Paper
Saddling Up a Dead Horse – Financial Inclusion in India
Is there value in pursuing a distributed banking strategy instead of a financial inclusion strategy?
2 pages
MicroSave's India Focus Note 95 highlights the disadvantages of no-frills accounts (NFA) as a means of financial inclusion in India. It recommends a change of perspective in which providers think of the business correspondent (BC) model as a distributed banking model rather than as a financial inclusion drive to meet regulatory compulsions or social objectives. The Note cites findings from various studies demonstrating that the NFA-focused approach to financial inclusion has so far been ineffectual. NFAs exclude innovators and early adopters. Recommendations include:
- Entire retail banking product suite should be made available over the BC platform;
- This needs to be seamlessly integrated with the banks core banking system to ensure that current customers can act as early adopters and opinion leaders;
- Need for product and channel innovations to suit specific needs of low income customers. This channel should be available to all so as to facilitate sustainability and gradual adoption;
- Financial inclusion will follow the establishment of an efficient, distributed banking channel.
About this Publication
Published
