India ranks 9th in Brookings financial inclusion scorecard2 min read . Updated: 25 Aug 2015, 04:12 PM IST
India, home to over a fifth of the world's unbanked adults, was ranked first for country commitment
Mumbai: India ranked ninth out of 21 countries for its overall financial and digital inclusion efforts, according to the 2015 Brookings Financial and Digital Inclusion Project (FDIP) Report and Scorecard that was launched on Tuesday.
Brookings’ experts analysed the financial inclusion landscape in 21 countries including Bangladesh, Brazil, Chile, Colombia, Ethiopia, India, Indonesia, Pakistan and Zambia. Countries received scores and ranking based on 33 indicators spanning four dimensions: country commitment, mobile capacity, regulatory environment and adoption.
India, home to over a fifth of the world’s unbanked adults, was ranked first for country commitment, 16th for mobile capacity, seventh for its regulatory environment and ninth for adoption, the experts at The Center for Technology Innovation at Brookings said. This year’s scorecard is the first of a series of annual reports examining financial inclusion activities around the world, and is being unveiled at a public event and webcast on 26 August.
According to the 2014 World Bank Global Financial Inclusion (Global Findex) database, about 62% of adults aged 15 and above around the world have access to an account at a formal financial institution or mobile money provider, the report said, adding that this leaves about 2 billion adults globally who are not account holders. However, only 4% of adults without accounts surveyed for the Global Findex database indicated that the sole reason they did not have an account was that they did not need one.
Simultaneously, many developing countries have made commitments to expand financial services for the poor. For example, as of May 2015, government leaders representing 54 institutions across 61 countries had signed the Maya Declaration on Financial Inclusion, pledging to recognize the importance of financial inclusion.
The top-scoring countries in the report include Kenya (89%), South Africa (80%), Brazil (78%), Rwanda and Uganda (tied at 75% each), and Chile and Colombia (tied at 74% each). India earned 72% of the total possible points.
India, the report said, performed well on the country commitment dimension largely because of the government’s Pradhan Mantri Jan-Dhan Yojana initiative that was launched in 2014. The program aims to provide 75 million individuals with bank accounts, distribute RuPay debit cards to enable financial transactions, and provide insurance and pension schemes to those in need. Yet while the target number of accounts has already been exceeded (as of February 2015, the initiative had facilitated the opening of nearly 137 million bank accounts), usage of accounts is low with a significant number having zero balance (about 72%).
Government leaders are seeking to improve this situation by linking public subsidies for products such as kerosene, food, liquefied petroleum gas, pension and fertilizer to financial accounts, the report said.
It concluded that with about 21% of the world’s unbanked adult population and about 67% of South Asia’s unbanked adult population residing in India, there is tremendous potential for growth in financial inclusion.