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Financial Inclusion: The ASEAN, & India Cooperation

The Formation of the ASEAN Network

The Association of Southeast Asian Nations (ASEAN)—formed on 8th August 1967 under the auspices of the ASEAN Declaration—is a regional intergovernmental organization with 10 Southeast Asian nations as members. The Association includes Indonesia, Cambodia, Malaysia, the Philippines, Singapore, Brunei, Laos PDR, Myanmar (Burma), Vietnam, and Thailand. The association promotes intergovernmental cooperation and enables economic, military, educational, political, security, and sociocultural integration of its members and other Asian countries.

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World Bank Group’s Universal Financial Access 2020 & India

The Universal Financial Access 2020

In October 2013, the World Bank Group (WBG—comprising of the World Bank and its organisation, the International Finance Corporation) President Jim Kim formalised the goal of attaining Universal Financial Access (UFA) by 2020. It read, “By 2020, adults globally have access to an account or electronic instrument to store money, send and receive payments as the basic building block to manage their financial lives.” The World Bank has been stressing on the crucial necessity of financial inclusion from a global economic and societal viewpoint since quite a while now. Around 30 partners have assembled to pledge commitments for achieving UFA by 2020.

The UFA approach in priority and other over 100 countries essentially includes: developing a regulatory milieu to facilitate access to transaction accounts, increasing access points, develop financial means, steering scale and viability via pumped-up government programs—social transfers, attributing core attention on reaching underserved (marginalised) populations—women and rural producers, igniting interest in financial services, boosting account use, making accessible the alternative financial services—savings, insurance, and credit. It also mainstreams the focus on a ‘platform approach’ that consists of triple layers—a biometric identity database, virtual payment, and interoperability of digital payment; and on the ‘national policies’ meant to make available scale via a mix of digital ID and digitised G2P (government-to-person) payments.

The WBG’s goal for facilitating universal financial access to primary transaction accounts by 2020 is a crucial consideration in removing poverty and elevating prosperity by 2030. Reports indicate that the financial inclusion initiatives taken by the World Bank have led to a 20% fall in the number of unbanked consumers. According to the World Bank’s Global Findex 2014, the net number of financially excluded people plummeted from 2.5 to 2 billion since 2011. Access to banking services has augmented thanks to mobile money technology. With over 700 million new adult subscribers becoming account holders globally (since 2011), the national financial system has benefitted from the governments’ policy stance in emerging markets of letting the NBFCs (non-banking finance companies) enter the market.

What has also buoyed the market growth is the provision of payment services via digital money and mobile money products. The advent of agent-based models of banking, advancing ecosystem of national payment systems and making available the access of the network infrastructure to mobile operators are also among the key growth stimulating factors. The G20 (Group of Twenty) has also placed financial inclusion in their priority list. This has led close to 50 countries drafting coherent policy goals to champion financial inclusion.

An essential tool for realising these goals is an initiation of policy actions to governments in emerging markets meant to assist in creating a levelled field of operation, and facilitate the availability of affordable and eased financial services to most of the population. The WBG increased investment, financial, advisory, knowledge, and convening resources. The benefits arising out of the UFA for the financial regulator as the stakeholder include: the configuration of the national financial inclusion strategies (NFIS), risk and compliance framework, technology, standards, infrastructure, and business model.

Universal Financial Access 2020 & India

India is one of the 25 UFA focus countries for the financial inclusion initiative. In India, the unbanked population stands at 21% of the unbanked adults of the world. During the period 2011 – 2014, the account holder penetration in India increased from 35% to 53%—according to the Global Findex Report 2014. This translates to a total of 175 million (new) account holders. However, the dormant account rate in India stood at 43%—195 million—following the Pradhan Mantri Jan Dhan Yojana. Also, the account penetration rate in the case of India is 53% whereas a mere 15% of adults use their account to pay or receive money, according to the Global Findex Report 2014. According to the UFA 2020 progress report for India, as of 2017, there are 80% adults owning a transaction account in India as compared to 35% in 2011. Also, there are 423.2 millions of adults that are still unbanked. In 2011, the adults reporting documentation as a barrier stood at 11%, in 2017 it reduced to 5%. It is also worth noting that the adults using electronic payment instrument to transact rose from 13% in 2011 to 29% in 2017. The WBG has supported several success stories across the UFA focus countries—like in the case of India, $93 million Bandhan investment was given a green signal for elevating faster approach to MSMEs (Micro, Small and Medium Enterprises). Also, by 2020, under the auspices of the UFA 2020, 22 million unique customers are anticipated. Concerted efforts are also underway to augment access to savings services for families belonging to lower income category, and to facilitate access to a broader variety of financial products.

CRISIL Inclusix: The Financial Inclusion Index of India

The S&P Global Company, CRISIL, is a pioneering global analytics company offering data, ratings, research, analytics, and solutions to MSMEs, corporate companies, investors, and global financial institutions. The analyses and solutions offered by CRISIL assist in determining the decisions taken by lenders, issuers, borrowers, intermediaries, investors, and regulators.

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The Prospects of Digital Lending in India

The Association for Information and Image Management (AIIM) organises the World Paper Free Day, every year on November 6 (since 2010). The previous loan subscribing process where regular physical presences in banks were necessary, apart from the weighty paperwork requiring multiple meetings to get your creditworthiness substantiated, was indeed time- consuming (still is). Then there was the credit underwriting process running for months to conclude. The yesteryear banks also offered a preferential treatment only to its current customer segment having already subscribed to either of the services offered by the banks. The concept of “consumption loans or loans for the unbanked and underserved” was alien and passé for the banks.

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AFI, GPFI, & G20 Principles for Innovative Financial Inclusion

The Alliance for Financial Inclusion (AFI)—launched in January 2008—is a network of financial inclusion policymakers to empower them in elevating access and usage of financial services. AFI was conceptualised on the realisation of having a global knowledge exchange platform for escalating and honing financial inclusion policy. AFI essentially works on discovering and advancing innovative and winning financial inclusion policy solutions. It keenly advances financial inclusion policy at national, regional and international levels by partnerships and cooperative arrangements formed with regulators, international organizations, and private leaders.

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Knowing the Credit Rating Agencies & Credit Bureaus in India


SEBI (Credit Rating Agencies) Regulations, 1999 (as amended up to December 27, 2011) regulate Credit Rating Agencies (CRAs) in India. The global analytics company CRISIL is the foremost rating agency in India, providing rating services across sectors. As reported by Centrum Broking (considering its Q4 2018 research figures), CRISIL tops with a revenue market share of approximately 30%. The following two CRA revenue market share spots are claimed by CARE with 28% and ICRA with 21%.

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