Financial Inclusion- News and Views - October 2014
As the Indian government pushes aggressively towards its target of bank accounts for all households, it is important to ensure that this mission leads to meaningful inclusion. This month's newsletter brings out highlights from the Intermedia national surveys that can guide policy makers in the right direction. The report India: Financial Services and Digital Pathways compares the results from the FII (Financial Inclusion Insights) Tracker Survey of 45,024 Indian adults with similar surveys conducted in Kenya, Tanzania, Uganda, Nigeria, Pakistan and Bangladesh. The report shows that:
a) Even though India has the highest percentage of adults who have ever accessed bank accounts (48%), just a quarter of Indian adults have active bank accounts. Amongst adults who have bank accounts, India has the highest proportion (47%) with inactive accounts.
b) Less than a quarter of Indians with accounts use more advanced banking services like credit, bill payments, remittances etc. While only 7% of Pakistani adults have bank accounts, more than half of these use advanced banking services.
c) India has the highest percentage of savers and lowest of borrowers. Saving in all countries is done predominantly through banks. Credit sources however differ. Like other South Asian countries, the dominant sources of credit are family, friends and neighbours; yet banks/MFI are reported with negligible contribution in India and 41% in Bangladesh, while private moneylenders are an important source only in India, with 12% of borrowers reporting credit from this source.
d) All countries report remittances mainly through cash delivered by hand, while frequency of remittances was lowest in India and highest in Pakistan.
It is clear from the above insights from the ground that policy makers and financial service providers should focus on raising the transaction levels in bank accounts. For this, it is important to design products and delivery mechanisms of advanced banking services appropriately.
Section I: Policy – the latest from India’s policymakers
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. The Centre is supported by the Bill & Melinda Gates Foundation. http://www.indicus.net/icfi