Financial inclusion is new paradigm of economic growth which plays a major role in driving away the poverty. Lack of access to financial services in most of rural areas due to high informative barriers and low awareness, poor functioning and financial history of financial institutions, near absence of insurance and pension service create the need and scope of financial inclusion. Financial inclusion is new paradigm of economic growth. Promotion of financial inclusion has been an important social and financial need across countries. Lack of access to finance for vulnerable and weaker sections of the society has been recognized as a serious threat to economic progress especially in developing countries. The aim of financial inclusion is delivery of banking and financial services in a fair, translucent and impartial manner at reasonable cost to the vast sections of disadvantaged and low income group. The Government of India (GOI) and the Reserve bank of India (RBI) have been making concerted efforts to promote financial inclusion. This paper focuses on the progress of financial inclusion in India, initiatives taken by RBI and government of India and its challenges.