The fact that the country’s financial scene has changed since November 2016 is plain for all to see, since the government demonetized two high denomination notes and has been working on a digital India.
With the focus more on cashless economy, MFIs, which have access to the bottom of the economic pyramid much more than the formal banking sector, have a major role to play in pushing the government’s agenda of minimizing the use of paper currency and bring about more transparency through digital transfers and transactions.
A World Bank survey reveals that while slightly over 50 percent Indians had bank accounts in 2014, only about 12 percent had any sort of cashless transaction since last November. Experts believe that these idle bank accounts can be turned active and individuals can be encouraged to indulge in cashless transactions if it can be ensured that all sorts of payments are directly made into bank accounts, and not just returns on subsidies and other payments from the government. While over the years, India’s approach to financial inclusion mostly meant providing access to bank accounts for people in distant parts of the country, just doing that will not serve the purpose. Several experts have admitted that a cashless economy, backed by a stable digital infrastructure, could be the answer to increased financial inclusion in India.
Microfinance, which has played a remarkable role towards financial inclusion of people living outside the purview of formal banking channels, is a sector that has the potential to create significant impact and empowerment by pursuing the government’s cashless agenda, which will also work towards helping the other goal of financial inclusion.
While the cost of providing services to ‘unbanked’ millions continue to present a challenge even for MFIs, the ‘last mile access’ to financial services is undergoing a major change in India due to with digital technologies in play. If the trinity of Jan Dhan, Aadhaar card and mobile phones has created an ecosystem to empower people in rural areas, a variety of digital payment platforms, both government and private, have made it imaginable to have nearly 5 crore users receive and repay loans through bank accounts, leading to what could be more than 100 million cashless transactions every month.
With the focus more on cashless economy, MFIs, which have access to the bottom of the economic pyramid much more than the formal banking sector, have a major role to play in pushing the government’s agenda of minimizing the use of paper currency and bring about more transparency through digital transfers and transactions.
A World Bank survey reveals that while slightly over 50 percent Indians had bank accounts in 2014, only about 12 percent had any sort of cashless transaction since last November. Experts believe that these idle bank accounts can be turned active and individuals can be encouraged to indulge in cashless transactions if it can be ensured that all sorts of payments are directly made into bank accounts, and not just returns on subsidies and other payments from the government. While over the years, India’s approach to financial inclusion mostly meant providing access to bank accounts for people in distant parts of the country, just doing that will not serve the purpose. Several experts have admitted that a cashless economy, backed by a stable digital infrastructure, could be the answer to increased financial inclusion in India.
Microfinance, which has played a remarkable role towards financial inclusion of people living outside the purview of formal banking channels, is a sector that has the potential to create significant impact and empowerment by pursuing the government’s cashless agenda, which will also work towards helping the other goal of financial inclusion.
While the cost of providing services to ‘unbanked’ millions continue to present a challenge even for MFIs, the ‘last mile access’ to financial services is undergoing a major change in India due to with digital technologies in play. If the trinity of Jan Dhan, Aadhaar card and mobile phones has created an ecosystem to empower people in rural areas, a variety of digital payment platforms, both government and private, have made it imaginable to have nearly 5 crore users receive and repay loans through bank accounts, leading to what could be more than 100 million cashless transactions every month.
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