The success of a country is defined by the relative prosperity of its people. The present government of India is focusing on ensuring the availability of basic services in its remote areas to ensure that no one is left behind in the development journey. The essence of this principle was aptly captured in Prime Minister Narendra Modi’s clarion call for “”.Sabka Saath, Sabka Vikas, Sabka Vishwas“(With All Together, Growth for All, and With Everyone’s Trust). He has also laid down a vision for ‘India at 100’, with an inclusive-welfare focus from the micro-economic level to the macro-economic A key part of this inclusive-welfare approach is to significantly improve financial inclusion in India.
The Prime Minister has led openly on the issue of deepening financial inclusion. He has highlighted the strength of the Indian financial system backed by a strong set of government interventions through reforms and schemes. This has encouraged bankers to invest in innovations to achieve greater financial inclusion. The Reserve Bank of India (RBI) has also recently set up an innovation center to address the challenges of financial inclusion and efficient banking. The reforms initiated under this government have helped in recovering almost 5 trillion from financial defaulters.
Additionally, the government has committed itself to stressed assets resolution initiatives. 2 trillion through the National Asset Reconstruction Company (NARCL). Central government initiatives have helped India strengthen its financial system. For example, in 2021, an asset-quality review reported that the gross non-performing assets (NPAs) of public sector banks had decreased by 31.2%.
In her budget speech, Finance Minister Nirmala Sitharaman detailed the central government’s vision for financial inclusion and said that 100% of India’s 150,000 post offices will be brought under the core banking system. In addition, it will allow access to accounts through net banking, mobile phones and ATMs, and allow online transfer of funds between post office accounts and bank accounts. This decision will be especially beneficial for farmers and senior citizens of rural areas.
Digitization of financial services has been a catalyst in taking the benefits of development in society to all. The JAM trinity of Jan Dhan-Aadhaar-Mobile is an example of this. Bank accounts, Aadhaar and mobile numbers were first linked with an individual’s identity as part of a pilot project to understand the reasons for leakages in subsidy disbursement. Under the JAM trinity, the government-provided subsidy is provided through the Direct Benefit Transfer (DBT) mechanism to the beneficiaries without the involvement of middlemen or agencies, where several leaks were identified. In 2020-21, 2.1 trillion was sent directly to the accounts of people under schemes like Mahatma Gandhi National Rural Employment Guarantee Act, Public Distribution System and Pradhan Mantri Awas Yojana. The Jan Dhan Yojana has also proved to be a game-changer in 2020 during the unprecedented COVID-related lockdown. Effective subsidy transfer helped ensure that incentives reached their rightful beneficiaries, despite the extraordinary circumstances that existed at that time.
The dream of being an economically capable citizen has reached its final stage due to the continuous efforts of the political administration. The Finance Minister has been a strong supporter of the vision of an economically inclusive India. The Ministry of Finance has encouraged the empowerment of urban and rural co-operative banks. The government has also provided infrastructure and policy support for the fintech sector to prosper. India has seen a 72% increase in the number of digital payments processed in 2021 (bit.ly/3ghF9pB) as compared to 2020 (bit.ly/3IYWtvF).
To further accelerate regional financial inclusion, we have launched and operate Bank Mobile Vans in Aurangabad. These mobile vans provide banking and ATM services with an aim to spread financial awareness and enable people. We have encouraged the National Bank for Agriculture and Rural Development to launch 12 additional mobile vans. To enhance financial literacy, we have held meetings with the State Level Committee of Bankers to take forward the credit outreach programmes. The ministry has also supported the decision to open 57 new bank branches in Assam and 30 branches in Manipur to accelerate development in the North East region of the country.
Due to such initiatives, more than 180 loan sanctions Rs 21.92 crore has been sent by State Bank of India to the beneficiaries in Assam (October 2021). In Manipur, two credit campaigns were launched through which more than 580 loan sanction letters were sent with the total loan amount. 30.16 crores. In addition, I have directed the banks in Assam to increase their cash deposit ratio to 60% from the existing 55%.
The Government of India aims to empower its citizens through financial inclusion to achieve greater economic heights. Important decisions to improve financial inclusion are to be announced in the current budget session. Its objective will be to further promote the development of every citizen with financial literacy while increasing the prosperity of the people through digitization.
Bhagwat Karad is the Minister of State in the Ministry of Finance, Government of India.
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