ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Financial InclusionSubscribe to Financial Inclusion

Faith-based Financial Exclusion

The United Kingdom was at the forefront of opening Islamic windows in its financial system with the objective of achieving financial inclusion of Muslims without compromising their value systems. India refused to think in that direction with its large Muslim population being excluded from financial deepening, which is a crucial pillar of poverty reduction. The consequent lower business potential of districts with a higher proportion of Muslim population has led to lower branch density and loan rates, affecting the general population as well. Jammu and Kashmir, in districts where the proportion of Muslims is higher, also reflects these trends observed in other states.

Making Digital Financial Inclusion a Reality

Technology has had a disruptive effect on the delivery of fi nancial services, and adoption of digital solutions could help accelerate fi nancial inclusion. This article creates a road map for digital fi nancial inclusion in India using the framework based on the eight high-level principles of G-20 nations. While evaluating the progress under each one of these principles, the article concludes with policy recommendations both on supply and demand sides to achieve the coveted digital fi nancial inclusion.

Financial Inclusion through Urban Cooperative Banks

This study gives insights into the financial inclusion and fintech performance of Telangana urban cooperative banks, based on a primary survey carried out among UCB officials. More than 60% of the UCBs are found to cater to slum dwellers and micro, small and medium enterprises. But a clear gender gap is evident in terms of account ownership and access to credit.

Determinants of Digital Technology Adoption and Financial Inclusion in India

The status of digital technology adoption after the launch of Pradhan Mantri Jan Dhan Yojana in 2014 is examined. Using microdata from two rounds (2013 and 2015) of a pan-India survey, the uptake of digital technology platforms among Indian adults for making financial transactions is examined and its determinants are investigated. The results suggest that being male and having a higher education, salaried job, smartphone, and access to mobile internet are positively associated with higher uptake of digital technology platforms. These results are fairly robust across empirical specifications.

Small Finance Banks

Small finance banks (SFBs) are niche banks serving the unserved and underserved population at affordable cost with a view to furthering digital financial inclusion in India. The main objectives of the SFBs are promoting an institutional mechanism to mobilise savings from rural and semi-urban areas...

Repercussions of Protracted Currency Shortage across Two Models of Financial Inclusion in India

Following the announcement of demonetisation on 8 November 2016, India saw the withdrawal of nearly 86% of the cash in circulation. This caused prolonged currency shortages and impacted employment, sales, income, loan payback capacity, savings and by extension, financial inclusion. A survey conducted among two distinct groups in Mumbai and Pune, three months after demonetisation, in April–May 2017, reveals the adverse impact of currency shortages on the incomes and livelihoods of those employed in tiny, informal enterprises. With a decline in the sales in their businesses, their income and savings fell, and so did the demand for credit.

Financial Inclusion and Digital India: A Critical Assessment

Financial inclusion is one of the cornerstones of a developing economy. Launched in 2015, Digital India has been regarded as a significant intervention to bring the unbanked population, who had been kept out of the mainstream economy, into the formal financial net. While there has been an improvement in digital transactions across the country, issues still remain of last-mile connectivity of banks and other financial institutions, dormant accounts, among others.

Can Payments Banks Succeed?

Recently, the Reserve Bank of India has begun licensing a new kind of retail bank, called payments banks, for the hitherto financially excluded. The regulator’s argument that technological innovation will allow payments banks to achieve a seemingly impossible trilemma of financial inclusion while still being competitive and profitable is examined. The article concludes that amelioration of this trilemma will require the regulatory orientation to fundamentally change, and for the state to provide a kind of public good to all payments banks.

Did Demonetisation Accelerate Financial Inclusion?

The claim that removing cash would improve financial access for the poor has become a fallback argument for demonetisation, despite notebandi failing to achieve its other objectives. Like many other arguments made for abolishing cash in favour of digital payments, this claim does not stand up to scrutiny.

Financial Inclusion of Female Sex Workers

The clandestine nature of sex work and the stigma surrounding it restricts access to and utilisation of financial services by female sex workers, and makes it more difficult for policymakers to design appropriate programmes for their empowerment. An examination of the factors that contribute to the utilisation of financial services focused on FSWs reveals that there is an urgent need to strengthen linkages with formal banking institutions for the financial inclusion and empowerment of FSWs.

Excluding the Poor from Credit

Andhra Pradesh and Telangana have become no-go areas for microfinance institutions due to the Andhra Pradesh Microfinance Institutions (Regulation of Money Lending) Ordinance, 2010 and, later, the Andhra Pradesh Microfinance Institutions (Regulation of Money Lending) Act, 2010. Contrary to their laudable objectives, these legislations have neither served public interest nor improved access to finance for the underprivileged sections. Instead, access to finance has contracted, and financial distress and fall in consumption levels of underprivileged households have increased. The law has hit the poor and the marginalised, by constricting their choices in accessing alternate modes of non-collateralised credit.

Can Jan Dhan Yojana Achieve Financial Inclusion?

While there has been a tremendous increase in the number of bank accounts opened, the data show that the average balance in these accounts is low and a significant proportion of the accounts are inoperative. Although there was a rise in the average deposits during demonetisation, they later settled at a lower level. Further, financial inclusion means not just the opening of bank accounts but, more importantly, access to credit from formal sources. The limited data available in this regard show that after the Pradhan Mantri Jan Dhan Yojana was launched there has not been any increase in the credit–deposit ratio and the share of small loans has continued to decline. Very few people have benefited from the overdraft facility that is supposed to be provided by the accounts under the scheme. Issues of access to banking in rural areas remain.

Pages

Back to Top