Digitisation of Financial Services and Financial Inclusion

Financial inclusion broadly refers to making available financial services (savings, credit, remittance, insurance and pension) to the people conveniently and at affordable cost. Since 2008, when the Government of India accepted the recommendations of Rangarajan Committee, the efforts for financial inclusion have gathered momentum. The momentum got further accelerated with launching of Pradhan Mantri Jan Dhan Yojana in 2014 followed by adoption of JAM trinity for direct benefit transfer schemes of the Government of India. The country is also a front runner in the number of digital payments and settlements transactions in the world. However, there is a clear divide between urban and rural users in utilising the innovations in the financial system, especially those related to digitisation. Digitisation, which is seen as a boon in urban areas, fails to catch the imagination of rural masses for whom, availing of basic financial services still remains a major challenge. The increasing number of cyber frauds, especially on the rural populace has dampened the enthusiasm of the people for inclusion in the financial ecosystem and they are being pushed back to the informal financial system. This article is an attempt to identify these challenges and to suggest a way forward so as to make the financial inclusion efforts more holistic.