ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Did Demonetisation Accelerate Financial Inclusion?

The claim that removing cash would improve financial access for the poor has become a fallback argument for demonetisation, despite notebandi failing to achieve its other objectives. Like many other arguments made for abolishing cash in favour of digital payments, this claim does not stand up to scrutiny.

Role of ‘Fintech’ in Financial Inclusion and New Business Models

The convergence of finance and technology to provide financial services by non-financial institutions, popularly known as “fintech,” has come to dominate the financial landscape. Taking stock of this development, its impact and implications for new products, processes and services, including for financial inclusion are examined. The Jan Dhan–Aadhaar–mobile phones trinity provides fertile ground for fintech to permeate to the “last mile.” Notwithstanding its manifold benefits, there is a need to exercise caution in areas such as privacy and ownership of data. In a fast-paced world of rapidly evolving technology and related financial services, regulators have new paradigms to grapple with and therefore, need to be proactive so as to not stifle the growth of this nascent sector.

Doing More with Less

The current focus on financial inclusion has opened up solutions to reduce leakages in central and state government schemes. For these solutions to have a sustainable impact, deeper issues in public fund management must be addressed. These issues revolve on three key challenges: "first-mile" problems of transferring central and state funds to local implementation agencies in a timely, efficient and transparent manner; "last-mile" problems of sending benefits to beneficiary or vendor bank accounts without delays; and "beyond-the-last-mile" challenges of ensuring rural beneficiaries have adequate access to remote banking services. This paper reviews these three challenges and proposes a new public finance management system, namely, JAM+. The authors believe that these reforms have the potential to reduce India's fiscal deficit by ₹1 lakh crore.
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