Financial Inclusion- News and Views - December 2015
More than 19 crore bank accounts have been opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY) so far, with the share of zero balance accounts reducing to 34.31% by end-November. While the emphasis of financial inclusion in India has largely been on the banking and financial services footprint, the crucial role played by technology and telecom connectivity in providing low cost access to financial services is well recognised. Digital transactions are steadily gaining acceptance in India - RBI data shows that mobile banking transactions have crossed Rs. 300 billion in value in October. Moreover, users are not concentrated in India’s metros - 40-50% of mobile wallet transactions are from smaller towns, as noted in the latest data culled from Nielsen Informate Mobile Insights.
The role of telcos in fostering financial inclusion, however, is not reflected in the monitoring dashboards of the PMJDY Mission Directorate. The latest policy brief from the Indicus Centre for Financial Inclusion “Service Quality Standards in Telecom Connectivity for Financial Inclusion” focuses on the state of telecom infrastructure and service quality to enable transactions, transfers and withdrawals of funds, without which financial inclusion will be a non-starter in areas with low or nil connectivity. The five takeaways for the PMJDY Mission are as follows:
Put in place a unified, harmonised database of the financial inclusion footprint, in terms of outlets, service points, devices, connectivity and agent networks, aggregated and monitored by a single source.
Recognise that internet and broadband footprint and quality of service need to be monitored directly under the PMJDY. In consultation with the Telecom Regulatory Authority of India (TRAI), National Payments Corporation of India (NPCI), Unique Identification Authority of India (UIDAI), and others, the Department of Financial Services (DFS) should notify the minimum telecom service requirements for devices for conducting mobile financial transactions.
Include in its monitoring framework these relevant metrics: coverage maps showing the present status of internet/broadband penetration, quality of telecom coverage – represented by uptime, transaction times and transaction failure data, for each enlisted Sub Service Area (SSA). This will enable a conjoint mapping of device penetration across Bank Mitra (Business correspondents or BC) outlets and requisite telecom connectivity to enable successful financial transactions.
Identify, along with TRAI, appropriate metrics for service quality appropriate for mobile financial transactions, like ‘transaction drops’ (equivalent to ‘call drops’ in voice telephony nomenclature). Data on service quality can be requisitioned under a financial inclusion section included in the quarterly review reports of telecom service penetration and quality.
Ensure through TRAI a more granular reporting by service providers of telecom footprint and data service quality aligned to Sub Service Area (SSA) level, and regularly update the availability and level of telecom connectivity (2G, 3G) at a granular (sub-service area) level, ideally building a GIS heat map of telecom towers, data service quality profiles and transaction quality at the locations of ‘Bank Mitras’ (business correspondents or BC) across India.
The monthly newsletter from the Indicus Centre for Financial Inclusion documents the latest news and views in the financial inclusion space, to provide a knowledge base that will help build understanding around how to accelerate the poor’s access to high-quality financial services. Editor: Sumita Kale can be contacted at email@example.com. 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