Interactive Discussion on "Digital Financial Inclusion in India"

Financial inclusion, broadly defined as the process of ensuring access to financial services and timely and adequate credit needed by vulnerable groups such as weaker sections and low income groups at an affordable cost, has emerged as a promising pathway for empowering individuals and families to cultivate economic opportunities.

Most poor households live in a physical cash economy, where they store and transfer value through physical assets, such as cash, jewelry, or livestock. The poor’s immersion in physical cash makes it expensive to be poor.

These forms of savings earn no interest and can actually lose value over time.
(To send money to family, the poor must rely on informal payment couriers or friends who carry cash by bus, which is expensive, insecure, and slow. To borrow money in an emergency, they must turn to moneylenders who charge notoriously high interest rates).

Above all, this “cash-digital divide” drives a wedge between poor households and the formal economy by making it costly for banks, insurance companies, utility companies, and other institutions to transact with them.

Digital accounts help fix these problems. Farmers can save their harvest proceeds in interest-bearing accounts outside the home. Migrant laborers can send money back home with the click of a button. Bank accounts also help poor people join the mainstream economy by making it easier to exchange payments with financial institutions, electricity companies, government agencies, and other service providers.

In this context, the Governance & Public Policy Initiative-Centre for Policy Research (GPPI-CPR) organized an interactive discussion with Members of Parliament on August 5, 2014. The meeting was attended by 14 current and former MPs.  

The discussion focused on – The need for digital financial inclusion: why is it important? Welfare impacts of digital financial inclusion and the pathway; Regulatory and policy barriers; & Success stories from other developing countries.

The discussion was co-chaired by Mr. Prem Das Rai (Sikkim Democratic Front) and Mr. Shivkumar Udasi (Bharatiya Janata Party) both of whom have earlier been on the Parliamentary Standing Committee on Finance.

The presentations by Mr. Kabir Kumar, Microfinance Specialist who helped launch CGAP's program on technology-enabled business models for financial services, provided a comprehensive overview of digital finance and a sense of what is happening in different countries and what are the public policy pathways to promote digital finance.

Mr. Anand Sahasranaman, Executive Director of the IFMR Finance Foundation, a policy research institution focused on issues of financial system design such as customer protection and institutional design of the financial system, in his presentation, demonstrated the digital financial landscape in India and provided an overview of where things are in India and the challenges, backed by some case studies.

The presentations where followed by an intensive discussion, with participants taking the opportunity to highlight important issues as well as seek clarification.
 
GALLERY 


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