India accounts about a fifth of the global population without bank accounts

Recent statistics released by the World Bank highlight not only the strides made by India on the financial inclusion front, but also the challenges ahead.

April 22, 2015 05:27 pm | Updated May 23, 2016 07:25 pm IST

This is a blog post from

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:

Have an account at bank or financial institution

Those with mobile accounts

Have debit card

Used a credit card to make payments

Used an account to receive wages

Used an account to receive government transfers

Used an account to pay utility bills

Saved at a financial institution

Used the Internet to pay or purchase

Borrowed from financial institution

Borrowed from family or friends

Borrowed from informal lender

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.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.