As the Indian government pushes aggressively towards its target of bank accounts for all households, it is important to ensure that this mission leads to meaningful inclusion. This month's newsletter brings out highlights from the Intermedia national surveys that can guide policy makers in the right direction. The report India: Financial Services and Digital Pathways compares the results from the FII (Financial Inclusion Insights) Tracker Survey of 45,024 Indian adults with similar surveys conducted in Kenya, Tanzania, Uganda, Nigeria, Pakistan and Bangladesh. The report shows that:
a) Even though India has the highest percentage of adults who have ever accessed bank accounts (48%), just a quarter of Indian adults have active bank accounts. Amongst adults who have bank accounts, India has the highest proportion (47%) with inactive accounts.
b) Less than a quarter of Indians with accounts use more advanced banking services like credit, bill payments, remittances etc. While only 7% of Pakistani adults have bank accounts, more than half of these use advanced banking services.
c) India has the highest percentage of savers and lowest of borrowers. Saving in all countries is done predominantly through banks. Credit sources however differ. Like other South Asian countries, the dominant sources of credit are family, friends and neighbours; yet banks/MFI are reported with negligible contribution in India and 41% in Bangladesh, while private moneylenders are an important source only in India, with 12% of borrowers reporting credit from this source.
d) All countries report remittances mainly through cash delivered by hand, while frequency of remittances was lowest in India and highest in Pakistan.
It is clear from the above insights from the ground that policy makers and financial service providers should focus on raising the transaction levels in bank accounts. For this, it is important to design products and delivery mechanisms of advanced banking services appropriately.
Section I: Policy – the latest from India’s policymakers
Digital India: Emerging Challenges & Opportunities for the Banking Sector
Shri. Harun R Khan, Deputy Governor, RBI, September 16, 2014
Economic & Financial Outlook
Dr. Raghuram Rajan, Governor, RBI, September 15, 2014
Protecting Customers - Safeguarding Stability
Dr. Deepali Pant Joshi, Executive Director, RBI, September 16, 2014
5.29 Crore Accounts Opened under PMJDY-3.12 Crore in Rural and 2.17 Crore in Urban Areas; RuPay Card issued in 1.78 Crore Accounts
No Need to Open Another Bank Account to Avail of Benefits Under Pradhan Mantri Jan Dhan Yojana (PMJDY)
Simplification of KYC Norms - Creating Public Awareness
Facilities Available to Account Holders Under Pradhan Mantri Jan Dhan Yojana (PMJDY) to be Extended to the Existing Account Holders as Well
Section II: News and Views Digest – the latest from India and abroad
RBI on Mission Mode, Refines Financial Inclusion Strategy
Monitor Financial Inclusion
How India compares on financial inclusion against other countries
Financial Inclusion in India: Moving Beyond Bank Accounts
Card payment network RuPay sees boost from PM Jan Dhan Yojana
Don't chase numbers in name of financial inclusion: Raghuram Rajan
Why digitisation of banks cannot be complete unless financial inclusion is achieved
Why isn't the RBI excited about Modi's financial inclusion scheme?
DBT will hold financial inclusion scheme together
Communication – The Achilles Heel of Direct Benefit Transfers – Part I
Communication – The Achilles Heel of Direct Benefit Transfers – Part II
Mobile Money and Microfinance: A Match Made in Heaven or Marriage Gone Awry?
Should the interest accrued on the trust or escrow account be paid out to mobile money customers?
New infographic: Mobile money and the digitisation of Kenya's retail payments systems
Financial inclusion in Tanzania: Tigo rewards its mobile money customers
Draft Branchless Banking Regulations in Indonesia – A Review
Simple Messages Help Consumers Understand Big Data
5 Sources of Untapped Innovation in Digital Finance
Can Digital Linkages Revitalize a Tried and True Savings Model?
Leveraging Mobile Phone Data: Tiaxa's Balance Advance
BanKO: Listening to Customers Helps Drive Growth
Big Data for Financial Inclusion: Is Boring Better?
Section III: Research – surveys and studies on expanding access to financial services
2014 Intermedia Pakistan Financial Inclusion Survey
InterMedia, September 2014
Reaching half of the market: Women and mobile money
Elisa Minischetti and Claire Pénicaud Scharwatt, GSMA, September 2014
Unbanked households: Evidence of supply-side factors
Claire Célérier and Adrien Matray, VoxEU.org, September 23, 2014
Facilitating the Market for Capacity Building Services
Mayada El-Zoghbi and Kate Lauer, CGAP Focus Note No. 97, September 2014
Operationalising Payments Banks for Inclusion
Policy Brief August, 2014
Direct Benefits Transfers for Inclusion
Policy Brief July, 2014
Financial Inclusion- Two priorities for India's New Government
Policy Brief June, 2014
In the media
Column: Making PM Jan Dhan Yojana a game-changer
Financial Express, 01 September 2014
Will the new financial inclusion plan work?
Financial Express, 18 August 2014
Column: Fix Aadhaar, don't junk it
Financial Express, 27 June 2014
Competition helps improve access for unbanked households
Banks raise barriers to basic banking
The Modi-fied financial inclusion plan