Banking News

Digital public infra’s transformative impact goes beyond inclusive finance in India: World Bank G20 document


A G20 document prepared by the World Bank has hailed the impact of the robust digital public infrastructure (DPI) in India over the past decade, highlighting that the DPI has had a transformative impact on India, extending far beyond inclusive finance.

The G20 Global Partnership for Financial Inclusion document has stressed that JAM (Jan Dhan-Aadhaar-Mobile) trinity has driven up India’s financial inclusion rate from 25% in 2008 to over 80% of adults in last 6 years, a journey shortened by up to 47 years thanks to the DPIs.

“While DPIs’ role in this leapfrogging is undoubtable, other ecosystem variables and policies that build on the availability of DPIs were critical. These included interventions to create a more enabling legal and regulatory framework, national policies to expand account ownership, and leveraging Aadhaar for identity verification,” it said.

The no-frills Jan Dhan accounts have surged from 147.2 million in March 2015 to 462 million by June 2022. At over 260 million, women accounted for 56% of these accounts, it said.
According to an estimate, by engaging 100 million low-income women in savings activities, public sector banks in India can attract approximately Rs 25,000 crore ($3.1 billion) in deposits.The country’s DPI network has also supported transfers of about $361 billion under 312 schemes directly to beneficiaries from 53 central government ministries. As of March 2022, this had resulted in a total savings of $33 billion, equivalent of about 1.14% of the country’s gross domestic product.As for the unified payment interface, over 9.41 billion transactions worth Rs 14.89 lakh crore were undertaken in May 2023 alone. In 2022–23, the total value of UPI transaction was nearly 50% of the nominal GDP, the report said.The paper also highlighted DPI’s potential added value for the private sector. The DPI has enhanced efficiency for private sector entities through reductions in the complexity, cost and time taken for business operations in India.

Thanks to the DPI, some non-banking financial companies have witnessed an 8% higher conversion rate in lending to small and medium enterprises, a 65% savings in depreciation costs and 66% cut in costs related to fraud detection. Industry estimates suggest banks’ costs of onboarding customers in the country dropped from $23 to $0.1.

Banks that use e-KYC lowered their cost of compliance by a half to $0.06.

The UPI-PayNow interlinking between India and Singapore, which was operationalized in February this year, facilitates faster, cheaper, and more transparent cross-border payments.

The account aggregator (AA) framework, regulated by the central bank, aims to strengthen India’s data infrastructure, enabling consumers and enterprises to share their data only with their consent through an electronic consent framework.

Cumulatively, 1.13 billion accounts have been enabled for data sharing, with consent being raised for 13.46 million.


Source link