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Harun R Khan: Issues and challenges in financial inclusion policies,
partnerships, processes & products
Keynote address by Mr Harun R Khan, Deputy Governor of the Reserve Bank of India, at the
symposium on "Financial inclusion in Indian Economy", organised by the Indian Institute of
Public Administration, Bhubaneswar, 30 June 2012.
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The speaker acknowledges the contribution of Rekha Mishra, Sushma Vij, Pankaj Ekka, Pallavi Chavan and
Surajit Bose of Reserve Bank of India.
It is a great pleasure to be in the midst of such a galaxy of eminent civil servants, serving and
retired, academics and corporate citizens associated with the Indian Institute of Public
Administration (IIPA). IIPA was established in the year 1954 to undertake academic activities
to enhance the leadership qualities and managerial capabilities. The idea is to build capacity
for good governance and create mechanism for efficient delivery of public goods and welfare
supporting benefits to the people, particularly the disadvantaged groups. And this is exactly
what we need to do for the success of financial inclusion in a framework of appropriate
policies, supportive partnerships, efficient processes and suitable products. As we all know,
financial inclusion has attained policy criticality to ensure growth with equity. In sync with the
objective of inclusive growth, the Reserve Bank of India, the Government and civil society in
India has been according high priority to the agenda of financial inclusion over the last few
years. Let me begin with the importance of financial inclusion in the context of Indian
economy in general and the financial system in particular.
Importance of financial inclusion
In majority of the developing countries, access to finance is now being perceived as a public
good, which is as important and basic as access, say, to safe water or primary education.
A question that arises is whether financial inclusion can be interpreted as a public good.
A good is considered a public good if it meets the conditions of "non-rivalness" in
consumption and non-excludability. I am sure you would agree that financial inclusion meets
the two criteria. One of the important effects of financial inclusion is that the entire national
financial system benefits by greater inclusion, especially when promoted in the wider context
of economic inclusion. The concept of financial inclusion has a special significance for a
growing economy like India as bringing the large segment of the productive sectors of the
economy under formal financial network could unleash their creative capacities besides
augmenting domestic demand on a sustainable basis driven by income and consumption
growth from such sectors. Financial inclusion efforts do have multiplier effect on the economy
as a whole through higher savings pooled from the vast segment of the bottom of the
pyramid (BoP) population by providing access to formal savings arrangement resulting in
expansion in credit and investment by banks. Deeper engagements of the
BoP/under-banked population in the economy through the formal financial system could lead
to improvement of their financial conditions and living standards, enabling them to create
financial assets, generate income and build resilience to meet macro-economic and
livelihood shocks. Government also immensely benefits by way of efficient and leakage-proof
transfer of vast amounts of welfare benefits to the targeted, disadvantaged groups of
population.
Concerns relating to AML/CFT get addressed through financial inclusion efforts without
compromising the basic KYC requirements. From the perspective of the Reserve Bank of
India, greater participation by all the economic agents in the financial system makes
monetary policy more effective and, thereby, enhancing the prospects of non-inflationary
growth. It also reduces reliance on the informal sector which tends to dent the impact of
monetary policy decisions.
Financial Inclusion: India's position compared with other countries
The extent of financial exclusion in India is found to be higher as compared with many
developed and some of the major emerging economies. The wide extent of financial
exclusion in India is visible in the form of high population per bank branch and low proportion
of the population having access to basic financial services like savings accounts, credit
facilities, credit and debit cards. The following table summarises India's performance in the
area of financial inclusion as compared with other developing as well as developed countries
(Table 1).
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Table 1: Select indicators of Financial Inclusion Cross Country Analysis
Country Number of Number of Bank Bank
Branches ATMs credit deposits
(per 0.1 million adults) (as per cent of GDP)
India 10.91 5.44 43.62* 60.11*
Austria* 11.81 48.16 35.26 32.57
Brazil 13.76 120.62 29.04 47.51
France 43.11 110.07 56.03 39.15
Mexico 15.22 47.28 16.19 20.91
UK* 25.51 64.58 467.97 427.49
United States 35.74 173.75* 46.04 53.14
Korea 18.63 250.29* 84.17 74.51
Afghanistan 2.25 0.50 11.95 21.4
Philippines 7.69 14.88 27.57 53.02
Source: World Bank, Financial Access Survey
Note: Data pertains to 2010. For rows/cells indicated as "*" data pertains to 2009.
