Trend of Financial Inclusion in South Asia:A Cross Country Analysis with Special Reference to India

Abstract

Though the financial landscape of South Asia is highly diverse across countries, but shared a unique history of transformation of financial institutions from social banking experience to the development of access institutions. However, cross country variations exist in including the excluded sections of the population under the formal financial institutions in South Asia. Does the variation across countries in financial indicators widened or narrowed down? Does it reflect a converging or diverging trend? To seek an empirical answer to these questions, attempts have been made in this paper to examine the trend of financial indicators across South Asian countries with a special reference to the Indian states. Empirical evidences in this paper suggest that the financial inclusion index broadly follows the converging pattern across South Asian countries. Thus countries having lower level of financial inclusion continue to converge with the higher levels in South Asia. On contrary, a diverging trend of index of financial inclusion index across states of India is exhibited in the post-reform period.