Other Countries Like US, Russia May Soon Follow the Model of India’s Financial Inclusion Drive

Tuesday, April 28, 2015

The Pradhan Mantri Jan Dhan Yojana programme, the drive launched by Prime Minister Narendra Modi to ensure at least one member in every household in the country had a bank account, could soon emerge as a worldwide template for achieving rapid financial inclusion.

The Financial Action Task Force, a global anti-terror financing agency, has given initial approval to a paper by India on how it achieved the task in a few months while adhering to know your customer (KYC) norms. The study will now be fleshed out further. The agency, which advocates stringent KYC standards in order to stamp out terror financing, is keen to see whether the Indian model can be emulated by other countries. The US, Russia, Spain and the Netherlands have extended support to the paper.

“We have informally given a presentation on the contours of KYC followed under the PMJDY (Pradhan Mantri Jan Dhan Yojana) programme,” a government official told ET. “A proposal has now been approved to study as to how India did it in form of a best practices paper.”

PM Modi’s Jan Dhan model: Other countries like US, Russia may soon follow

A working group led by India and including officials from other countries as members will be set up to prepare the template, the official said. FATF prescribes standards for countries to develop policies to combat money laundering and terror financing. India became a member in 2010 and is obliged to ensure that its domestic regime is in compliance with these norms with strict KYC rules for all financial transactions as a key base case requirement.

Source: The Economic Times (link opens in a new window)

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financial inclusion, unbanked