As at end of 2010-11, the number of ATMs per 0.1 million stood at 6.3, bank credit
and bank deposit as a percentage of GDP stood at 50.10% and 66.10%
respectively.
Measuring financial inclusion
One of the measures of the level of financial inclusion is the Financial Inclusion Index. This
index is based on three basic dimensions of an inclusive financial system -banking
penetration, availability of the banking services and usage of the banking system.1 Banking
penetration is definitely the most critical parameter for measuring the depth financial
inclusion and is measured as a ratio of bank accounts to the total population. The second
parameter, availability of banking services provides an indication to the number of bank
outlets available per 1000 people to deliver financial services. The bank outlets may include
the brick and mortar branches, ATMs, business correspondents, etc. The third parameter
seeks to determine the usage of banking services going beyond mere opening of accounts.
Therefore, this is evaluated on the basis of outstanding deposits and credits. Accordingly, the
volume of outstanding deposit and credit as proportion on the net district domestic product is
used for measuring this dimension. According to the value of the index, Indian States can be
classified into three categories, i.e., states having high, low and medium extent of financial
exclusion. According to the empirical results, Kerala, Maharashtra and Karnataka are some
of the States having wider extent of financial inclusion as compared to other States of India.
Tamil Nadu, Punjab, Andhra Pradesh, Himachal Pradesh, Sikkim and Haryana fall under the
category of medium financial exclusion.
The extent of financial exclusion is found to be significantly low in North-Eastern and Eastern
i.e.,
States, Assam, Nagaland, Manipur, Odisha, Bihar, West Bengal, etc. Though the index
and findings of the report in reference are based on empirical study, they are possibly not
way off the ground realities.
Indian approach to financial inclusion
Financial inclusion can be construed in two ways. One is countering the exclusion from the
payment system that is, not having an access to a bank account. The second is countering
the exclusion from the formal financial services. The Indian approach in recent years has
been to establish the basic right of every person to have access to a bank account. This
approach is based on the fundamental principle of 5A's of ensuring Adequacy and
Availability of financial services to all sections of the society through the formal financial
system covering savings, credit, remittance, insurance, etc. and, at the same time, increasing
Awareness of such services and ensuring Affordability and Accessibility of the appropriate
financial products through a combination of conventional and alternative delivery channels
and technology enabled services and processes. Against this background, we can see large
variance in the level of financial inclusion across the country. The Reserve Bank has
therefore been pursuing a multi-pronged strategy for enhancing the outreach of financial
services including the delivery channels across all sections. The entire spectrum of the
financial system which comprises commercial banks, regional rural banks (RRBs), urban
co-operative banks (UCBs), primary agricultural credit societies (PACS) and post offices is,
therefore, geared for this purpose. Besides, self-help groups (SHGs) and Micro Finance
Institutions (MFIs) also meet the financial service requirements of the poorer segments.
Furthermore, banks have been encouraged to use a combination of strategies which include
provision of new products and relaxation of processes coupled with leveraging ICT for
efficient handling of low ticket large volume transactions. Broadly, the policy approach
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adapted to financial inclusion in India can be divided in two categories the minimalist
approach and the expanded approach.
The minimalist approach for financial inclusion focuses on the provision of a bouquet of basic
financial products and services, including thrift, credit, remittance and payment facilities for
the vulnerable and financially excluded sections. Banks have been urged to include products,
such as, savings cum overdraft product, remittance product, pure savings product and
entrepreneurial credit product while pursuing the objective of greater inclusion. The expanded
approach for financial inclusion, on the other hand, focuses not only on the provision of the
basic banking products but also other important ancillary financial products, such as, general
insurance, health insurance, micro-pension, mutual fund, finance for affordable housing, etc.
The expanded bouquet of financial inclusion would also entail focus on consumer protection
and education, particularly financial literacy for the new entrants to the formal financial
system. Sustainable and viable financial inclusion, which would be a win-win proposition for
both those who supply financial services and those who demand the same, would also mean
that financial inclusion in a sense forms a part of the broader context of economic inclusion.
Against this background, I shall now touch upon some of the major issues and challenges in
relation to partnerships, processes, policies and products involved in Indian efforts at
financial inclusion in the recent years.
