India is now ahead of China in financial inclusion metrics, mobile and internet banking transactions increased to 13,615 per 1,000 adults in 2020 from 183 in 2015 and the number of bank branches reached 14.7 per 1 lakh adults in 2020 from 13.6 in 2015, which is higher than in Germany, China and South Africa, as per a report.
The report authored by Soumya Kanti Ghosh, SBI’s Group Chief Economic Advisor, states that financial inclusion policies have a multiplier effect on economic growth, reducing poverty and income inequality, while also being conducive for financial stability.
“India has stolen a march in financial inclusion since 2014 with the introduction of PMJDY accounts, enabled by a robust digital infrastructure and careful recalibration of bank branches and thereby using the BC model judiciously for furthering financial inclusion. Such financial inclusion has also been enabled by the use of digital payments as between 2015 and 2020, mobile and internet banking transactions per 1,000 adults increased to 13,615 in 2019 from 183 in 2015,” the report said.
The report said that the research also shows that the states with higher Pradhan Mantri Jan-Dhan Yojana accounts balances have seen a perceptible decline in crime.
It is also observed that in the states where more PMJDY accounts have been opened, there has been a statistically significant and economically meaningful decline in the consumption of intoxicants such as alcohol and tobacco products.
The report highlighted that the Banking Correspondent (BC) model in India is enabled to provide a defined range of banking services at a low cost and is therefore helpful in promoting financial inclusion.
“The new Branch Authorization Policy of 2017, which recognizes BCs that provide banking services for a minimum of 4 hours per day and at least 5 days a week as banking outlets has progressively prevented the need to set up brick and mortar branches. For example, the number of ‘Banking Outlets in Villages – BCs’ has increased from 34,174 in March 2010 to 12.4 lakhs in December 2020. Such progress reflects the effective reach of banking services through branchless banking,” the report said.