Trends and regional disparities in financial inclusion in Karnataka

Abstract

This paper examines the status and progress of financial inclusion programmes in Karnataka, analyzing district-level variations and comparing the state's performance within the national context. The study utilizes secondary data from RBI reports and primary district-level financial inclusion indices to assess banking penetration, availability of services, and usage patterns across 31 districts. Results reveal significant intra-state disparities, with coastal districts (Udupi, Dakshina Kannada) and urban centers (Bengaluru Urban) demonstrating high financial inclusion, while northern districts (Kalburgi, Koppal, Yadgiri) lag substantially. Karnataka ranks 6th nationally with a Financial Inclusion Index of 0.396, positioned in the medium inclusion category. The analysis of PMJDY coverage shows 99.97% household saturation in Karnataka, with 20.12 lakh accounts and 56.6% women participation. Trend analysis of national savings schemes (CAGR 12.50%) and pension subscriptions (CAGR 36.55%) indicates robust growth in financial deepening. Principal Component Analysis of four major schemes reveals two distinct dimensions: an Insurance Factor (PMJJBY and PMSBY) and a Pension-Banking Factor (APY and PMJDY), explaining 91.06% of variance. The findings underscore the need for targeted, region-specific interventions to address persistent geographical inequalities in financial inclusion.