PhonePe's data dashboard shows the way; Will NPCI and RBI oblige too?

September 2021


India is going through a V-shaped recovery, as the impact of the second wave recedes. However, growth numbers, especially the latest official 20.1% year on year estimate for April-June 2021, must be treated with caution, as the unusual circumstances of a national lockdown last year and severe health crisis this April-May must be factored in. This year’s kharif sowing was hit by patchy rains in August, though the forecast for September is positive. While mobility recovery has been much faster this time than after the first wave, and indicators like GST collection, E-way bills, PMI Markit indices, electricity consumption etc. show upward movement, vehicle sales are still to reach pre-pandemic levels. CMIE reported a slight rise in the unemployment rate in August, halting the downward trend since the May peak. Though uncertainty around a possible third wave still restrains demand, we can expect more stability as vaccination coverage improves this year.

Meanwhile there has been a veritable revolution in India’s digital payments architecture with the launch of the Account Aggregator platform – what has been termed the UPI moment in lending. Sahil Kini and Neeti Bhatt explain how this move will democratize credit by removing the trust deficit between customers and financial service providers. Along with the recent amendments in the Factoring Bill, this platform has the potential to significantly boost MSME access to finance, as V. Anantha Nageswaran has pointed out.

Last month the RBI released the Financial Inclusion Index which aimed at capturing the extent of financial inclusion in India. The annual FI-Index for the period ending March 2021 is 53.9 based on 97 indicators across three broad parameters - Access Usage and Quality. This is an excellent initiative, as at a conceptual level, this index aims to capture much more than the single table measuring the progress of financial inclusion in RBI’s Annual Report. However, the two numbers released leaves us asking for more, much more.

From ICFI we have been making the case for improved metrics to track financial inclusion beyond the number of bank accounts, number of business correspondents etc. to include data on usage of accounts and the quality of service/transactions (See ICFI Policy Brief March 2017). With the phenomenal success in PMJDY covering access to banking, clearly it is time to look at usage and quality of banking services. It would therefore be extremely useful to know the progress within each category since 2017. Also we do need a breakup across all categories for gender at the district level, which will enable focusing efforts towards reducing the gender gap in inclusion. We look forward to more detailed notes and data from the RBI on the index particulars.

Talking of data, PhonePe has come out with an exciting report Pulse, which has fascinating insights into the trends in adoption of digital payments over the past five years, along with an interactive dashboard showing regional and category specific data. The Fun Facts section of their website is a must read. Naturally this is based on PhonePe customers and transactions, and we hope that NPCI takes the cue and brings out anonymized, granular data for India, for all providers!

Our latest ICFI White Paper on Direct Benefit Transfers in India, authored by Sumita Kale, Laveesh Bhandari and V. Anantha Nageswaran, looks at the current status and the challenges that remain to be addressed in two buckets – a) the larger issue of identifying eligible beneficiaries and ensuring enrolment under the scheme, and b) the compliance and operational issues faced by beneficiaries after enrolment. The paper sets out a possible four-pronged framework that can take the DBT programme to a higher level of efficiency for a greater impact on welfare – a strong grievance redressal system, an effective monitoring and oversight mechanism, better coordination and interaction amongst the multiple stakeholders and improving the service quality and viability of the agent network at the last mile.

Do follow our Indicus Centre for Financial Inclusion page on Linkedin to continue the conversation on financial inclusion in India.

Some Other Highlights

•     Dilip Asbe, CEO, NPCI, gives a candid interview to ET on the need to tokenize all payment mechanisms, regardless of high initial costs, to mitigate risk from cyber-attacks.
•    An interview with Shri Shaktikanta Das, Governor, Reserve Bank of India on CNBC Asia, August 26, 2021, covering India’s economic outlook.
•    The RBI released the Report of the Expert Committee on Urban Co-operative Banks, with recommendations on the functioning, regulations, and supervision of UCBs.
•     UPI Autopay feature is gaining traction, with nearly two million mandates a month registered.
•    The RBI has included street vendors in Tier-1 and Tier-2 cities under the PM SVANidhi Scheme as beneficiaries under the Payments Infrastructure Development Fund (PIDF) Scheme.
•    Graham Wright, Samveet Sahoo and Anik Muntasir Chowdhury of MicroSave have an interesting blog post on how Bangladeshi MFIs stay resilient through crises.
•    A policy brief by Madhu Srinivas and Deepti George from Dvara Research evaluates public MSME Credit Guarantee Schemes in India.
•    The EIU report on the digital payments revolution across the world put India as the leader in real-time payments market, followed by China and South Korea.

Errata: In our August newsmailer, the sentence “A CGD policy paper looks at the implementation of the Pradhan Mantri Garib Kalyan Yojana during the lockdown last year and highlights the importance of beneficiary-centricity in the delivery.”, should have read “A CGD and MicroSave policy paper looks at the implementation of the Pradhan Mantri Garib Kalyan Yojana during the lockdown last year and highlights the importance of beneficiary-centricity in the delivery.” The correction has been made online and the omission of MicroSave’s authorship is deeply regretted.


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. 4thJanuary 2019

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