Are small finance banks acting as catalysts for financial inclusion in India? A phenomenological study

Purpose - This paper aims to investigate whether small finance banks (SFBs) in India are working towards financial inclusion through qualitative studies. Design/methodology/approach - This paper uses a phenomenological approach in which semi-structured interviews were conducted with the employees of two SFBs in Mumbai with different specializations. Employee experience was captured to grasp, interpret and code data for the creation of different themes. Findings - This research shows that the current literature on financial inclusion is inadequate to explain the behavior of the needy in India. Study found multiple themes of financial inclusion, namely, financial literacy, self-esteem, use of technology, prompt repayment, credit identity, cross-referencing and financial stability. Although overall results are positive, to generalize the results, SFBs need to spend some more time in business. The findings of this study can be of global benefit to micro-finance organizations of a similar scale to achieve financial inclusion and business improvement. Research limitations/implications - This qualitative study was performed at a single location and with a limited sample size, which underlines the need for repeated exercises at multiple locations with a larger sample size to establish a broader logical generality. It also points out the need for a study of employee themes to enhance the business processes of SFBs. Originality/value - To the best of the authors’ knowledge, this qualitative study is first attempt to figure out the extent of work done by SFBs in India in promoting financial inclusion. Themes related to financial inclusion can provide further thought process for policymakers for financial inclusion and business improvement. Findings refer not only to Indian organizations but also to small banks around the world to recognize the underpinnings of financial inclusion and what small banks and micro-finance institutions can do to make it meaningful.