World Bank praises India's financial inclusion in G20 document

A G-20 policy document prepared by the World Bank lauds India's financial inclusion through digital public infrastructure.

The document released by the World Bank on 8 September 2023 said that India has achieved the target of financial inclusion in just six years, which could have taken at least 47 long years to achieve.

• The report is a Global Partnership for Financial Inclusion (GPFI) document prepared by the World Bank with guidance from the G-20 India Presidency represented by the Ministry of Finance and the Reserve Bank of India (RBI) as the implementing partner of the GPFI.

Various aspects of the G-20 policy document prepared by the World Bank can be seen in the following points:

• Without digital payments infrastructure (DPI) like Jan Dhan bank accounts, Aadhaar and Mobile phones (JAM trinity), it could take 47 years for India to achieve the financial inclusion rate of 80%, which the country has achieved in just six years.
• The World Bank document also notes that the total value of UPI transactions was about 50% of India's nominal GDP in the last financial year.
• Using DPI, banks' cost of onboarding customers in India reduced from $23 to $0.1.
• By March 2022, India achieved total savings of $33 billion due to Direct Benefit Transfer (DBT), which is equivalent to about 1.14% of GDP.
• The implementation of DPIs like Aadhaar along with Jan Dhan bank accounts and Mobile phones have played a significant role in increasing the ownership of transaction accounts from about one-fourth of adults in 2008 to over 80 per cent now.
• The number of Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts to triple from 147.2 million in March 2015 to 462 million by June 2022. Of these, 56% i.e. more than 260 million accounts are owned by women.
• The report mentions steps taken by the Narendra Modi-led government such as interventions to create a more enabling legal and regulatory framework, national policies to expand account ownership and Aadhaar for identity verification.
• The UPI platform has gained significant popularity in India; In May 2023 alone, more than 9.41 billion transactions worth approximately Rs 14.89 trillion were made.
• For the financial year 2022-23, the total value of UPI transactions was about 50% of India's nominal GDP.
• According to industry estimates, the use of DPI has reduced banks' cost of onboarding customers in India from $23 to $0.1.
• India Stack has digitalized and simplified KYC processes, thereby reducing costs; The World Bank report mentions that banks using e-KYC have reduced their compliance costs from $0.12 to $0.06.