Global Findex 2025

A recent World Bank report titled ‘Global Findex 2025’ has highlighted a significant challenge in India’s financial inclusion efforts: over a third of its bank account holders have inactive accounts, meaning they are no longer actively using banking facilities.

Key Findings on Inactive Accounts in India:

• High Inactivity Rate: The report estimated that 35% of account holders in India in 2021 had an inactive account. This figure is seven times larger than the 5% average for all other developing economies.
• Definition of Inactive Account: An inactive account is defined as one with no customer-initiated transactions for a specific period, typically 12 months for most banks.
• Role of Jan Dhan Yojana: The Pradhan Mantri Jan Dhan Yojana (PMJDY), a government scheme launched to increase account ownership, is cited as a likely reason for India’s high share of account inactivity. Many accounts were opened for financial inclusion, but not necessarily for active use.
• Reasons for Inactivity: Nearly half of respondents in India with inactive accounts cited the following reasons:
  • Distance from financial institutions.
  • Lack of trust in financial institutions.
  • No perceived need for an account.
  • Other reasons include insufficient funds (40%) and discomfort using accounts independently (30%).
• Consistency Over Time: The share of adults with an inactive account in India remained relatively consistent between 2017 and 2021.

Gender Gap in Account Inactivity:

• Globally, in developing economies, women account holders are, on average, 5 percentage points more likely than men to have an inactive account.
• However, India significantly contributes to this gender gap, showing a 12-percentage-point difference: 42% of women account holders had an inactive account compared to 30% of men account holders.

Source: BS