Expanding the scope of India post payment bank

Abstract

Finance is an essential component for the development of an economy. A well-developed financial system lays the foundation for sustainable growth. In a developing country like India, bringing the masses into the envelope of financial stability is essential as it is a key step in the development of the society both in terms of human development indices like education and health as well as economic growth. Let us take a look at the scenario in India currently. As of 2015, we have a bank branch network of 1,25,857 in the country.i At the same time, India is home to a startling 21% of the world’s unbanked population.ii Only 14% of our country’s population use financial institutions as a means for savings.iii To deliver 1 rupee worth of food, the government spends Rs. 3.65. 57% of this doesn’t even reach the end beneficiaries.iv These figures bring forth one key question. Is our present financial system catering to only certain sections of the society? In a country of 1.2 billion people, are there segments of the society that are being completely neglected? Is our system of subsidies and inclusiveness flawed? What happens to the money spent on various initiatives for the betterment of the society? These questions have serious implications. Financial access to the lower income strata of the society at an affordable cost is a prerequisite for poverty reduction and social cohesion. It is a key step for progress and growth.