Digital financial inclusion in India

Abstract

India, the most emerging economy among the BRICS nation stands as the sixth largest economy of the world in World Bank’s report of 2017 with likely to surpass United Kingdom in near future, but at the same time roughly 270 million Indian (appx. 21.9% of India’s 2011 population) lived below poverty line of 1.25 dollar per dayi . The policy makers in India are always in quest of poverty eradication with several policies focussing on financial stability of the poor. The Govt. of India have made several policies for alleviation of poverty, but it is of outmost important The Govt. of India have made several to make people financially sustainable so that they themselves be get out of the poverty.However,1.7 billion people are still devoid of formal banking channel (Source: Global Findex Report 2017).So, without making people financially inclusive, it will be a distant dream to make them financially sustainable. Thus, financial inclusion is the first step for achieving the financial upliftment of common masses as well as making measures for poverty alleviation. Several policy makers in India has made financial inclusion as a key enabler in eradicating the poverty. The present policy paper describes the country’s growth in financial inclusion sector right from the independence to the present era. It discusses various policy interventions for boosting financial inclusion across the depth and breadth of the country, the shift of policy directives towards digital financial inclusion and differentiated banks and its efficacy in achieving the goal of financial inclusion. This paper also describes the last mile connectivity failure of different financial inclusion policies at the grassroot level and its suggestive measures. It identifies the key role of various stakeholders (Govt., RBI, Financial Institutions, Fintech Companies, Telecom Companies, NGOs) in achieving the goal of universal financial inclusion in the country. It critically analyses the performance of differentiated banks (Payments Bank and Small Finance Bank) since their inception and provides suggestive measures for their contribution in financial inclusion. This policy paper also suggests future policy interventions for further growth of financial inclusion with respect to digital perspectives.