Experts from the financial and digital sectors exhibited an optimistic outlook on the future of financial inclusion in India during the first day of the 4th Financial Inclusion and Digital Payment Conference, organized by IAMAI. The speakers were unanimous in acknowledging the viable impact of technology and digital payments to increasing financial inclusion in India, where even now an overwhelming majority of the population does not have access to banking services.
Outlining the challenges faced by the financial system, Surya Sethi, Senior Advisor, Roland Berger Strategy consultants GmPH pointed out, “A major challenge for the system is that along with tackling illiteracy we also need to develop the ability to include people who are not in the system. Legal identity as a challenge also follows, but with AADHAR in action, it will slowly diminish. While India is second globally in terms of total number of people in the financial system, we still have to catch up when it comes to absolute number of people in the system.”
Rupay Card India
A P Hota, Managing Director and Chief Executive Officer, NPCI added, “Transactions are booming everywhere, especially in electronic and on papers. Mobile payments are still not used to increase financial inclusion. We can also look to include more facilities via the Rupay card, especially for a customer at one bank to carry out transactions at another. This should help us move from person to person, to person to merchant.”
According to Jayant Sinha, Chief General Manager, Rural Business, State Bank of India, we should give products that address demands of potential account holders and initiate innovations. “Moving a step closer towards this we have come up with an unusual way of reaching out to the people in the interiors of Andhra Pradesh by creating mobile business correspondents who travel around on bikes.”
Rahul Bhagat, Country Head Retail Liabilities, Marketing and Direct Banking Channels, HDFC Bank emphasized on adopting a collaborative approach towards tackling the issue of financial inclusion. He said, “Banks can work with telecom operators to leverage the existing distribution and technological base creating by them. This will enable the financial industry to optimize reach.”
The day also included a discussion on prospects of micro-finance as a means to increase financial inclusion. Royston Braganza, CEO, Grameen Capital began by highlighting some of the common myths associated to micro-finance, “People normally associate micro finance with micro credit. However, micro credit is just one part of micro finance. In fact micro savings is the largest part of micro finance.” He added, “Micro finance is based on two facets – social and commercial. For it to be successful both these facets need to be nurtured simultaneously.”
Ujjivan Financial Services
Samit Ghosh, Chairman and Managing Director, Ujjivan Financial Services came up with a very interesting insight to increase the scope of financial inclusion, “The largest concentration of people outside the financial net is in Mumbai itself. When we talk to financial inclusion we forget that these people too need products customized for them.”
At the conclusion of the first day, all speakers accepted that fact that financial inclusion is likely to get a boost based on the coming of age of the telecom industry, and that manufacturers of financial products had started creating products to increase financial inclusion.