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Financial Inclusion- News and Views - February 2015

 

February 2015

 

The year has begun on a positive note for India's inclusion mission – the PMJDY target of covering all households with bank accounts has been accomplished before the deadline and the RBI has received an excellent response to its call for licence applications for the new niche banks. With 72 applicants lined up for Small Finance Banks and 41 for Payments Banks, the committees for evaluation are set to report their decisions in a few months. The list of applicants includes firms and banks of all sizes (India Post has also applied for a Payments Banks license) and the finalised list should allow for sufficient number to ensure a competitive market that will deliver universal inclusion.

The road ahead is not without its challenges. While the PMJDY has achieved 100% household coverage by banks in almost all states, the government has to now move to the next stage of ensuring that these accounts are used actively. One of the biggest challenges is ensuring that the agent on the ground receives sufficient remuneration (Rs. 5000 per month minimum as set by the PMJDY); currently less than a third of the agents get this amount. To confound matters, the notification released on 16th January that fixes commission for banks distributing direct benefit transfers has moved the pace one step back. As noted by Puneet Chopra, Lokesh Kumar and Graham Wright in a blog post, banks are currently losing money on the Direct Benefits Transfers and there is a strong case for raising the transaction charges to 3.14% as set out by the Nandan Nilekani Task Force, rather than limiting it, as per the latest dispensation.

For Payments Banks, it is important to incentivise customers into using digital payments and for this there are five challenges to overcome, as noted by Kabir Kumar and Daniel Radcliffe (Business Standard, January 30, 2015). These include keeping transaction charges as low as possible for digital transactions, discouraging over the counter transactions through agents, pricing remittance transfers competitively, investing large funds upfront for long term profitability and partnering with banks for credit issuance.

 
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Section I: Policy – the latest from India's policymakers

Problem Loan Management & MSME Financing

Shri R. Gandhi, Deputy Governor, RBI, January 30, 2015

PMJDY Press Note - 20.01.2015

Press Conference - Finance Minister

January 20, 2015

Business Standard Best B-School Project Awards

Dr. Urjit R. Patel, Deputy Governor, RBI, January 12, 2015

Public Sector Banks: At Cross Road

Shri R. Gandhi, Deputy Governor, RBI, January 10, 2015

Notifications:

DBT/DBTL- Payment of Commission to Banks

Section II: News and Views Digest – the latest from India and abroad

India

So Many Steps Forward … And Now One Big Step Back …

What Will It Take for Payments Banks to Succeed in India?

Can India Achieve Universal Digital Financial Inclusion?

2015 Set to be Big Year for Digital Financial Inclusion in India

Payment banks: How it is possible to build a business around financial inclusion

USAID, cos to support India's financial inclusion initiative

Jan Dhan Yojana features in Guinness Book of World Records

Unbridled financial inclusion can create problems: RBI

Across the Aisle: Jan Dhan stands tall on UPA's shoulders

India Post's focus should be inclusion, not universal banking; we don't need another PSU bank

Expanding mobile payment services – the role of vernacular language applications

Using technology to fight poverty

Why private banks lag on the Jan-Dhan front

Why 2015 will be important for financial inclusion in India

Furthering financial inclusion

Privatise regional rural banks for inclusion

Bankers hold extensive discussions to draw reform blueprint

India turns to corner shops, mobile phones for banking revolution

International

Responsible Digital Finance for Kenyan Merchants: Five Priorities

Papayas and Digital Finance: Emerging Consumer Risks in Colombia

AML/CFT: Balancing Regulation with Innovation

Setting the Stage for Mobile Money in Myanmar

The Arab World in Crisis: How Should Donors & Investors Respond?

Benin's Expansion of Digital Finance

Mobile Money in Pakistan: From OTC to Accounts, Part 2

Mobile Money in Pakistan: From OTC to Accounts, Part 1

When Digital Meets Traditional Banking: A New Concept in Senegal

Section III: Research – surveys and studies on expanding access to financial services

Impact of Policies and Regulations on the Micro finance Sector

Partha Ghosh, Puneet Chopra and Richa Valechha, MicroSave, January 16, 2015

The Potential of Digital Data

Greg Chen and Xavier Faz, January 27, 2015

Emerging Risks to Consumer Protection: Key Findings in Colombia

CGAP, January 26, 2015

Driving Scale and Density of Agent Networks in Perú

Xavier Faz and Pablo Garcia Arabehety, CGAP, January 13, 2015

 

Research

Global Lessons on Partnerships for Financial Inclusion

Policy Brief January 2015

Implementing the Pradhan Mantri Jan-Dhan Yojna

Policy Brief November, 2014

Financial Inclusion Metrics-Part I

Policy Brief October, 2014

Financial Inclusion Metrics-Part II

Policy Brief October, 2014

Operationalising Payments Banks for Inclusion

Policy Brief August, 2014

Blog

Payments Banks, another step forward

PMJDY surpasses target before deadline

RBI releases Final Guidelines for Payments Banks

 
 

Editor: Sumita Kale can be contacted at icfi@indicus.net

The Indicus Centre for Financial Inclusion was launched in 2011 to distil and disseminate information on accelerating the poor’s access to high-quality financial services. The Centre is supported by the Bill & Melinda Gates Foundation. http://www.indicus.net/icfi

© Indicus Centre for Financial Inclusion. All rights reserved. 31st January 2015