SHG-Bank Linkage Programme
In the last two decades, the major institutional innovation in India for expanding financial
system access and usage for the poor and marginalized sections of the population has been
the SHG-Bank Linkage Programme (SBLP). This was an outcome of pilot projects during the
1980s for improving access of rural poor to formal institutional financial services. For the
banks, it was a way of reducing their transaction costs by dealing with groups of people
rather than individuals, reducing the credit risks through peer pressure and making people
save. Subsequently in the year 1992, the National Bank for Agriculture and Rural
Development (NABARD) started a pilot project of linking SHGs with branches of banks
across the country. The project provided a cost-effective SBLP model for providing financial
services to the underserved poor. Being a "savings-first, credit later" model, credit discipline
became a norm for SHGs and "social collateral" made them bankable. The model was also
successful in providing solution to the twin problems faced by banks, i.e., low recovery of
loans in rural areas and high transaction costs in dealing with small borrowers at frequent
intervals. One of the major positive impacts of the SBLP was social and economic
empowerment of the membership.
Despite the noteworthy accomplishments of SHGs (Table 2), certain issues, such as,
inadequate outreach in many regions, delays in opening of SHG accounts and disbursement
of loans, impounding of savings by banks as collateral, non-approval of repeat loans by
banks even when the first loan was repaid promptly, multiple membership, borrowings by
SHG members within and outside SHGs, adverse consequences of unhealthy competition
between NGO promoted SHGs and Government promoted/subsidy oriented SHGs and
limited banker interface and monitoring continued to affect the programme in many areas.
While the basic tenets of the SHGs being savings led credit product remain true even today,
recent developments have given rise to the need for crucial changes in the approach and
design of SBLP to make it more flexible and client friendly. The revised NABARD guidelines,
popularly known as SHG2 (version 2), have sought to address some of the shortcomings of
the earlier version. The major features of SHG2 are : (a) more focus on voluntary savings; (b)
cash credit system of lending over three to five years cycle to minimize the problem of
inadequate finance and non-availability of repeat loans; (c) enabling creation of Joint Liability
Groups (JLGs) within SHGs to scale up economic activities by more entrepreneurial
members of the group; (d) improving risk mitigation systems by bringing in third party audit;
(e) building second tier institutions; (f) strengthening the self-monitoring mechanism and (g)
meeting the training/capacity building requirements of the SHGs.
Table 2: SHG-Bank Linkage Programme
(numbers in millions)
Particulars 2009-10 2010-11
Total number of SHGs savings linked with banks 6.95 7.46
Total savings amount of SHGs with banks
₹61.98 billion ₹70.16 billion
Total number of SHG credit linked during the year 1.58 1.19
Total amount of loans disbursed to SHGs during the year
₹144.53 billion ₹145.47 billion
Total number of SHGs having loans outstanding 4.85 4.78
Total amount of loans outstanding against SHGs
₹280.38 billion ₹312.21 billion
Estimated number of families covered 97.00 97.00
Source: Status of Micro Finance in India, NABARD
Microfinance Institutions (MFIs)
Given the limitation of scaling up SHG movement in the absence of human and financial
resources and in the absence of deeper geographical penetration of formal banking system
due to several demand and supply side factors, other intermediaries with a reach to the
excluded segments of the society were required to augment the efforts. Semi-formal financial
sector service providers like the MFIs fill this niche space and, to that extent, play a critical
role in the financial inclusion. The MFIs have served the underserved/un-served populace in
the last few years and improved access to credit though there have been quite a few
debatable issues on the style of corporate governance and ethics of conducting business on
part of some of the MFIs. Despite these debates, it has been realized that the MFIs do help
in financial deepening and can remain an important segment of the Indian financial market
keeping in view the present level of penetration of the banking system. Many of the MFIs
have therefor ben conduits of credit flows from the banks whose capacities for last mile reach
are constrained under various forms of MFI-bank partnership model.
The conceptual framework underlying MFIs, however, requires a change, more so in the
context of serious challenges the sector faces in post Andhra crisis phase. These institutions
have to revisit their business models to support the income earning ability of the borrowers
and, at the same time, themselves remain economically viable. MFIs will have to work hard
in pursuit of transparency and responsible finance, shaking off the perception that their motto
is profiteering at the cost of the poor but not profitability for sustainable and viable growth.
