The focus of financial inclusion is changing globally. Non-banks are playing a key role providing novel digital financial services to the underbanked. Look at PayPal, America’s largest non-bank financial services provider, that has now practically become a bank. Its customers can even invest “spare change” in select low-cost ETF portfolios(Tearsheet, November 20, 2017). What PayPal is doing is providing easy micro-investment opportunities to the underbanked, the segment that traditionally banks have neglected. CEO Dan Schulman says PayPal is laser focused on driving financial inclusion and improving financial health with digital technology, while expanding operations in India (Hindu Business Line, November 19, 2017). Meanwhile, Paytm has launched its payments bank officially, aiming to become the world’s largest full-service digital bank. Apart from insurance and share trading, a charge card and monthly instalment based micro-loans are reportedly on the anvil (Mint, November 28, 2017).

In this new landscape where digital financial services will increasingly reach the previously unbanked at the click of a button, the government and the regulators have fresh challenges. As Graham Wright points out in his blog post, Can Fintech Really Deliver On Its Promise For Financial Inclusion?, regulatory capacity and the customer protection environment are weak in most countries, making the poor even more vulnerable to fintech. In India, considerable work is underway. The Ministry of Electronics and Information Technology has released its “White Paper on Data Protection framework for India”, inviting comments from the public till 31st December 2017. The Telecom Regulatory Authority of India (TRAI) has released its Recommendations on Net Neutrality for the Department of Telecommunications to now take a call on. Next up, the TRAI is working on a consultation paper on regulating OTT services, and will also take up issues of privacy, security and ownership of data. All these will impact the delivery of digital financial services to the poor and underbanked. However, the Supreme Court is yet to set a date for its final hearing on the Aadhaar petitions - the country has been waiting more than two years for this.

At this juncture, the RBI needs to begin a system of comprehensive monitoring, to ensure that the customer protection framework is tight. It should also initiate a process of collecting, and disseminating, granular data to understand the impact of these new services on low income customers. India is seen as a global leader in financial inclusion, we have a greater responsibility now in getting things right.


From Cash to Non-cash and Cheque to Digital: The Unfolding Revolution in India’s Payment Systems, Reserve Bank of India Mint Street Memo #7, November 24, 2017
Initial Steps Towards the Setting up of a Public Credit Registry for India: Dr. Viral V Acharya, Deputy Governor, Reserve Bank of India, November 05, 2017
Statement on Developmental and Regulatory Policies - October 4, 2017- Banking Facility for Senior Citizens and Differently abled Persons


Banking the unbanked: the Indian revolution
Framework actively working to check financial frauds: Department of Telecommunication
Net neutrality central to financial inclusion, says Trai chief
Want a loan? Make sure you’re tweeting the right things
Apply same data protection rules on OTTs: Big telcos to Trai
TRAI plans consultation for regulation of Internet apps and sites in India; Our Take
India’s Data Protection Regime Must Be Built Through an Inclusive and Truly Co-Regulatory Approach
India Posts Payments Bank to have nationwide operations by April
Bigger RBL footprint in financial inclusion
Capital Float partners with StoreKing to extend credit to rural India
How P2P lending can be a route to creating financial inclusion
'Digital payments are making financial services more affordable'
Fino Payments Bank to source gold loans for banks
Payments Banks Struggle To Get Deposits Into Bank Accounts
Who Are Kenya’s Financially Excluded?
Foresight in a FinTech Forest – Financial Technology Drives a Digital Banking Response
Can mobile money be the motor of a virtuous cycle of government service?
P2G payments: How does mobile money experience inform what users want?
Why mobile money needs enabling e-commerce regulation to digitise payments


Draft Discussion Paper on Unlicensed Digital Investment Schemes, ITU, November 2017
Draft Discussion Paper on DLT and Financial Inclusion, ITU, November 2017
Is Digital Credit A Silver Bullet? MicroSave, November 24, 2017.


Editor: The Indicus Centre for Financial Inclusion was launched in 2011 to distil and disseminate information on accelerating the poor’s access to high-quality financial services. ©Indicus Centre for Financial Inclusion. All rights reserved. 4thDecember 2017

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