India has seen unprecedented growth in digital services across the nation due to an increase in internet penetration and availability of necessary infrastructure. Covid-19 pandemic has also played major role in adoption of digital modes of payments; however, the potential is still huge as the rural population carries limited knowledge of the citizen-centric financial services available in the country.
Government bodies and FI’s role has been instrumental in creating awareness across the nation and accelerate the adoption of digital payments by introducing more products, lowering transaction costs, and building an integrated eco-system. Today, people expect doorstep delivery of financial services and bank branches even in the remotest part of the country.
Tapping the unbanked
It is essential to reach out to the people living in rural and remote places to accelerate the Indian economy. The growth of financial inclusion in the country will enable the overall economic development of the unbanked and underprivileged. The need of the hour is to provide banking services such as cash deposit, cash withdrawal, balance inquiry, bank statement, insurance, simplified KYC, easy credit, and others to the weaker section of the society at an affordable cost. Digitization has emerged as key theme for financial inclusion and thus, economic development. Digitization has led to low cost and convenient delivery of all these services.
Role of Government Bodies
Government bodies have been quite active in the financial inclusion programs, and several schemes such as Pradhan Mantri Jan Dhan Yojana, Atal Pension Yojana, Stand Up India Scheme, Pradhan Mantri Mudra Yojana, Pradhan Mantri Suraksha Bima Yojana, and Sukanya Samriddhi Yojana were launched for the financially challenged sections of the society.
However, government bodies need to address the current challenge of providing better infrastructure to enhance acceptance infrastructure across the country, encourage innovation in digital payments methods, increasing the spectrum of social schemes, and better regulatory frameworks. Improving awareness on digital means of payments and ensuring customer grievances are addressed seamlessly in time-bound manner, will help build confidence among those sections of society who are excluded, and reluctant in accepting digital modes of payments.
Women empowerment is key to financial inclusion and these women can be empowered through their continuous engagement with Financial Institutions. Uttar Pradesh BC Sakhi Yojana is yet another scheme to drive financial inclusion in the country and making women financially independent. The scheme was launched by the Government of Uttar Pradesh to provide employment to women in the rural regions., They play the role of banking correspondent provide doorstep banking services to the people in the region. This initiative aims at improving the access to sustainable and demand-oriented financial services via rural cooperative credit system, microfinance organizations, and banks. SahiPay powered by Manipal Business Solutions has empowered more than 8000 rural women as Bank Sakhi under the state rural livelihood mission. SahiPay provided banking terminals to enable Sakhis to conduct transactions in their villages and earn a livelihood.
Role of Financial Institutions
Financial institutions are driving financial inclusion by providing digital banking services, easy access to the full range of products, opening bank branches, and investing in technology.
However, FIs are facing a challenge to reach the unbanked. Going forward, they need to collaborate with fintech companies to increase their distribution channels. FIs need to roll-put customized products and easy credit to attract the rural population. The role of banks will be critical in addressing the challenge of low credit history in remote and rural areas.
Government of India and the FI’s are continuously spreading awareness on bringing up the financial inclusion agenda in the country and enabling the masses to be part of the economy.
Views expressed in this article are the personal opinion of Anuj Khanduja, Vice President & Head of Products, Manipal Business Solutions.