Unlocking Financial Inclusion: The Dynamics of Bank Account Ownership in Urban Slums

Financial inclusion is a key driver of sustainable development, contributing to poverty reduction (SDG 1), gender equality (SDG 5), and reduced inequalities (SDG 10). Despite extensive financial-inclusion policies in India, residents of urban slums remain largely excluded from formal banking systems. This study examines the determinants of formal bank account use in Seelampur, one of Delhi's largest informal settlements, interpreting active account ownership as a core indicator of effective financial inclusion. Using original survey data from 221 adults collected in 2019, the analysis combines logistic regression, Partial Least Squares–Structural Equation Modeling (PLS-SEM), and hierarchical cluster analysis. The results show that education, income, and institutional engagement—proxied by tax compliance and prior borrowing—significantly increase the likelihood of using a formal bank account. PLS-SEM reveals that institutional engagement mediates the effect of socio-economic status on financial inclusion, highlighting the central role of formalization pathways. At the same time, a persistent gender gap emerges: women are significantly less likely than men to be financially included, even after controlling for socio-economic characteristics. Cluster analysis uncovers substantial heterogeneity within the slum population, identifying distinct behavioral profiles and showing that financial exclusion is concentrated among low-income, female-dominated groups with weak links to formal institutions. Overall, the findings suggest that sustainable financial inclusion requires policies that go beyond physical access to banking infrastructure and address gender-specific barriers, institutional participation, and localized outreach in informal urban contexts.