India has joined the UN-based Better Than Cash Alliance as it bids to accelerate the country's migration to electronic payments as part of a more general strategy to boost financial inclusion.
The Better Than Cash Alliance was set up in 2012 by a group of development organisations, foundations and private companies, including Citi and Visa, to lobby for a shift towards electronic payments in the fight against global poverty.
The group argues that moving to e-money has the potential to advance financial inclusion and help people build savings while giving governments, development organisations, and companies a more cost-effective, efficient, transparent, and safer means of disbursing and collecting payments.
India is joining the alliance on the first anniversary of the launch of the country's financial inclusion programme, Pradhan Mantri Jan-Dhan Yojana, an ambitious effort led by Prime Minister Narendra Modi to cover every household with a bank account in a matter of months, focusing on people excluded from the formal financial sector, including women, small farmers, and labourers.
The government claims the programme has helped see 175 million new bank accounts opened, with deposits of more than $3.4 billion. To ensure that these accounts are actively used, the government is delivering financial products, such as credit for economic activity, as well as remittance facilities, insurance, and pension directly into the accounts.
Arun Jaitley, India's finance minister, says: "The scale of ambition of Pradhan Mantri Jan-Dhan Yojana has been much higher than for any other financial inclusion initiative in the past. The project has been instrumental in bringing almost all families of the country into the formal financial system and enabling citizens at grassroots level to perform financial transactions and keep their hard-earned money safe."
Authorities are also seeking to boost financial inclusion through regulatory change, recently giving "in-principle" approval to telcos and tech firms to operate as so-called payment banks.
Specifically on payments, in June the government put forward proposals to reduce the tax burden on electronic payments in an effort to reduce the use of cash and bring more people into the formal economy. In addition, the National Payments Corporation of India (NPCI) has been given the task of consolidating and integrating the country's various retail payments systems, creating one electronic payments platform and a set of APIs designed to wean the country off of cash and onto electronic transactions tapping smartphone and biometric technology.
By joining the Better Than Cash Alliance, the Indian government says it will have a new research, technical, and policy partner as it seeks to exploit this potential and find ways to make the electronic shift.
Ruth Goodwin-Groen, MD, Better Than Cash Alliance, says: "By making the digitization of payments to achieve financial inclusion a top priority, the Indian Government is showing its commitment to improving the lives of its people and driving inclusive growth."