The Global Findex 2025 by World Bank has flagged a major issue in India’s financial inclusion efforts over one-third of bank account holders have inactive accounts. High inactivity rates are linked to Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, many of which were opened for inclusion but not actively used.
Key Findings- Inactive Accounts in India
High Account Inactivity:
- 35% of account holders in India had inactive accounts in 2021.
- This is 7× higher than the 5% average for all other developing economies.
Definition of Inactive Account:
- No customer-initiated transactions for a specific period (typically 12 months).
Role of Jan Dhan Yojana (PMJDY):
- Boosted account ownership but also led to high inactivity as many accounts are dormant.
Reasons for Inactivity (India):
- Distance from financial institutions.
- Lack of trust in financial institutions.
- No perceived need for an account.
- Insufficient funds – 40% respondents.
- Discomfort in independent use – 30% respondents.
Consistency:
- Inactivity rate in India remained nearly unchanged from 2017 to 2021.
Gender Gap in Inactivity
India:
- Women account holders: 42% inactive.
- Men account holders: 30% inactive.
- Gap: 12 percentage points (more than double the 5-point global average).
Global Developing Economies:
- Average inactivity: 9% of adults.
- Decline from 17% in 2017 to 12% in 2021.
Global Context
Account Ownership:
- 2021: 76% of adults globally had an account.
- 2011–2021: Increase from 51% to 76% (50% growth in a decade).
High-Income Economies:
- Nearly all account holders active in 2021.
About Global Findex Database
- Started: 2011 (by World Bank with funding from Bill & Melinda Gates Foundation).
- Purpose: Measures financial inclusion and the use of financial services globally.
- 2025 Edition: Based on a survey of ~128,000 adults across 123 economies during the COVID-19 pandemic.
- Tracks: Account ownership, usage, digital payments, savings, credit.
About World Bank
- Established: 1944 at Bretton Woods Conference (New Hampshire, USA).
- Original Name: International Bank for Reconstruction and Development (IBRD).
- Operations Started: June 1946.
- Headquarters: Washington, D.C., USA.
- Members: 189 countries (India is a founding member); (188 UN countries and Kosovo)
- Membership Rule: Must be IMF member first.
- Five Institutions of the World Bank Group:
- IBRD – Loans to middle-income & creditworthy low-income countries.
- IDA – Concessional loans/grants to poorest countries.
- IFC – Private sector development.
- MIGA – Political risk insurance & credit enhancement.
- ICSID – Arbitration of investment disputes (India is NOT a member).
- India’s Membership: Member of IBRD, IDA, IFC, MIGA (NOT ICSID).
- Goals:
- End extreme poverty by 2030.
- Boost income of poorest 40%.
- First Loan: France (1947). First non-European loan: Chile (1948, hydro power).
- Major Reports:
- World Development Report
- Global Economic Prospects
- Human Capital Index
- (Earlier) Ease of Doing Business (discontinued in 2021).