Introduction: The Milieu

The 1990s witnessed the advent of microfinance at the mainstream in international development policies. There was a prime focus on market development by private financial firms. As the decade of the 2000s approached, the ambience of state legitimacy (via policies and strategies of financial inclusion) made its way. The warranted summoning of government interference is owing to the (still incumbent) ailing realities shaped by the worrying existence of social and geographical inequalities, gender biases, etc. With this stance, financial inclusion is envisioned as an instrument to establish, transform, and reinforce state institutions. The deployment of financial inclusion (social) policies in India is meant to facilitate access to marginalised (susceptible) populations of afresh rights and inclusivity. Also, such social policies having financial inclusivity agenda at the core could also promote the incoming of new alternatives to organise the behaviour of recipient (fragile) segment of the society.

The Institutional Framework

With these objectives also in mind, the G20 (an international forum for the governments and central bank governors of 19 countries and the EU) aimed to initiate a dialogue for promoting global financial stability. The purpose of G20 (established in 1999) Congress is assembling systemically crucial industrialised and developing economies to bring in the forefront the key, financial and beyond, issues facing the global economy. The G20 recognised financial inclusion as a primary facilitator in eradicating poverty. The G20 Financial Inclusion Indicators (FIIs) measure the state of financial inclusion and digital financial services, at national and global levels. The data (measuring accessibility, use, and quality of financial services) can be utilised by countries to assist in meeting their financial inclusion objectives.

The Initiatives for Financial Inclusion

The G20 Principles for Innovative Financial Inclusion were drafted in 2010 by the Access Through Innovation Subgroup (ATISG) of the G20 Financial Inclusion Experts Group (FIEG). The Alliance for Financial Inclusion (AFI) has developed these principles to augment innovation in financial inclusion whilst also safeguarding the consumers and maintaining financial stability. The AFI has also studied the manner in which developing countries’ policymakers are realising these Principles. Financial inclusion gained due consideration on the international agenda after a pledge to improve the banking access of people was made in 2009 at the G20 summit in Pittsburgh.

G20, India, and Financial Inclusion

As announced on December 1, 2018, by the incumbent Prime Minister, the host nation for the G20 summit to take place in 2022 will be India. This event will also mark the 75th anniversary of India’s Independence. Although the portrayed image of financial inclusion seems progressive at the institutional and policy level, the same isn’t true when assessed at the ground level, where the bank account activity of the fresh account openers is minimal. As reported by livemint (citing the World Bank’s Global Findex data published in April 2018), India is the top G20 emerging market (out of a total 10 largest emerging markets) member nation with the people having the most accounts in a financial institution. In reality, over 48% of accounts are left unused or inactive (according to World Bank estimates). This means that in the case of India, larger access to financial services didn’t lead to an appropriate elevation in the use of financial services. A lot here has to do with the still limited use of digital modes of payment. Also, when referring to the need for ensuring sustained usage of freshly opened bank accounts, it’s also worth mentioning that a majority of the accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY)—the National Mission for Financial Inclusion, is an open-ended scheme providing higher insurance cover with double the overdraft service—are now underused or dormant (approximately 1/5th). As reported by Business Standard, prior to the launch of PMJDY, around 250 million people of the total population of 1.2 billion were not holding a bank account; the PMDJY motivated over 300 million people to open a bank account. According to the data listed on the PMJDY portal, there are 34.73 crore beneficiaries as on 27th February 2019. The Hindu Business Line’s latest reports indicate that merely 20% of 33.66-cr beneficiary PJMDY accounts are lying inactive.

Following the Budget 2018 announcement of PMJDY-sops by the Government, the provision to offer microinsurance and unorganised sector pension schemes under the purview of PMJDY accounts was introduced. As of 2019, the PMJDY offers its account holders interest on their deposits, an accidental insurance cover of Rs. 1 lakh, life insurance of Rs. 30,000, direct benefit transfer (DBT) of all government-sponsored schemes, overdraft facility following six months of operation, and overdraft facility (OD) of Rs 5,000 on one account for each household.

There is still time for the G20 summit in 2022 when the stakes will be high for India to present a promising picture with convincing results on the world stage in regards to achieving its ambitious targets of financial inclusion. How that materialises for the Republic also when the election season’s pressure is pounding on the incumbency only time will reveal.