GS Paper - 3 (Economy)

India is now ahead of China in financial inclusion metrics, with mobile and internet banking transactions rising to 13,615 per 1,000 adults in 2020 from 183 in 2015 and the number of bank branches inching up to 14.7 per 1 lakh adults in 2020 from 13.6 in 2015, which is higher than Germany, China and South Africa, according to a report.

What

  1. The report highlighted that the Banking Correspondent (BC) model in India is enabled to provide a defined range of banking services at low cost and hence is instrumental in promoting financial inclusion.
  2. States with higher financial inclusion/ more bank accounts have also seen a perceptible decline in crime along with a meaningful drop in consumption of alcohol and tobacco, according to the report, pencilled by Soumya Kanti Ghosh, group chief economic adviser at State Bank of India (SBI).
  3. Under the non-frills accounts scheme, the number of persons with deposit accounts at banks has significantly increased, becoming comparable with emerging economy peers and even some of the advanced economies.
  4. Public sector banks have opened 34 crore of the total 44 crore no-frills accounts and the private sector ones just 1.3 crore of them.
  5. Under the non-frills accounts scheme, the number of persons with deposit accounts at banks has significantly increased, becoming comparable with emerging economy peers and even some of the advanced economies. In terms of the use of digital payments also, there is noteworthy progress.
  6. The major credit for the financial inclusion drive should go to the RBI which in January 2016 allowed the business correspondent model of branchless banking.