NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, December 2, 2013

Smart investors in urban India secure their future by buying mutual funds. Smart investors in villages buy goats. Or cattle.

After many years of efforts to improve financial inclusion in the country, roughly a third of India’s over 600,000 villages have access to formal financial services.

There is a long way to go to bring everyone within the formal banking system. Fortunately the path to this goal is being paved with rapid technological innovation.

The Reserve Bank of India’s (RBI) pressure on banks to go deeper into rural country is beginning to pay off now. Allowing banks to use an independent network of “banking correspondents (BCs)” has helped the cause.