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MUMBAI : Although India has created a strong public infrastructure for digital payments and financial inclusion, there is a need to spread awareness about it so that more people can access its benefits, panellists at a Mint webinar said.

Industry experts at Mint Budget Conversations 2022 discussing Technology for Financial Inclusion highlighted the role of public infrastructure such as IndiaStack, Aadhaar KYC and Unified Payments Interface (UPI) in expanding financial inclusion, while identifying scope for change.

Bindu Ananth, chairperson and managing trustee of Dvara Holdings, said that in the last decade or so, there has been phenomenal progress in financial inclusion, which is visible on the ground. India has grown from about half the country having a bank account six-seven years ago to about 90% now, she said.

“While it is not everything, it is certainly a starting point. To me, the defining feature of what is making some of this possible is investments we have made in public infrastructure such as the IndiaStack, Aadhaar KYC and UPI. This is a path that India has uniquely taken and that, to me, is the most significant policy feature, not demonetization, not Jan Dhan," said Ananth.

Launched in August 2014, Pradhan Mantri Jan-Dhan Yojana (PMJDY) is a financial inclusion programme that envisages universal access to banking facilities with at least one basic banking account for every household.

Rishi Gupta, managing director and chief executive, Fino Payments Bank said that in India, a mix of physical and digital transaction models would work, and not either of them in isolation.

“It will not be a one model that fits all but you will see a model where people transact physically and as well as digitally. When you are looking at 1.3 billion population of the country, we cannot expect everyone to be on mobile phones and do transactions," said Gupta, adding that it is not about just having mobile phones and telecom networks but also about the safety and convenience of transacting on mobile devices.

Others believe that existing financial inclusion tools could be tweaked to accommodate more citizens, especially those in the informal sector.

“I feel that the public goods investment has gone a long way. There are things we can do today that we could not do earlier. That combined with increased mobile phone penetration is helping. While there is so much positive movement here, one of the things we noticed on the ground is that there are enough fault lines, too," said Natasha Jethanandani, co-founder, Kaleidofin.

Jethanandani said that there could be some interesting tweaks to help the Jan Dhan-Aadhaar-Mobile (JAM) trinity perform better for the rural customer or the informal sector customer.

“UPI has transformed India’s payments system, but if we look deeper, I think the number of unique customers is still a little over 125 million, far from India’s population. A few challenges are there. One needs a debit card to set up a UPI handle, but many banks in rural areas do not issue customers with a debit card," said Jethanandani.

She believes that nudges from the central government and the RBI to say that every one of these technologies that is being made available should also be available to the entire 600-800 million population in non-urban locations and those working in the informal sector, will be useful.

Tara Subramaniam, director, JM Financial Home Loans said that one of the driving forces to increase cashless payments was demonetization, having given a huge thrust to the economy. She was referring to the government’s decision in November 2016 to withdraw high-value currency notes of 1,000 and 500.

“Digitalization has taken us very much forward and with contactless payments, ‘at home consumption’ alone has a potential of about $3 trillion market by 2025. This is on account of the kind of banking system digitalization and people using mobile phones. While banking has gone into interiors, a lot more needs to be done," added Subramaniam.

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