Inclusive Financial Systems
Exclusion from the formal financial system keeps millions of Indians trapped in a cycle of poverty. While government programs have enabled easier access to financial services and have led to more than 80 percent of Indian adults having bank accounts, many people still rely heavily on informal methods such as moneylenders, cash storage, and payment couriers. These methods are not only insecure, expensive, and often inconvenient, but they can also exacerbate household financial crises.
India is one of the first countries to have implemented a large-scale ecosystem for digital financial inclusion. Digital financial services offer a safe way for India’s people to save and transfer money and make payments. The country’s digital ID system, interoperable payment systems, widespread mobile phone use, and supportive policies are enabling new banking models and services that empower consumers. Progress includes direct deposit of social welfare payments to poor households; digital tools for payments, savings, credit, insurance, and pensions; and better ways to reduce fraud and inefficiencies in anti-poverty programs.
We support efforts by the Indian government to digitize government payments to economically weaker households and encourage new digital financial models, and we work with private-sector providers to design digital financial products that meet the needs of these households. In particular, we focus on addressing market failures that restrict access to and the use of such products by poor and rural communities and women.
In supporting the country’s vision of digital financial inclusion, we share ideas with the government and other partners and provide technical assistance, contextual research, monitoring and evaluation, and best practices from within and outside India on how to provide digital infrastructure and an enabling environment that can best serve economically weaker segments of society and women sustainably. Our partners also provide rapid, field-level assessments of various government direct payment programs to respective departments. This assistance helps them diagnose emerging challenges and understand pathways to improving uptake and usage as new products and services become available.
We have supported the efforts of the government and financial service providers in several key areas:
- Supporting the central government’s efforts to ensure that states were prepared to implement the Digital Benefit Transfer (DBT) program
- Supporting NITI Aayog in identifying and addressing challenges with digital financial services in 27 aspirational districts where focused interventions were implemented
- Supporting the Centre for Digital Financial Inclusion (CDFI) in developing a platform for delivering welfare payments to 7.3 million lactating mothers
- Conducting research and surveys on multiple aspects of the implementation of digital financial services, to help providers tailor products and offerings
