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NITI Aayog’s Report for a Digitally Inclusive Bharat

NITI Aayog’s Report for a Digitally Inclusive Bharat

Why in news?

  • The NITI Aayog and Mastercard have released a report titled ‘Connected Commerce: Creating a Roadmap for a Digitally Inclusive Bharat’.
  • The report identifies challenges in accelerating Digital Financial Inclusion (DFI) in India and provides recommendations for making digital services accessible to its 1.3 billion citizens.

Challenges In Accelerating Digital Financial Inclusion

  • Digital Exclusions.
  • Unfamiliarity With DBT.
  • Breeding of Corruption.
  • Inadequate Rural Banking.
  • Unsuccessful Banking Correspondent Model.
  • Accountability Issue.

About Digitally Inclusive Bharat Report 2021

  • The report identifies challenges in accelerating digital financial inclusion in India and provides recommendations for making digital services accessible to its 1.3 billion citizens.
  • Based on five roundtable discussions held in October and November 2020, the report highlights key issues and opportunities, with inferences and recommendations on policy and capacity building across agriculture, small business (MSMEs), urban mobility and cyber security.
  • Experts from the government, banking sector, the financial regulator, fintech enterprises, and various ecosystem innovators participated in the discussions led by NITI Aayog and supported by Mastercard.
  • NITI Aayog was a knowledge partner in this endeavour.
  • The series of workshop sand the outcome report were curated by business advisory firm FTI Consulting.

Key recommendations

  • Strengthening the payment infrastructure to promote a level playing field for NBFCs and banks.
  • Digitizing registration and compliance processes and diversifying credit sources to enable growth opportunities for MSMEs.
  • Building information sharing systems,including a ‘fraud repository’, and ensuring that online digital commerce platforms carry warnings to alert consumers to the risk of frauds.
  • Enabling agricultural NBFCs to access low-cost capital and deploy a ‘phygital’ (physical + digital) model for achieving better long-term digital outcomes. Digitizing land records will also provide a major boost to the sector.
  • To make city transit seamlessly accessible to all with minimal crowding and queues, leveraging existing smartphones and contactless cards, and aim for an inclusive, interoperable, and fully open system such as that of the London ‘Tube’.

Digital Financial Inclusion Initiatives Taken in India

  • Enhancing Financial Literacy (Project Financial Literacy, Pocket money)
  • Jan Dhan-Aadhar-Mobile (JAM) Trinity
  • Expansion of Financial Services in Rural and Semi-Urban Areas (KCC, SHGs, ATMs)
  • Promotion of Secure Digital Payments (UPI, AEPS)

What Is Financial Inclusion?

  • It is the process of making financial services (savings, payments, credits, and insurance) accessible and affordable to all persons and businesses. It aims at addressing and bringing solutions to the issues that exclude people from participating in the financial sector.
  • The United Nations defines the goals of financial inclusion as follows
  • Financial and institutional sustainability to guarantee continuity and certainty of investment.
  • Access at a reasonable cost for all households to the entire range of financial services.
  • Competition to ensure choice and affordability for clients.
  • Efficient and safe institutions governed by proper regulation and performance standards.

Financial Inclusion In India

  • Despite India possessing economic growth higher than most developed countries in recent years, a majority of the country’s population still remains unbanked. Financial Inclusion refers to efforts for providing financial services and access to adequate credit at affordable costs to the excluded sections of the society and low-income households where traditional finance lacks its reach.
  • It became quite famous in the early 2000s when RBI highlighted the importance of financial inclusion in its annual policy statement.                NITI Aayog’s Report for a Digitally Inclusive Bharat
  • The basic financial services with the introduction of 3-year FIP (Financial Inclusion Plans) and PMJDY (Pradhan Mantri Jan Dhan Yojna) became accessible to the public. With the introduction of said services and measuring its progress, India has improved its score in Global Findex (GFX) from 35 in 2011 to 80 in 2017 but still struggling to achieve last-mile connectivity as concerted efforts are needed to deepen access from all the involved bodies.                    NITI Aayog’s Report for a Digitally Inclusive Bharat

Most Prominent Fintech Startups In India

  • India’s fintech segment has expanded by leaps and bounds, and the data around this industry points to a strong growth potential going forward.
  • The country’s adoption rate for fintech products stands at 59%, the second-highest pace worldwide, and significantly higher than the global average of 33%, as per analysis by DataLabs by Inc42.
  • Fintech startups have transformed commerce and payments in many ways in the India market.
  • Here are the top fintech startups in the country:
    • Paytm
    • Paytm Money
    • PhonePe
    • MobiKwik
    • PayU
    • ETMoney
    • PolicyBazaar
    • LendingKart
    • Freecharge
    • Mswipe
    • ezetap
    • LoanTap
    • Billdesk
    • FINO PayTech
    • Capital Float
    • Pine Labs

Collaboration Of Fintech Companies With Banks

  • India has many fintech companies that are constantly working towards simplifying the process of providing financial services to underserved people.
  • Many a time, poor people are exploited by moneylenders and they may end up paying hefty interest rates to them.                            NITI Aayog’s Report for a Digitally Inclusive Bharat
  • In order to save poor people from such high expenses banks, NBFCs can collaborate with fintech companies to come up with simpler and quicker banking processes.
  • The evolvement of such processes will help India towards financial inclusion.

 

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