Editor
New Delhi, September 8, 2023: In a remarkable testament to India's progress in financial inclusion, a G20 document prepared by the World Bank has hailed India's achievement in reaching its financial inclusion goals in just six years, a feat that would have otherwise taken nearly five decades. Prime Minister Shri Narendra Modi proudly shared these findings on social media, underlining the vital role of India's Digital Public Infrastructure (DPI) in this achievement.
India's leap in financial inclusion, powered by Digital Public Infrastructure! A G20 document prepared by the World Bank shared a very interesting point on India's growth. India has achieved financial inclusion targets in just 6 years which would otherwise have taken at least 47 long years. Compliments to our robust digital payment infrastructure and the spirit of our people. It is equally a testament to rapid progress and innovation.
The World Bank document emphasizes that India's success story is built upon the foundation of DPI, including Jan Dhan Bank accounts, Aadhaar, and mobile phones, collectively known as the JAM trinity. Without these digital tools, India might have taken nearly half a century to achieve the 80% financial inclusion rate it now boasts.
One of the standout statistics highlighted in the report is that the total value of UPI (Unified Payments Interface) transactions in the last financial year was nearly 50% of India's nominal GDP. Moreover, the report underscores the significant cost savings realized by banks in India due to the adoption of DPI, with customer onboarding costs dropping from $23 to just $0.1.
Direct Benefit Transfer (DBT) also played a pivotal role, contributing to a total savings of $33 billion, equivalent to approximately 1.14% of India's GDP, as of March 2022. This showcases how DPI has not only improved financial inclusion but also led to substantial economic benefits for the country.
The G20 Global Partnership for Financial Inclusion (GPFI) document attributes India's success to its comprehensive DPI approach, referred to as the "India Stack." This approach combines digital ID, interoperable payments, a digital credentials ledger, and account aggregation. It is this combination that enabled India to achieve an 80% financial inclusion rate in just six years.
The report acknowledges the impressive growth of Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, which tripled from 147.2 million in March 2015 to a staggering 462 million by June 2022. Notably, women own 56% of these accounts, a testament to India's commitment to financial inclusion.
While DPIs like Aadhaar, Jan Dhan bank accounts, and mobile phones have played a critical role, the report also acknowledges the importance of a supportive legal and regulatory framework, national policies to expand account ownership, and the effective use of Aadhaar for identity verification.
The report also highlights the rapid and transformative adoption of the Unified Payments Interface (UPI) in India, with over 9.41 billion transactions valued at approximately Rs 14.89 trillion occurring in May 2023 alone. In the financial year 2022-23, UPI transactions accounted for nearly 50% of India's nominal GDP.
Furthermore, DPIs have led to increased efficiency for private organizations, reduced complexity and costs for business operations, and significant benefits for non-bank financial companies (NBFCs) in India. These include an 8% higher conversion rate in SME lending, a 65% reduction in depreciation costs, and a 66% decrease in costs related to fraud detection.
In conclusion, the World Bank's recognition of India's outstanding achievements in financial inclusion through DPI is a testament to the country's commitment to innovation and progress. India's success story will undoubtedly be showcased at the upcoming G20 Summit in New Delhi, where the world can learn from India's journey towards financial inclusion and digital empowerment.