Microfinance and Financial Inclusion and Financial Literacy: Evidence from Flagship Microfinance Initiatives

Abstract

Aims: By analyzing national trends in SHG membership, PMJDY women account ownership, and financial literacy indicators, the research seeks to evaluate the role of microfinance in advancing women's financial inclusion and financial literacy in India. Study Design: Based solely on secondary data from national-level sources, this research is descriptive and analytical. Location and Study Period:  India; data spanning five years, from 2018–19 to 2022–2023. Methodology: The research uses secondary data from NABARD’s Status of Microfinance in India reports and NCFE’s Financial Literacy Survey 2019. Descriptive statistics, trend analysis and a binomial test were conducted using SPSS to evaluate women’s financial inclusion and literacy outcomes. Result: Microfinance and financial inclusion are strongly positively correlated, as seen by the steady increase in women-led SHGs, loan availability, and PMJDY account ownership. Women's financial literacy is still only moderate, though, and their understanding does not always translate into autonomous financial activity. Conclusion: Microfinance significantly enhances women’s financial inclusion, but its impact on financial literacy is limited. Integrating structured literacy programs within microfinance initiatives is essential for achieving comprehensive financial empowerment.