Financial inclusion with safeguards will be the priority of the Reserve Bank of India (RBI) with the focus shifting to consumer protection and awareness from basic services, so that people make the best use of funds and don’t fall into a debt trap, governor Shaktikanta Das said.
“Greater financial literacy and education, together with sound consumer protection mechanisms will ensure that people at the bottom of the pyramid are empowered to take informed financial decisions,” he said at the ET Financial Inclusion Summit. RBI is in the process of consolidting various rules governing tiny loans with the objective of rationalising interest rates and helping borrowers take informed decisions as the past few years of work has achieved the basic necessity of linking them to the financial world, he said.
“Greater focus is now being given to addressing the vulnerable segments of the economy and population, while paying attention to consumer protection and enhancing capacity of customers, so that responsible and sustainable use of financial services can be achieved,” Das said.
Under Prime Minister Narendra Modi, the government and the regulator have accelerated financial inclusion. Over the years, the nation has moved from about half the population being unbanked to nearly every household having access to basic banking services. With the internet reaching every corner of the country and the mushrooming of smartphones, rural India has also taken to digital banking.
“The evolution and adoption of technology has led to massive improvement in deepening of digital financial services,’’ said Das. “The Jan Dhan, Aadhaar and Mobile (JAM) ecosystem has brought about a major shift in the universe of financial inclusion.”
The extent of digital penetration can be gauged from India’s payment systems processing more than 150 million transactions amounting to nearly Rs 4.5 lakh crore each day on average in June. The Unified Payments Interface (UPI) platform witnessed more than 2.8 billion transactions last month. The impact of digital payments in direct benefit transfer (DBT) is also evident. About Rs 5.53 lakh crore was paid out digitally across 319 government schemes run by 54 ministries in FY21.
“To make the post-pandemic recovery more inclusive and sustainable, financial inclusion would continue to be our policy priority,” said Das. The primary objective is to address concerns relating to over-indebtedness of microfinance borrowers; enable market mechanism to rationalise interest rates; and empower borrowers to make informed decisions by enhancing transparency of loan pricing.
A literate and aware borrower not only safeguards his interests, but would also protect the system, he said.
“This will also enable banks, NBFCs (nonbanking finance companies), MFIs (microfinance institutions), etc. to enhance their customer base and products and diversify their balance sheet,’’ said Das.