Is India’s new financial inclusion strategy already outdated?
Tuesday, September 2, 2014
Plans to extend the reach of traditional banks seem so old-fashioned. Wouldn’t mobile money be quicker and cheaper?
The first instalment of India’s ambitious financial inclusion plans kicked off last week, as 15m bank accounts were opened on Thursday, the first day of the Jan Dhan Yojana scheme, Prime Minister Narendra Modi’s new initiative for every Indian household to have at least one bank account by 2018.
Yet, the proliferation of cell phones and mobile money begs one important question: do we still need traditional bank accounts?
India serves as an ideal case study with over 60% of the adult populationoperating outside of formal financial services, according to the World Bank. India has 600,000 villages, of which only 74,000 have access to banks. Financial inclusion efforts by the government focus on trying to increase the number of brick-and-mortar banks, creating a massive network of banking correspondents to target rural areas, and installing more ATM branches – one within 15 minutes walking distance of every Indian by January 2016.
Yet, these stats fail to account for the country’s massive unbanked population that utilise informal financial services, notably mobile money.
- Impact Assessment