per cent during 2025-26 over the corresponding period in the previous year (Table IV.2).

IV.9 A comprehensive review of the KCC scheme guidelines was undertaken with the objective of expanding coverage, streamlining operational aspects and addressing emerging requirements. The draft guidelines have been issued for public comments.

Bank Credit to the MSME Sector

IV.10 Increasing the flow of credit to the MSMEs has been a policy priority of the Reserve Bank and the Government of India. On a y-o-y basis, the outstanding credit to the MSMEs by SCBs increased by 23.5 per cent during 2025-26 (as at end-December 2025) as compared with 18.3 per cent in the corresponding period of the previous year (Table IV.3).

Financial Inclusion (FI)

Campaign for Saturation of FI Schemes and re-KYC

IV.11 The Reserve Bank has been closely associated with a nationwide campaign involving banks, conducted by Department of Financial Services (DFS), Ministry of Finance, Government of India, for saturation of financial inclusion schemes at the Gram Panchayat level. At the Reserve Bank’s instance, the scope of the campaign was expanded to cover re-KYC of all accounts where it had fallen due and was leveraged for grievance redressal and promoting awareness on unclaimed deposits. Top Management and senior officials of the Reserve Bank visited and addressed several camps conducted as part of the campaign. A nationwide multimedia campaign to educate the public about the importance of re-KYC/KYC updation was undertaken and progress in coverage of accounts was monitored closely.

Campaign to Facilitate Efficient and Faster Settlement of Unclaimed Funds

IV.12 The Reserve Bank was also involved with the nationwide campaign, ‘Aapki Poonji, Aapka Adhikar’ (Your Money, Your Right), conducted during October-December 2025 to facilitate the return of unclaimed deposits and timely settlement of eligible claims from the Depositor Education and Awareness (DEA) Fund. During the campaign, ₹2,876 crore of unclaimed deposits were settled by public sector banks and regional rural banks.

Comprehensive Review of Lead Bank Scheme (LBS)

IV.13 A comprehensive review of the LBS was undertaken with a view to enhancing its effectiveness in deepening financial inclusion and promoting flow of credit to priority sectors. The draft guidelines were published for public comments.

Assignment of Lead Bank Responsibility

IV.14 At present, 12 public sector banks and two private sector banks (Jammu & Kashmir Bank and ICICI Bank) have been assigned lead bank responsibility, covering 778 districts across the country.

Expanding and Deepening of Digital Payments Ecosystem (EDDPE)

IV.15 The EDDPE programme was extended to all districts [except two districts of union territory (UT) of Andaman & Nicobar Islands] in August 2023. As on March 31, 2026, 100 per cent coverage has been achieved in more than 80 per cent districts (710 districts) across the country, which includes all districts in 22 states³ and eight UTs⁴.

Monitoring Progress of Financial Inclusion

IV.16 Banks’ progress in financial inclusion is monitored through the Monitoring Progress of Financial Inclusion (MPFI) Return. The progress achieved by banks on these parameters as at end-December 2025 is presented in Table IV.4.

Financial Inclusion Index (FI-Index)

IV.17 The Reserve Bank has developed a composite Financial Inclusion Index (FI-Index) comprising three sub-indices (viz., access, usage and quality) to assess the extent of financial inclusion in the country. Based on data from banking, investment, insurance, postal and pension sectors, the FI-Index improved to 67.0 in March 2025 from 64.2 in March 2024, with gains across all dimensions, led by usage and quality, reflecting deeper financial inclusion and sustained financial literacy efforts (Charts IV.1 and IV.2).

IV.18 The National Strategy for Financial Inclusion (NSFI): 2025-30, approved by the Sub-Committee of the Financial Stability and Development Council (FSDC-SC) in its 32nd meeting, was formally unveiled by Shri Sanjay Malhotra, Governor, Reserve Bank of India on December 1, 2025. The strategy builds upon the achievements of the preceding strategy (NSFI: 2019-24) and seeks to put in place a strategic vision and pathway to mitigate demand and supply impediments, while further deepening and strengthening the financial inclusion ecosystem for the wellbeing of people (Box IV.1).

Financial Literacy

Observing Financial Literacy Week 2026

IV.19 The Financial Literacy Week (FLW) 2026, an annual initiative of the Reserve Bank, was observed during February 9 - 13, 2026 on the theme “KYC - Your first step to safe banking” to promote awareness among the public on the importance of KYC and account discipline. A centralised mass-media campaign across television, radio, digital platforms and outdoor hoardings was undertaken during the week. The Regional Offices of the Reserve Bank also carried out localised campaigns on the theme. Banks were also advised to create awareness amongst their customers and the general public. KYC related awareness messages were covered in the Hon’ble Prime Minister’s Mann Ki Baat address on February 22, 2026.

3. Agenda for 2026-27

IV.20 The Department has set out the following goals for 2026-27:

• Implementation of action points under NSFI: 2025-30;

• Achieving 100 per cent coverage in all identified districts across the country by March 2027, under EDDPE (Utkarsh 2029); and

• Review of the framework for revival and rehabilitation of MSMEs to make it more effective for timely resolution of stress in MSMEs.

4. Conclusion

IV.21 The Reserve Bank continued with its focus on ensuring availability of banking services to all sections of society and strengthening the credit delivery system to cater to the needs of all productive sectors of the economy. Going forward, the strategy adopted under NSFI: 2025-30 is expected to further deepen financial inclusion in the country.

¹ Providing every eligible individual in the identified districts at least one mode of digital payment, viz., debit/RuPay cards, net banking, mobile banking, UPI, unstructured supplementary service data (USSD), Aadhaar enabled payment system (AePS), etc.

² Pertains to public sector banks, private sector banks, small finance banks and foreign banks.

³ Kerala, Telangana, Andhra Pradesh, Tripura, Tamil Nadu, Madhya Pradesh, Rajasthan, Bihar, Himachal Pradesh, Karnataka, Jharkhand, Gujarat, Goa, Uttar Pradesh, Odisha, Maharashtra, Mizoram, Assam, Chhattisgarh, West Bengal, Haryana and Punjab.

⁴ Delhi, Chandigarh, Lakshadweep, Dadra & Nagar Haveli and Daman & Diu, Ladakh, Puducherry, Jammu & Kashmir, Andaman & Nicobar Islands.

Index