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India, which is home to 21 per cent of the world's unbanked adults, faces a significant challenge in catching up with the rest of the world in universalising banking access, reveals global financial figures released recently by the World Bank.
The World Bank paper, "The Global Findex Database 2014 - Measuring Financial Inclusion around the World," says that three countries - India, China and Indonesia - accounted for 38 per cent of the world's unbanked adults, of which China accounts for 12 percent and Indonesia 6 per cent.
"Both China and India saw strong growth in account ownership between 2011 and 2014—in China account penetration increased from 64 percent to 79 percent, and in India from 35 percent to 53 percent. Translated into absolute numbers, this growth means that 180 million adults in China and 175 million in India became account holders—with the two countries together accounting for about half the 700 million new account holders globally," the paper said. In comparison, 94 percent of adults had accounts in high-income OECD economies.
Here's how India and the world fare with respect to select indicators:
| Chart: TR |
Last year, the government had launched the high-profile financial inclusion programme, Pradhan Mantri Jan Dhan Yojana, aimed at ensuring that all households have a bank account. The Yojana had resulted in the opening of 125 million new bank accounts by the end of January 2015; "as a point of comparison, a 2013 survey had found that fewer than 400 million people in the country had an account," the paper noted. But 72 percent of the new accounts showed zero balances, maybe because "many new account holders may not yet have had an opportunity to use their accounts—especially since the accounts were not set up for an explicit purpose, such as to receive wages or government transfer payments."
But India faces the twin challenges of scale and quality in achieving or surpassing the 61 per cent coverage that the rest of the world has recorded. The figures, for instance, point to a weak spot in the gains made on the financial inclusion front: India accounted for nearly half of the dormant bank accounts in the world - 195 million out of the total of 460 million. "This means not only that their account had no cash deposits or withdrawals, but also that it had no electronic wage deposits and no electronic payments or purchases," the paper said.
The move to a digital payment disbursal system has is yet to make much headway - the number of those using an account to receive government transfers is pegged at 3.6 per cent compared to global figure of 8.2.
