Resetting the bar for financial inclusion
The month of April was the warmest on record for the world, the IMD has been talking of high number of heat wave days across large parts of India this year, and the World Meteorological Organisation’s recently released report on the “State of the Climate in Asia 2023” referenced the extreme weather and climate events that hit India last year. And yet, through the heat of the summer, the discourse in the long drawn out elections is missing a most critical issue- climate change, as Aditya Valiathan Pillai points out in his detailed piece. While relief to the vulnerable communities depends for a large part on government policy and direction, we already see examples on the ground of fintech bringing solutions for financial resilience against climate shocks. We also have Mahila Housing Trust working with insurance companies to bring out an innovative extreme heat insurance for workers in Ahmedabad, Vadodara and Surat. Researchers from CGAP are writing extensively on the need for a coordinated effort from macro to micro insurance solutions, as we move beyond access to banking towards financial resilience for targeted segments. Christoph Jungfleisch has pointers for financial service providers, reiterating that solutions will always be context-specific and there cannot be a one-size fits all model that can be scaled up. India is extremely well placed, given the foundations laid through PMJDY and DPI to take this forward and what we need now is just to reset the bar for our financial inclusion mission to give the right support to low-income households.
One oft-talked about barrier to raising usage of financial services in India has been the KYC challenge, as the financial services industry continues to shut customers out asking for documents in the name of compliance. When KYC compliance is onerous, it is in fact likely to result in financial exclusion. Monika Halan has written an excellent roundup of the issue, with two clear recommendations - a) look at a process such as the KYC validation system set up by SEBI to be extended for all financial services, with the aim of KYC portability and b) examine why the CKYC system failed, shut it down or at the very least fix accountability for future lessons.
Meanwhile India’s retail payment revolution has been hitting international headlines , see the latest coverage from CNN. Even as UPI payments are now going global, there is lots more to do within the country. The RBI is looking to increase domestic adoption of digital payments using the network of existing beneficiaries of DBT schemes. While this may seem like a low-hanging fruit, it will involve considerable effort - clearances for mobile banking by the RBI for rural and local banks, onboarding these banks on the NPCI systems, onboarding merchants in the rural value chain, popularising UPI123 which is for feature phones etc.
Interestingly, our newsmailer had pointed out last month that the market share cap rule for UPI needs to be relooked; and in what could only be said to be a coincidence, the NPCI is looking to defer the deadline by another two years.
We have two highlighted pieces for this month: a) Aditi Madan and Arjun Dubey have looked at the gendered impact of heatwaves and water scarcity in India, the increased economic vulnerability for women and young girls and b) a report by MySaltapp and RBIH where Shinjini Kumar, Shilpa Rao and others in the team have dived deep into the space of women entrepreneurs in India’s Tier2 and Tier3 towns.
Do read more news and views in our curated list below. Please also follow our Indicus Centre for Financial Inclusion page on Linkedin to continue the conversation.
Ivo Jeník, Louis De Koker and Mehmet Kerse, CGAP, have reviewed the proposed revision by FATF in the travel rule, from the lens of low-income customers and merchants.
Ravi Venkatesan, GAME - Global Alliance for Mass Entrepreneurship, writes on the opportunities that India's MSMEs should look at and with a mindset shift, can take on the world.
Yasmin Bin-Humam, Devika Verma and Mariana Lopez, CGAP, look at a new approach for financial regulators towards gender equality.
Jatinder Handoo, Digital Lenders Association of India (DLAI), looks at the promising rise in fintech lending for small businesses.
Pratik Bhakta, The Economic Times, writes on the changing wallet market space in India.
Anushka Sengupta, ETBFSI, writes on industry feedback on the latest Reserve Bank of India (RBI) guidelines on LSPs.
Anant Deshpande, FinBox, explains how the account aggregator ecosystem holds a lot of promise when it comes to improving collections in digital lending.
Gopika Gopakumar, LiveMint, explains that despite the new Reserve Bank of India (RBI) rules, no small finance bank will apply for a universal banking licence anytime soon.
Ks Badri Narayanan, Hindu Business Line, writes on the move by Securities and Exchange Board of India (SEBI) on bringing down the minimum investment for systematic investment plans (SIPs) to as low as ₹250.
Arisha Salman and Maria Fernandez Vidal, CGAP, share insights from their research on India’s implementation of the AA framework.
Mitali, Disha Bhavnani and Ankit Kumar, MicroSave, write a blog post exploring ways in which peer learning can bridge the mentorship gap among women entrepreneurs.
Anant Jayant Natu and Mitul Thapliyal, MicroSave, write a blog post on the journey, challenges, and innovations in Centrally Sponsored Schemes (CSS) funding.