MFIs will also have to take initiatives to retool the product redesign for garnering new
customers and acquiring more share of the market. At the same time they need to
re-engineer the customer responsive processes so as to create a favourable climate for
doing business. MFIs will have to revisit the mission and business strategy and reinvent the
sector to remain relevant in the system. Creation of a new category of MFI-NBFC under the
framework prescribed by the Malegam Committee, more nuanced appreciation by the
financing banks of the difficulties being faced by some of the MFIs despite having
responsible and sustainable business model, greater sense of responsibility in the sector as
evident from the code of conduct being voluntarily accepted by the MFIs and the
Microfinance legislation which is in the offing, possibly hold key to future success and
sustainability of the MFIs.
Business Correspondents (BCs)
Due to the constraints involved in going for a full-fledged brick & mortar branch model, the
Reserve Bank, based on the recommendations of the Internal Group on Rural Credit and
Microfinance, adopted the ICT based agent bank model through Business
Facilitators (BFs)/Business Correspondents (BCs) for ensuring door step delivery of financial
products and services. In January 2006, the Reserve Bank permitted banks to engage BFs
and BCs like NGOs/MFIs set up under the Societies/Trust Acts, Section 25 companies, post
offices, etc. as intermediaries for providing financial and banking services, thus, addressing
the proverbial last mile problem. The approach adopted has been technology and delivery
model neutral. Initially, the BC retail outlets were being created by the banks themselves.
Over the last few years, however, a number of innovations, in particular with regard to the
universe of entities that can work as agents of banks (individuals like retired
bank/government employees, kirana/fair price shops, insurance agents, operators of
common service centres, etc.), have been brought in under the BC model so as to scale up
the financial inclusion drive in a sustainable manner, latest being the use of corporate entities
as BCs of banks. The adoption of corporate entities as BCs has, however, raised a number
of issues both for the partner banks and also for the regulators. On one hand, the corporates
with a widespread retail network bring in larger resources, higher organizational strength and
financial backing needed for a large network of BCs besides providing financial security to
the bank. The outlets of corporates being familiar to the local populace are able to tap the
benefit of "one of us".
On the other hand, the challenges arise in the event of failure of a large corporate BC as this
would translate into a reputation risk to the banks and endanger their substantive business.
From the perspective of a regulator, the major cause of concern is that banking and financial
services should not be thrust on the uninformed customers. Corporates in the interest of
revenue maximisation may use their resources and network to push banking and financial
products, unmindful of whether they are suitable or appropriate for the targeted persons.
There is also the issue of lack of grass-root level of experience of rural India and possibly
lack of commitment to financial inclusion per se on the part of large corporates/technology
service providers.
Business Correspondents bridge the connectivity gap between the service seekers, i.e.,
under-served populace, and the service providers, i.e., the banks. Banks, being regulated
entities, are governed by prudential regulations and supervisory rules, e.g. adherence to
KYC/AML, consumer protection laws, etc. In the BC-oriented model of financial inclusion,
pursuit of higher volume of business for revenue maximization may dilute prudential
requirements exposing the banks concerned to whole host of risks like reputation risk,
strategic risk, compliance risk, operations risk besides the risk of contaminated asset
portfolio. In case of a cluster approach where a common BC could for many banks then there
could be issue of concentration risk. These risks may get further aggravated if the monitoring
systems of the banks are not strong enough to detect these red flags. Given the lack of
financial strength of the BCs, risk of inability to fulfil commitments arising due to shortfalls in
cash due to frauds, errors, etc. is high. Banks engaging BCs may, therefore, have to put in
place risk mitigants and adequate checks and balances to prevent such incidents and also
ensure proper customer redressal. The sponsoring banks are expected to lay down
processes, procedures and practices for the BCs but there still exists a risk that some agents
may end up pursuing activities or adopting processes which are inconsistent with the overall
strategic goals of the bank concerned. Further, banks and their BCs also exposed to huge
risk of cash management, particularly as cash dependence of the economy continues to be
very high. There is also huge requirement of hand-holding and training of the BCs to
enhance the trust level of the end customers. In this context, the current thinking of having
lean, brick and mortar outfits of the banks (e.g. ultra small branches) to provide support to
and supervise work of certain number of BCs appears to be a step in right direction. The
success of BC model also hinges on adoption of technology, which in turn, is dependent on
the degree of compatibility and integration of technology being used by the banks and their
BCs. Lack of integration of technology and processes may lead to delay in submission or
submission of accurate information to the regulators or generating MIS for the internal use by
the banks. There is a view that banks could also have their in-house BC outfits in the form of
separate trusts/subsidiaries with separate recruitment and remuneration structure but under
closer supervisory control. This idea is worth a trial.
