Prime Minister Narendra Modi had identified building inclusive economic infrastructure as one of his top priorities during his visit to the U.S. in September last year. And President Barack Obama had asked his officials to provide all necessary help in this regard. The American objective in this partnership is to support India’s financial inclusion efforts and provide an opportunity for all Indians to participate in the digital economy. “In India and many parts of the world, cash is still king. And for the billions that remain unbanked, that is a tremendous barrier to achieving economic stability,” Biswal said. “To help bring down that barrier/the barriers to financial inclusion in India, we’ve conducted original research to help understand how we can better incentivize merchants and consumers to conduct their transactions digitally,” she said.
“And based on that research, we’re now starting to incubate and test new business models that will expand and accelerate the use of digital payments,” Biswal said, adding that this partnership is another great proof—of—concept of how the U.S. and India, together, are able to develop solutions locally that can be scaled globally.
Said to be a game changer for India’s financial inclusion efforts, over 193 million bank accounts have been opened under the Jan Dhan Yojana and roughly 26,000 crores have been deposited in these accounts.
The programme has created a platform for inculcating the habit of saving, providing formal credit facilities, plugging leakages in public subsidies and welfare programmes. “The challenge now is to build a widespread digital payments acceptance network and to extend last mile connectivity,” an Indian official said, adding that financial inclusion is a top priority for India for achieving inclusive growth and poverty alleviation. In November this year, the Ministry of Finance and USAID had signed a memorandum of understanding in this regard. The MoU established a Partnership between the Finance Ministry and the USAID, and a coalition of organisations, including companies and banks, to support financial inclusion in India, by expanding the digital payments network, so that all consumers can participate in the formal financial system using electronic payment methods such as mobile phones and payment cards.