Financial inclusion for whose benefit?
Wednesday, June 13, 2012
The tale of financial inclusion in India is akin to that of the blind men and the elephant. You all know the story. A bunch of blind men chance upon an elephant. The one who catches hold of its tail says the elephant is like a rope. The one who touches the trunk says the elephant is like a snake, while the one touching the animal’s leg insists it’s like a tree.
Likewise, when it comes to financial inclusion, every member of the dramatis personae has got hold of a different bit of the inclusion elephant. And they all appear to think that the whole animal looks like the bit they have caught hold of. The Finance Ministry, for instance, seems to think that financial inclusion ends with ensuring that everyone has a bank account. Whether the accounts have any money, or in what way those accounts will help the holders of these accounts, is not its concern.
The Reserve Bank of India, charged with implementing this goal, has done its bit to ensure that banks do not haemorrhage money in the process. So it created the concept of ‘Business Correspondents’, so that banks could actually outsource the actual process of reaching out to the great unbanked — at a reasonable cost, of course.