Startup News Magazine

Financial Literacy in Rural Areas: Apprehensions attached with E-Wallets and Net Banking

Authored Article By Amit Nigam (COO & Executive Director of BANKIT)

Irrespective of the ‘Cash is King, but Digital is Divine’ philosophy of the RBI’s latest financial model, cash still seems to be the ace runner in the rural and semi-urban sectors of the country.

The country’s preference for tangible cash is evident in the figures showing high currency in circulation (CIC) relative to Gross Domestic Product (GDP). The scarcity of financial literacy in the country seems to be a roadblock to the fortification of the digital payment environment. Out of the 121 crore people of India, 68 per cent reside in rural areas, and a massive 76 per cent of the Indian population lacks an understanding of basic financial concepts.

Irrespective of the rapid development of financial infrastructure in the socio-economic spectrum, most people remain uninformed about how these financial services have the potential to change their quality of life, making these services go unnoticed. The rural people have a tough time trusting digital platforms with their money. The endless confusion and scarcity of information have paved the way for their apprehension towards digital payment platforms like E-wallet and Net Banking.

Educating the Youth

One of the major concerns while digitalising rural areas has been the inefficient financial literacy despite being equipped with digital resources like ATM reach and banking services in the rural areas. The presence of financial literacy has always been proven crucial for adults. However, it is just as necessary for the children too.

Integrating the importance of knowing financial concepts in children’s minds during their schooling stage would help them grow as financially literate individuals. It is of utmost importance that financial literacy is integrated into the academic curriculum of these children.

 The Urbanisation of Rural Youth

It has been a common sight to see the youth of rural India moving to urban destinations in search of development opportunities. Hence, the movement of youth to urban areas discourages the development of the rural regions because the advanced generation has a vital role in accelerating the growth of a place.

With the absence of youth, the remaining population, including adult men, women and growing children, are left without any information regarding digital financial innovations like E-wallets and net banking, leaving them with concerns. Clarifying confusion is the only way to build trust among the rural population, and the youth has the upper hand here. Hence, better development opportunities in rural sectors will help retain the child, thereby contributing to the development of the place.

Few People With Bank Accounts

Research says that only 35 per cent of the Indian population had access to bank accounts in 2011. This figure is an evident roadblock to achieving digital transformation in the country. However, through government schemes like Jan Dhan Yojana, 31.20 crore people were encouraged to opt for banking services.

The number is significant, and almost 80 per cent have bank accounts as of today. But, the need for improvement in the usage of digital platforms is still substantial, given the stark imbalance between digitalisation and banking services.

It is believed that the execution of the scheme was not well planned. Had the rural population was well informed about its workings and benefits on digital platforms, it would have been a tremendous success.


Rising inflation has led to an increase in poor financial conditions in rural areas. Most rural people survive on daily wages. The inflated costs and penny-to-penny living do not allow them to have luxuries (which have become a necessity of the modern age) like smartphones and internet connections. Hence, the lack of resources keeps them devoid of E-wallets and net banking. The only solution to this problem is development opportunities in the rural areas that will increase the per capita income of such regions.

Final Thoughts

With many problematic potholes, the Reserve Bank of India has taken the initiative to inform multiple sections of society about the importance of digital payment interfaces and financial literacy. Few suggested solutions include educating women and children about the financial concepts in vernacular languages to reach even the remotest corners of the country. Also, a bunch of Community Service Centres (CSCs) is to be set in Rural Areas managed by familiar faces of the village to build trust among the rural population regarding the process.

Overall, the gap is vast, and the road is long. However, with youth and government contributions and cooperation from the rural people, India can achieve financial digitalisation in no time.