India does well on financial inclusion, granular data needed to identify and resolve specific issues
Two reports released recently, the Agent Network Accelerator Survey 2017 (MicroSave and Helix Institute of Digital Finance) and the CRISIL Inclusix, show that India’s financial inclusion mission has been quite successful in coverage, and usage of financial services has seen a significant rise over the past two years. It is crucial now for policy to be more cohesive and not send conflicting signals to service providers; the Finance Minister’s statement that financial inclusion goals are yet to be achieved, sets the government’s agenda quite unambiguously.
However despite strong representations by industry, the RBI has refused to extend the KYC compliance deadline for PrePaid Payment Instruments (PPIs) beyond the stipulated date, 28 February 2018 (See Mobile wallet firms grapple to get users to comply with KYC norms, Mint, March 3, 2018). The RBI also issued new norms for payments banks to use third parties for KYC verification, and not rely on KYC done by telecom companies (Mint, February 21, 2018). While better KYC compliance enables smooth inter-operability and reduces risk of fraud, the RBI needs to ensure that its regulatory requirements do not kill innovative digital payments solutions for low income customers.
Even as all these reports come in, it is important to remember that innovation and new product launch make for a lengthy process and policy uncertainty or ambiguity tend to hinder the process. As suggested in the Indicus Policy Brief “Fostering Innovation For Financial Inclusion", January, 2018, a comprehensive time bound regulatory road map can be evolved and shared with the industry by the DFS.