India’s financial inclusion story over the last decade has been remarkable, with dramatic expansion in account ownership and sustained growth in credit. Yet, evidence increasingly points towards a gap between access and impact as witnessed in high rates of dormant accounts and the ongoing NPA crisis in the microfinance industry. These gaps signal that product ownership alone has not reliably translated into suitable use or improved financial lives.
We believe the key to a more coherent inclusion story lies in improving the quality and intent of impact measurement. Doing so will transform the utility of impact measurement exercises from obligatory external reporting to being a valuable tool for core business strategy.
The Financial Health Survey (FHS), developed jointly with PwC, is our contribution to this shift. To read the report, click here
FHS provides a baseline view of household financial well-being across India’s underserved ’Bharat’ segments. The survey’s key value lies in its potential to explore how access to finance, the actual usage of financial products, and lived customer outcomes may vary across regions, occupations, and the customer’s nature of engagement with formal and informal systems. The survey also captures the ground realities of customer engagement with financial products, often missed in mainstream customer datasets. FHS is a valuable tool for India’s financial inclusion story where high access (high bank account coverage and a rising financial inclusion index) does not appear to translate to usage quality and financial health.
About the survey
Our iteration of FHS covers 4,000 kitchen-sharing households across 18 districts in seven states, grouped into four regional clusters – North, South, East, and West. Household data was captured through a variety of institutional partnerships with micro finance institutions, self-help group/ joint liability group networks, and civil society channels.
Purpose and approach
FHS uses an input–output–outcome framework. Inputs track access to products and touchpoints; outputs capture how households use and engage with these options; outcomes measure whether they can meet needs, absorb shocks, and plan ahead with confidence. This approach is aligned with India’s national strategy for financial inclusion (2025–30), which represents a shift from counting accounts to tracking whether finance actually improves financial security and resilience.
Three structural frictions
Three structural frictions stand out across the data collected and analysed as part of FHS. These indicate system-level barriers that prevent access and usage from converting into resilience.
- Access drives usage but not resilience
The data from the survey indicates that higher levels of financial access translate to more frequent usage of financial products among households across different regions and occupation categories. There is, however, divergence in outcomes that represent households’ overall financial wellbeing. Some customer segments with modest access, like the farmers in the South and East, report relatively strong resilience whereas other cohorts with higher access demonstrate a limited ability to handle shocks. - Income volatility is a key barrier to financial health
Across FHS, data indicates that households with predictable incomes and expenses show stronger input, output, and outcome scores. These households are saving more regularly, repaying more smoothly, and are reporting higher confidence in meeting planned needs. For occupation groups with volatile earnings such as daily wage/freelance workers, and small business owners and farmers, savings portfolios are weaker and outcome indicators indicate fragility even when they have access to formal sources. This is especially true in the West and north. A parallel may be drawn to India’s growing platform workforce, which also demonstrates variability in earnings and high exposure to risk factors. - Informal finance is a complement, not a competitor
FHS data suggests that households using both formal and informal finance often demonstrate higher usage of formal products than those relying only on formal, especially in the East and North where local networks are strong. Outcomes vary by region, and this variance may depend on whether informal sources are a flexible buffer or a high-cost dependency. This also aligns with the long running role of SHGs, moneylenders, familial networks, and trader credit in serving low-income households.