Viability of the BC model in general has remained a critical issue for which the model has not
taken off as expected. There is a mismatch between the revenues earned and costs incurred
while undertaking the BC operations, resulting in non-viability of the model. Hence, attempts
to employ large BCs under competitive L-1 (lowest one) bidding system without ensuring
their financial and technical capabilities and without assessing the performance of a large
number of existing BCs who are yet to become viable, run the risk of creating huge
uncertainty for the whole system of Bank-BC partnership model. Many of the BCs became
non-operational due to lack of timely payments by banks or inadequate commission paid by
banks. It is extremely critical to ensure that the remuneration paid to the BCs is adequate to
keep the model economically viable and attractive. A combination of fixed and variable pay
would encourage BCs to strive harder for bringing in more business for the bank. Under the
circumstances, it is imperative that the Bank-BC partnership model is structured
appropriately, supervised closely by the banks/regulators and scaled up in a calibrated
manner after taking into account the problems encountered at the grass-root level. If this is
not done, there is a huge risk of the entire model being discredited with all its adverse
consequences for the financial inclusion efforts.
Having discussed the three important partnerships in the pursuit of financial inclusion, I
would now turn towards products and technology enabled processes in the next part of my
address.
Product initiatives
Reserve Bank of India has been providing policy impetus for introduction of new products
and innovative intermediary channels to enable sustainable and meaningful financial
inclusion. The "no-frills account" (NFA) has been one of the landmark financial products
which allowed financially excluded individuals to access banking services for the purpose of
savings and also had credit feature in the form of overdraft facility. To ensure that more and
more people come within the banking fold and realizing that there is some stigma attached to
the NFA, it is now felt that banks should offer all the customers a "basic savings deposit
account" with certain minimum common facilities and without the requirement of minimum
balance. The services provided in this account should include deposit and withdrawal of cash
at the bank branches as well as ATMs, receipt/credit of money through electronic payment
channels or by means of deposit/collection of cheques drawn by Central/State Government
agencies and departments. The Reserve Bank is currently in the process of issuing
guidelines on opening of such basic savings bank deposit account by banks. Another
innovative product offered by the banking system is the General Credit Cards. This was,
however, preceded by Kisan Credit Cards which are likely to undergo major transformation
when they become smart-card based cards. Innovation of products for the specific needs of
the poor is necessary for achieving the ultimate objective of inclusive growth. A bouquet of
products may be offered through the BCs instead of a single product to make the financial
inclusion efforts viable.
Rural customers are looking upon banks for insurance products in view of their confidence in
the banking system. Insurance is a useful way for households to protect themselves from
financial shocks and other adverse events. Unfortunately, although a range of insurance
products is available, very few of them have migrated successfully downmarket to serve the
poor, whose need for such protection is arguably more acute. One plausible reason holding
back the diffusion of micro-insurance is transaction costs, i.e., the cost of selling and
underwriting insurance and evaluation of claims in a timely and efficient manner. Using
traditional channels and processes, insurance companies simply cannot write policies with
values below a certain floor without pricing them unrealistically. Moreover, micro-insurance is
a low-cost, high-volume business; therefore, scale of economy is crucial for success.
Currently, only insurance company agents, banks, microfinance institutions,
non-governmental organizations and SHGs are allowed to sell micro-insurance policies,
while a BC is authorized to offer banking services, such as, cash transactions to customers.
The BC network could be tapped to increase penetration of micro-insurance and take
insurance to the uninsured segments of the country. The concern, however, remains on
account of the possibility of mis-selling.
Tapping technology platforms
It has been observed that the product initiatives are usually scaled down versions of the
existing products. To enable a successful financial inclusion, innovation of products for the
specific needs of the poor is not only necessary but also an essential condition. Today,
banks can provide a bouquet of financial services through the various networks of agents
and branches by leveraging and fine tuning technology platforms. Technology holds the key
to providing models for efficient delivery of small value transactions in large volumes while
reaping economies of scale. The implementation of such effective, scalable and
platform-independent technology will help drive down the cost of providing banking services
to the poor. Further, technology helps in spreading financial literacy both as a delivery
channel and as an intrinsic part of the learning process (e.g., instructional computer). Today,
both the service providers and service seekers have a number of technology options, such
as, smart cards, micro-ATMs, ATMs, mobile technology, Aadhaar Enabled Payment Systems
(AEPS), etc. to choose from to provide/seek financial services irrespective of their
geographic locations.
