An enabling policy environment and an increase in banking outreach have resulted in significant progress under Financial Inclusion during the last decade. Several initiatives which prompted India to embark on a financial inclusion journey emerged essentially from the recommendations of Rangarajan Committee on Financial Inclusion 2008, which made an extensive analysis of the nature and extent of exclusion and set out a comprehensive roadmap for inclusion. A second major initiative was the creation of Unique Identification Authority of India (UIDAI) to issue Aadhar, followed by the introduction of Aadhar Payment Bridge System (APBS) by the National Payments Corporation of India (NPCI). Thirdly, a nationwide financial inclusion programme named Swabhiman was launched in February 2011 by GoI and IBA which focused on ensuring banking facilities in habitations with the population over 2000. Two years later, the Direct Benefit Transfer (DBT) Scheme was introduced in 2013 for direct credit of social welfare benefits and subsidies.
These initiatives marked the beginning of our critical march towards financial inclusion goals. Later the programme got accelerated, and the scope of work got broadened through implementing recommendations of Nachiket Mor Committee on Financial Inclusion, Deepak Mohanty Committee for Medium-Term Path on Financial Inclusion, JAM trinity, PMJDY, the launching of Stand-up India, MUDRA, and other social security schemes.
Through a decade of sustained work in increasing the outreach, India has reached a stage where banking is no more seen as an inaccessible service or viewed as a place for the elite. Banks have been able to address, to a great extent, issues of long-distance travel in rural areas, loss of earnings if people have to go to the branch / banking outlet or the lack of assurance of getting the service people desire. The issues of commercial viability and high transaction cost of banks in providing service to the poor have been managed, through the implementation of banking outlet concept.
The progress of outreach is best reflected in the achievements of Financial Inclusion Plans (FIPs) of banks. From 2010 to 2019 the number of rural branches increased 1.5 times from 33,378 to 52,489; rural BCs increased 15.8 times from 34,316 to 5.44 lac; the number of urban BCs increased 1000 times from 447 to 4.47 lac; basic accounts increased from 7.35 crore to 57.42 crores; Kissan Credit Card (KCC) from 2,43 crore to 4.9 crore and green channel counter (GCC) from 10 lac to 120 lac. Amount of savings in the basic accounts increased 25 times from INR 5,500 crore to INR 1,40,960 crore.
Simultaneously we have seen a massive roll-out of many digital financial services in rural areas, and the entry of multiple service providers. Besides deposit and withdrawal activities, millions of people in rural and semi-urban areas now use or are beneficiaries of one or more of the digital financial services like Aadhar Enabled Payment System (AEPS) at BC point, debit / credit cards, merchant level transactions, internet banking, government to person (G2P) and person to person (P2P) transactions, bill payments, DBT, remittance to family members, mobile transfers to name a few. Given that activities leading to financial inclusion have undergone several changes, it is a matter of curiosity to look at various ways in which agencies attempt to measure the progress, and also at the indicators used for such measurements. We can appreciate the constraints in obtaining information / data required for numerous indicators of measuring progress and imagine ways in which the process can be further tweaked.
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