Blockchain and Financial Inclusion in India: A New Era for the Unbanked

Abstract

The economic growth of rural India relies heavily on connecting isolated villages to both local and international supply chains. Unfortunately, widespread financial exclusion in these rural areas prevents many communities from actively participating in such networks. This paper reviews the existing literature on financial inclusion, blockchain technology, and technology use in India, and highlights that overcoming financial exclusion in rural India requires addressing four major challenges: geographic isolation, high costs, mismatched banking products, and widespread financial illiteracy. We propose that blockchain technology holds great promise in tackling most of these challenges. However, for blockchain to truly contribute to financial inclusion efforts, it is essential to understand how technology adoption works in India. To foster this understanding, we present a research agenda focusing on factors influencing adoption, the patterns of technology adoption, and the outcomes associated with blockchain implementation. Addressing these areas of research will lead to a better understanding of how blockchain can be effectively adopted in rural India. From a practical perspective, this paper explores how blockchain can help reduce financial exclusion, ultimately paving the way for rural communities to participate in global supply chains. On a theoretical level, it identifies critical knowledge gaps that must be filled to achieve comprehensive financial inclusion for people living in rural areas of India.