January 12 2014
Abstract: Despite creation of millions of universal electronic bank accounts, India has failed to achieve true financial access. In its report submitted in January 2014, an RBI appointed committee visualized a strategy for meaningful financial access for all adult resident Indians by January 2016. Such a daring aspiration is laudable and akin to a big hairy audacious goal (BHAG)–first conceptualised by James Collins and Jerry Porras–that distinguish successful visionary companies from the rest.
But, considering India’s dismal past records on inclusion, can the strategy prescribed in the report ever achieve the stated goal, even if we ignore the aggressive deadline? Yes, the proposed strategy–with its three key components namely, (a) new dedicated institutions; (b) redefined priority sector lending; and (c) a central role for technology–has the potential to achieve the goal. But its success would critically depend on whether the policy makers pay adequate attention to some (potential) pitfalls that have been identified.
Keywords: inclusion; financial services; technology; RBI; priority sector lending; payment banks; universal electronic bank account