Unleashing emerging India
by: Vipul Somaiya
Despite 2 out of top 10 Fintech companies of the world in 2014 is originated from India (Rank 2-TCS and rank 6-Infosys), 50% of the population is under banked. The major challenges are the old-aged financial services ecosystem, rigid regulations, limited access to huge capital requirement and data limitations.
It seems likely that all that is about to change and India may become one of the hottest spots in the world in mobile finance and commerce (MFC) space in the years to come.
Favourable Government of India (GOI) initiatives:
- Aadhaar is a 12 digit individual identification number issued by the UIDAI. This could be the most significant advance in financial inclusion and mobile money seen anywhere this century. Aadhaar being used as proof of identity to access government subsidies or as a simplified “e-KYC” process in opening bank accounts and registering SIM cards. Almost 775 million Aadhaar have been issued since 2009.
- Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking & Deposit Accounts, Remittance, Credit, Insurance, and Pension in an affordable manner. The program has opened almost 125 million bank accounts since its launch.
- Small finance banks and Payments banks are expected to provide banking services to the poor and marginalised who are outside the ambit of the banking system.
JAM Trinity, an abbreviation for PMJDY, Aadhaar and Mobile number, the government is pinning its hopes on these three modes of identification to deliver direct benefits to India’s poor. Subsidies and payments-in-kind (costing the central government some US$37 billion each year) are going to be gradually phased out, and fully replaced by a system of benefit transfers directly into bank accounts and mobile wallets.
With over 1.2 billion People, 904 million mobile phones, 250 million smart phones and by 2020 over 50% of subscribers will be connected to the network using a smartphone (700 million subscribers), the mobile financial services opportunity in India is glacial.
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