Full banking access is a distant goal in India

Subject

Banking access in India.

Significance

Ensuring financial inclusion by extending the reach of banks and non-bank financial services is an oft-repeated policy objective of successive governments. The issue has become particularly salient since the launch in November 2016 of Prime Minister Narendra Modi’s demonetisation policy, which partly aims to push India towards a digital, cashless economy.

Impacts

• The market for digital payments systems will continue to expand in urban areas.
• Limited rural access to credit will compound agriculture’s productivity woes.
• Social constraints, especially gender inequality, are an abiding obstacle to spreading banking access.