Chapter 1.5Rails for the Next Wave of Inclusive Growth in Microfinance
From an ecosystem perspective, a multitude of government-led transformative initiatives are reshaping rural and semi-urban India, laying the foundation for robust and inclusive economic growth in these regions. These are enhancing public infrastructure, improving livelihoods, and enabling rural commerce thereby creating ground for sustainable economic development. Initiatives such as the PM Jan Dhan Yojana (PMJDY), Grameen Credit Score, Unified Lending Interface (ULI), and broader access to trusted digital data sources are laying the rails for the future of inclusive growth of micro credit.
Inclusive Growth Through Resilient Microfinance Nanaiah Kalengada
1.5 Rails for the Next Wave of Inclusive Growth in Microfinance
From an ecosystem perspective, a multitude of government-led transformative initiatives are reshaping rural and semi-urban India, laying the foundation for robust and inclusive economic growth in these regions. These are enhancing public infrastructure, improving livelihoods, and enabling rural commerce thereby creating ground for sustainable economic development. Initiatives such as the PM Jan Dhan Yojana (PMJDY), Grameen Credit Score, Unified Lending Interface (ULI), and broader access to trusted digital data sources are laying the rails for the future of inclusive growth of micro credit.
- The Pradhan Mantri Jan Dhan Yojana
(PMJDY): The Pradhan Mantri Jan
Dhan Yojana (PMJDY), one of India’s
most transformative financial inclusion
initiatives, has opened 55.02 crore
accounts as of 7th March 2025, with 36.63
crore (as per PIB, 18th March 2025) in
rural and semi-urban areas, underscoring
its reach beyond urban centres. These
accounts have brought millions into the formal financial system and providing
access to basic banking.
From a lending perspective, this vast account base offers lenders valuable transaction data to assess creditworthiness, even without traditional credit histories. Through the Account Aggregator framework, such data can be securely shared for real-time, cash- flow-based risk assessment—driving responsible credit delivery to underserved populations. - Grameen Credit Score: In the Union Budget 2025–26, the development of the Grameen Credit Score was announced. This framework is expected to be created by public sector banks to assess the credit needs of Self-Help Group (SHG) members and people in rural areas by leveraging both conventional and alternative data. This will enable lending institutions to make data-driven credit decisions, thereby advancing the government’s financial inclusion agenda and expanding credit access for rural communities.
- Unified Lending Interface (ULI): ULI launched by the Reserve Bank Innovation Hub, is a transformative step in digitizing and democratizing access to credit in India. Designed as a digital public infrastructure, ULI brings together diverse data sources— such as Aadhaar-based eKYC, PAN, GST, land records and bank transaction data via Account Aggregators—onto a single, consent-based platform. This enables lenders to access reliable, real-time information for faster and more accurate credit decisioning. Especially beneficial for underserved segments like small farmers, MSMEs, and rural borrowers. RBI is looking to replicate the UPI revolution in the lending space through ULI. This is a significant leap forward in India’s financial inclusion journey.
- Credit Information Companies (CICs):
Strengthening the Backbone of Credit
Decisioning.
Credit bureaus in India have evolved as robust data platforms. The recent directive from the Reserve Bank of India mandating regulated entities to submit credit data every 15 days and requiring bureaus to update records within 7 days is a significant step forward. This ensures more frequent data refresh cycles, which is critical for timely and accurate credit decisioning. As technology capabilities continue to advance, transitioning toward daily data submission could be a game-changer for the industry, enhancing real-time risk assessment and credit monitoring.
The RBI’s earlier directive for the credit bureaus to provide a comprehensive credit view of borrowers encompassing microfinance, retail, and commercial exposures has further empowered underwriters with a 360-degree view of borrower risk. Moreover, improvements in the quality and consistency of data submitted by regulated entities are steadily strengthening the overall reliability and value of bureau data as a cornerstone of credit infrastructure. - Account Aggregator Framework: Enabling
Secure, Consent-Based Data Sharing for
Inclusive Finance.
The Account Aggregator (AA) framework, introduced by the Reserve Bank of India (RBI), is a key pillar of India’s digital financial infrastructure. It enables individuals and small businesses to securely share their financial data with banks & NBFCs through a fully consent-driven environment. This architecture transforms how credit is assessed and delivered.
Traditionally, many individuals, particularly in the informal sector, could not access formal credit due to the absence of a credit history in CIC’s. With AA, lenders can access verified bank transaction data, GST records, income flows, and other financial information directly from the source. This facilitates lending to underserved segments and new-to-credit customers, paving the way for faster loan approvals and tailored financial products. - Anonymized Aadhaar data: The recent move by UIDAI to share anonymized non-personal Aadhaar dashboard data is a significant step forward in enabling data-driven financial inclusion. By making anonymized, aggregated data on Aadhaar enrolments, authentications, and updates publicly accessible, it offers valuable insights into the level of digital identity penetration across geographies and demographics. This allows financial institutions and fintech innovators to identify underserved regions and fine- tune outreach strategies.
- Census in 2027: The forthcoming Census in 2027 is expected to significantly accelerate the next phase of India’s financial inclusion journey. As the population census is happening after a decade, it is likely to provide updated and granular data on households, income levels, occupation, education, and access to basic infrastructure across rural, semi- urban, and urban regions. This wealth of demographic and socioeconomic information will enable financial institutions to assess market potential, identify underserved segments, and sharpen their outreach strategies.
Data Powering the future of Rural Economy: India is entering a data-rich era that holds immense promise for deepening financial inclusion—particularly for underserved and credit-excluded populations.
With data from Credit Information Companies (CICs), the Account Aggregator (AA) framework, the 2027 Census, and anonymized Aadhaar records, data-driven finance will gather further momentum. This convergence enables lenders, particularly in microfinance and small-ticket loans, to target customers more precisely, assess risk better, and design credit products suited to local needs. Together, these advances create a powerful opportunity to extend credit meaningfully and responsibly to the last mile.
Looking ahead, the future of microfinance in India appears stronger than ever. With expanding digital infrastructure, richer datasets, and evolving regulatory frameworks, the sector is poised to reach new heights in both scale and impact. By combining innovation with robust governance, microfinance can continue to empower underserved communities, fuel entrepreneurship, and contribute meaningfully to inclusive economic growth. If this momentum is sustained, resilient microfinance will remain a cornerstone of India’s growth journey.