Financial inclusion a key driver of economic growth: Das

RBI Governor Shaktikanta Das on Thursday said financial inclusion will continue to be a “policy priority” for the central bank to make the post-pandemic recovery more equitable and sustainable.

The Reserve Bank of India will very soon be coming out with the first financial inclusion index, which will assess progress in terms of access, usage and quality, Das said, while speaking at the Economic Times Financial Inclusion Summit.

It is the responsibility of all stakeholders to ensure that the financial ecosystem (including the digital medium) is inclusive and capable of effectively addressing risks like mis-selling, cybersecurity, data privacy and promoting trust in the financial system through appropriate financial education and awareness, he added.

Since the start of the last decade, financial inclusion has been a key focus area for the RBI to help formalise the economy by ensuring that banks reach the people.

Technological advances made it easier and the government also gave it a greater thrust with the launch of the PM Jan Dhan Yojana scheme.

“In order to make the post-pandemic recovery more inclusive and sustainable, FI would continue to be our policy priority,” Das said.

To measure the extent of financial inclusion in the country, it has been decided to construct and periodically publish a financial inclusion index (FII), he said, adding an announcement was made some time back about such an index.

The index will have parameters across the three dimensions, including access, usage and quality, he said, adding “work on FII is underway and the index will be published very shortly by the Reserve Bank”.

Das said financial inclusion is a key driver of sustained and balanced economic growth, which helps reduce inequality and poverty, and while we have made tremendous strides on this aspect, the pandemic has created newer challenges and complexities.

“The financial system will have a crucial role to fulfil the aspirations and needs of our economy on the mend,” he said.

During the pandemic, the RBI's efforts on financial inclusion have helped in enabling the government to provide timely support through cash transfers under the Direct Benefit Transfer schemes, Das said, adding Rs 5.53 lakh crore was transferred digitally across 319 government schemes spread over 54 ministries in FY21.

The RBI has taken a slew of measures to mitigate the impact of COVID, including rate cuts, on-tap liquidity, cash reserve ratio exemptions and tweaks in the priority sector lending scheme, he said.

Payments are the lifeline of an economy and the operationalisation of Payment Infrastructure Development Fund (PIDF) will provide the necessary impetus for the development of payment acceptance infrastructure in tier-3 to tier-6 centres and northeastern states, Das said, adding that the fund is an initiative jointly carried out by the RBI, banks and card networks.

He said substantial progress has been made by banks with respect to financial inclusion plans (FIPs), which the RBI has advised them to prepare.

Greater focus is now being given to addressing the vulnerable segments of the economy and population while paying attention to consumer protection and enhancing the capacity of customers so that responsible and sustainable use of financial services can be achieved, the governor said.

The RBI has encountered challenges for financial inclusion, which include how to identify the customer, reaching the last mile and provide relevant products that are safe, he added.

Scaling up of the Centre for Financial Literacy (CFL) project across the country at the block level by March 2024 is expected to enhance the effectiveness of community-led participatory approaches for greater financial literacy, he said.

Das also said that 15 state education boards have consented to include financial education in their curriculum to ensure kids get going on crucial knowledge.

“There is a need for accelerated universal reach of bank accounts along with access to financial products relating to credit, investment, insurance and pension,” he noted.