Financial Inclusion Drive: Perspectives From Gulbarga

This study evaluates the financial inclusion drives in the district of Gulbarga, Karnataka to assess its impact and success in opening accounts for unbanked households.

In 2005, the Reserve Bank of India (RBI) – the central bank of India – announced a nationwide drive for financial inclusion: in one district of every state in India, every “unbanked” household in the target district would be provided with a savings account. Since then, many states have started the drive in more than one district and some states such as Himachal Pradesh and Karnataka have declared 100% financial inclusion in the entire state. Initiatives for financial inclusions are important for various reasons. The objective of this study was to understand the process through which people become financially included and how they perceive the drive. It presents preliminary findings from the study and focuses on whether or not the drive succeeded in opening accounts for all unbanked households.
Gulbarga, in Northern Karnataka, is one of the most backward districts in the state, placing 26th out of 27 districts in the Karnataka Human Development Report 2005. The financial inclusion drive was implemented in this district from August 2006 to January 2007. During this time, a total of four lakh no-frills accounts were opened Gulbarga is also one of the districts where the National Rural Employment Guarantee Programme (NREGP) has been implemented. Under the scheme, the village panchayat opens bank accounts for all NREGP beneficiaries. The wages from the NREGP programme are deposited in these accounts. NREGP accounts, since the rollout of the financial inclusion drive, have also been zero-minimum balance no-frills accounts. The data for this study was collected through household surveys administered to below poverty line (BPL) households who were identified through state-issued ration cards. The survey was conducted in Shorapur and Gulbarga blocks since these blocks have the highest proportion of BPL households in the Gulbarga district. A total of 999 respondents were surveyed in the study.

Key Findings

While Gulbarga claims 100% financial inclusion, the study revealed that a significant proportion (36%) of the sample households remain unbanked. It also appears that of the accounts opened, a majority of them have been opened under the NREGP. This indicates the possibility that the drive has failed to target its beneficiaries appropriately. It also indicates that account holders do not recall having opened these accounts since the accounts were opened without any purposes from the beneficiary’s perspective.

Considerable amounts of money are currently being spent in extending no-frills accounts to unbanked households. Greater research needs to be done which examines how these accounts are used and how targeting techniques can be improved. Furthermore, such nationwide initiatives need to be accompanied by extensive marketing campaigns which publicise these campaigns and their benefits for users.

Thematic Area

Financial Well-being and Social Protection

Project Leads

Minakshi Ramji


Gulbarga district, Karnataka


College of Agricultural Banking