- By Vaamanaa Sethi
- Sat, 09 Sep 2023 01:12 PM (IST)
- Source:JND
Without Digital Payment Infrastructure (DPI) like Jan Dhan Bank accounts, Aadhaar, and Mobile phones (the JAM trinity), it may have taken 47 years for India to achieve financial inclusion rate at 80%, which has been reached within six years only, a G20 policy document prepared by World Bank revealed.
The World Bank document also highlighted that the total value of UPI transactions last financial year was nearly 50% of India’s nominal GDP. “Banks’ costs of onboarding customers in India decreased from $23 to $0.1 with the use of DPI. As of March 2022, India did total savings of $33 billion, equivalent to nearly 1.14% of GDP, due to Direct Benefit Transfer (DBT),” says the World Bank document, as cited by News18.
The document said that this G20 Global Partnership for Financial Inclusion (GPFI) document has been prepared by the World Bank as an implementing partner of the GPFI with the guidance of and inputs from the G20 India Presidency represented by the finance ministry and the Reserve Bank of India (RBI).
The World Bank document also said the India Stack illustrates the DPI strategy by integrating digital identification, interoperable payment systems, a digital credentials ledger, and account aggregation.
“In just six years, it (the India stack) has achieved a remarkable 80% financial inclusion rate — a feat that would have taken nearly five decades without a DPI approach. Implementation of DPIs such as Aadhaar, along with the Jan Dhan bank accounts and mobile phones, is considered to have played a critical role in moving ownership of transaction accounts from approximately one-fourth of adults in 2008 to over 80 percent now,” the report says.
Since its inception, the number of Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts has surged, tripling from 147.2 million in March 2015 to 462 million by June 2022. Notably, women hold the majority, with 56% of these accounts, totaling more than 260 million. While the unquestionable role of DPIs in this rapid growth is evident, it emphasizes that other elements within the ecosystem and policies that leverage the availability of DPIs also played a crucial role.
“These included interventions to create a more enabling legal and regulatory framework, national policies to expand account ownership, and leveraging Aadhaar for identity verification,” the report further added.
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It cited how the Fast Payment System like UPI has particularly been quick and transformative. “UPI has been widely adopted, benefitting from a user-friendly interface, open banking features, and private sector participation. The UPI platform has gained significant popularity in India; more than 9.41 billion transactions valuing about Rs 14.89 trillion were transacted in May 2023 itself. For the financial year 2022-23, the total value of UPI transactions was nearly 50% of India’s nominal GDP,” the World Bank report has said.
