Wider acceptance and adoption of digital payments will play a key role towards financial inclusion, according to the Reserve Bank of India’s (RBI’s) recommendation for sustainable financial inclusion during 2019-20.
Along with traditional banking outlets, payments banks, small finance banks, co-operative banks and other non-bank entities such as fertilizer shops, fair price shops, should also promote efficiency and transparency through digital transactions, the banking regulator said in the National Strategy for Financial Inclusion (NSFI) report on Friday.
The report has called for increasing outreach of banking outlets of scheduled commercial banks, payment banks, among others to provide banking access to every village within a 5 km radius of 500 households in hilly areas by March 2020.
The government has been trying to take steps to provide access to credit at an affordable cost and financial instruments to the low-income group and the weaker sections of the society. PM Jan Dhan Yojana that to seeks to provide universal banking services for every unbanked household, pension scheme such as Atal Pension Yojana and insurances schemes such as PM Suraksha Bima Yojana are some of the schemes launched by the National Democratic Alliance (NDA) alliance led government in the last five years.
“The document views universal access to financial services and providing bouquet of basic financial services as the starting point of the strategy. Over the next few years, it is envisaged that ubiquitous physical and digital connectivity coupled with full financial inclusion is possible owing to the focused efforts being undertaken by the respective stakeholders,” the report said.
While, India has largely benefited from the Jan Dhan-Aadhaar- Mobile (JAM) trinity over the last few years, steps are needed to strengthen the digital financial services’ eco-system including increased awareness on usage of digital modes of transactions, increased acceptance infrastructure and a safe environment incorporating the principles of consent and privacy, the report said.
Currently, financial inclusion policies are targeted towards specific sectors such as the small and medium businesses, agriculture, or specific regions such as the aspirational districts. The banking regulator said that there is a need to develop a sector-specific action plan to monitor targets and review the progress, along with a strong regulatory and legal framework aimed at protecting the interests of the customers, promoting fair practices and curbing market manipulations.
“Every willing and eligible adult who has been enrolled under the PMJDY (including the young adults who have recently taken up employment) to be enrolled under an insurance scheme (PMJJBY, PMSBY, etc.), Pension scheme (NPS, APY, etc.) by March 2020,” the report said.
It also suggested making the public credit registry fully –database of credit information of borrowers--operational by March 2022 so that authorised financial entities can leverage on the same for assessing credit proposals from all citizens.
