India’s Budget for 2017-18 announced on 1st February had several measures for digital financial inclusion: ensuring high speed broadband connectivity on optical fibre to more than 1,50,000 gram panchayats, with wifi hot spots and access to digital services at low tariffs, a Computer Emergency Response Team for the Financial Sector (CERT-Fin) to work in close coordination with all financial sector regulators and other stakeholders, two new schemes to promote the usage of BHIM (Referral Bonus Scheme for individuals and a Cashback Scheme for merchants), launch of Aadhar Pay, a merchant version of Aadhar Enabled Payment System, for those who do not have debit cards or mobile phones, targeting 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards,reduced presumptive income tax for small and medium tax payers on turnover which is received by non-cash means, proposal to mandate all Government receipts beyond a prescribed limit through digital means,etc. The government also accepted a Watal Committee recommendation to create a Payments Regulatory Board within the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems.
The first two payments banks to launch their services in January - Airtel Payments Bank and India Post Payments Bank – have dramatically different strategies (How does India Post Payments Bank stack up against Airtel Payments Bank, Mint ). With Paytm expected to enter the fray soon and other payments banks to follow, India’s banking landscape is set to be transformed this year. In a recent blog post “India has built the rails, will passengers climb aboard?”, Greta Bull of CGAP sums up India’s current challenges on financial inclusion: “The fundamental building blocks of distribution networks with viable business models and consumer adoption of digital payments will be the true test for whether India can fulfill the promise that it holds for radically changing the face of financial services for all Indians.”