Mobile banking
Mobile banking transactions have been defined as customers undertaking banking
transactions using mobile phones involving credit/debit to their accounts. With the rapid
growth in the number of mobile phone subscribers in India, banks in collaboration with
telecom companies are seeking to develop an alternate channel of delivery of banking
services. Keeping in view the issues relating to diversity of network providers in India,
remittance centric approach of such model and KYC related concerns, the Reserve Bank has
advocated bank-led mobile banking model and issued operative guidelines to banks for
effecting mobile based banking transactions. As on May 31, 2012, the Reserve Bank had
permitted 69 banks to provide mobile banking services to their customers. During May 2012,
about 3.34 million transactions amounting to ₹2.86 billion as against 1.28 million transactions
amounting to ₹0.91 billion in May 2011 were transacted through this channel. Even though
the value and volume are increasing on month on month basis, the growth rate is low when
compared with the number of bank accounts and the vast mobile subscriber base of more
than 900 million. This indicates that banks are yet to fully exploit this technology even for
their existing customers. While the Reserve Bank has provided the policy framework for a
collaborative relationship between the banks and mobile network operators, the results of
this collaboration are not yet fully visible. Some of the likely reasons which have been
flagged relate to ownership of the customer, control of transactions and developing an
appropriate revenue sharing model. The need of the hour, therefore, is that the banks and
the mobile operators reach a workable understanding while protecting their mutual interests.
Such an approach would result in a "win-win" situation for both and, more importantly, serve
the larger cause of public good of financial inclusion.
The Inter Bank Mobile Payment Service (IMPS), an instantaneous 24x7 electronic funds
transfer system has been developed by the National Payment Corporation of India (NPCI).
Despite tremendous potential of the product, the volumes are low, probably due to the
reluctance of the telecom companies to offer the common Unstructured Supplementary
Service Data (USSD) platform. The USSD platform is menu driven and can be invoked by
dialling a number. Its main advantage is that even users with low-cost handsets can perform
their banking transactions through the mobile phone. It is, however, gathered that the
telecom companies prefer negotiating with individual banks on the issue rather than with
NPCI in providing such a common USSD platform. Telecom companies, regulatory
authorities, NPCI and all the stakeholders need to work together to draw up a roadmap for
increasing the IMPS supported mobile banking transactions.
Mobile based remittance services
Many countries have experimented with mobile based remittance services for reaching the
unbanked population. The success story cited often is that of M-Pesa in Kenya. Several
mobile based remittance services are operating in a few countries, e.g. Tigo Cash in
Paraguay, Pago Movi in Peru, Nipper in Mexico and Oi in Brazil. The common thread running
through all these examples have been the successful deployment of technology to service
low income, financially excluded households. Most schemes use mobile phones for providing
financial service platforms, others use point-of-sale (PoS) devices in conjunction with
magnetic stripe cards (mostly in Latin America), some use both mobile phones and
point-of-sale devices (e.g. WIZZIT in South Africa and Smart in the Philippines). In Indian
context, among others, money transfers through mobile wallets (upto ₹50,000 for the
present) leveraging National Electronic Fund Transfer (NEFT) platform of RBI being
promoted by a few telecom companies hold a great promise for facilitating small value
remittances.
Aadhaar Enabled Payment Systems (AEPS)
The AEPS architecture designed by Unique Identification Authority of India (UIDAI) in
collaboration with the NPCI is a platform which banks can leverage upon for expanding their
financial inclusion initiatives. The basic premise of AEPS is that one BC Customer Service
Point (CSP) will have the ability to service customers of many banks based on the unique
bio-metric identification data stored in the Aadhaar database. The AEPS platform is expected
to empower a bank customer to use Aadhaar as his/her identity to access the respective
Aadhaar enabled bank account and perform basic banking transactions like balance enquiry,
cash withdrawal and deposit through the BC. A pilot scheme in four districts of Jharkhand
state is currently being carried out under which MGNREGA wages to labourers are credited
to their Aadhaar enabled bank accounts. The beneficiaries withdraw the amounts through
micro-ATMs which authenticate their Aadhaar number. There is a need to scale this up
across the country.
Issues and challenges in ICT based financial inclusion
Use of technology
For the success of the ICT-based models, resolving technology related issues is the key.
One of the major