19% Of Indian Population Remains Unbanked

The government along with Reserve Bank of India (RBI) has initiated and implemented numerous schemes to promote financial inclusion, especially in rural India. Despite all the efforts, about 19 percent of the Indian population doesn’t have access to banks, according to a study jointly conducted by ASSOCHAM and the consultancy firm, Ernest & Young.

The launch of co-operative banks and regional rural banks, the introduction of mandated priority sector lending targets, a formation of self-help groups, the appointment of business correspondents by banks to provide door-step delivery of banking services, are some of the underway efforts by the government to increase bank facilitators among the public.

“These initiatives helped to bring in a large section of the unbanked population under the formal financial credit system. However, a significant portion of India’s population still remains devoid of access to basic formal credit facilities mainly due to lack of last mile connectivity. Hence, the Government, with RBI’s support, continues to introduce various new initiatives to fulfil its objective of achieving 100% financial inclusion,” revealed the joint study, ‘Evolving Landscape of microfinance institutions in India.’

The Jan Dhan Yojana massively multiplied the number of bank accounts across the country. It attempted to ensure that the households at the bottom of the food chain to get proper benefits. By the end of June, there were approximately 28 crore beneficiaries of PMJDY with RuPay debit cards.

Additionally, The Direct Benefit Transfer (DBT) mechanism that began in 2013 under UPA but was substantially uplifted by the Modi government linked numerous schemes together saving huge costs. According to government figures, savings due to DBT over the last three years have touched Rs 50,000 crore as on December 31, 2016. The total payout at the end of June is said to have touched Rs 2 lakh crore.

Despite rationale and a strong institutional credit network, India’s financial services ecosystem lags in terms of physical infrastructure and has failed to reach the poor, highlighted the ASSOCHAM-EY joint study.

Consequently, the implementation of Demonetization in November and the recent launch of Goods and Services tax (GST) has directed the manufactures, sellers as well as the consumer towards the nearest bank but until unless the banks are available and accessible across the nook and corner of the country, how would the  benefits reach them?