It has been almost 8 months since demonetisation and Financial Inclusion & remonetisation needs to be carried out in full swing with an aim to reduce cash transactions and enable more digital exchange of transactions. Financial Inclusion is meant to bring in the poor, vulnerable and weaker sections of the population into the main stream and provide them affordable, safe, secure banking and other services thereby insulating them from the clutches of moneylenders and others who were exploiting them till now. It is a rapidly growing objective among smaller banks, microfinance institutions, lending organizations and other non-banking financial businesses.
With the objective of further deepening financial inclusion, RBI kicked off an era of differentiated banking by allowing MFI’s (Micro Finance Institutions), SFBs (small finance banks) and PBs (payments banks) to start services.
But, are we moving in the right direction? Yes, we are…
In ways to achieve the overall eco system one needs support from all sides e.g. internet, mobile penetration, financial/banking products availability and payment solution technology availability, consumer friendly regulations, data security etc. at the last mile to achieve the actual transactions of users.
Financial literacy, is one of the things to promote which will reinforce the thought to adopt the technology available. Some of the policy changes to improve financial inclusion were hurriedly executed without setting up appropriate regulatory oversight or consumer education. Due to this, there has been slow acceptance of services in remote areas.
Digital financial inclusion (DFI) has emerged as the new wave in the hope that it will reach the last mile consumer in the most convenient and affordable manner.
Using new technology through e-KYC for users, remote verification of transactions and lowering transaction costs of payments looks promising. Today, we have solutions for everyone in Indian to have access to a bank account through mobile even if the mobile is a feature phone and being able to easily send and receive digital payments through SMS.
At the same time, we need to keep the unique identifier (UID) system intact and trust worthy and one has to work upon creating trust and confidence in technology being built around and the institutions that administer and oversee Aadhaar. We must have the openness to influence the potential of Aadhaar to deliver access to basic financial services while continuing to work on gaps and weaknesses as we progress in achieving our goals.
One of the most important aspects is the data security. We have 1.5 billion Aadhaar numbers in our databases and we need to protect the privacy of all residents of India across all platforms, including Aadhaar. There will be a major setback in growth of financial inclusion if there is a compromise in data privacy.
To conclude, there should be a strengthened push from all sides to achieve financial inclusion and integration with Aadhaar for digital India to deliver financial services in the last mile.