India aims to utilise bank accounts created under Pradhan Mantri Jan-Dhan Yojana to extend insurance, pension and credit facilities to those excluded from these benefits, Finance Minister Arun Jaitley has said, as the country joined a UN initiative to enable nations transition to electronic payments.
Taking a step closer to becoming a cashless economy, India has joined the 'Better Than Cash Alliance', a United Nations Capital Development Fund ( UNCDF) initiative that helps enable countries transition to electronic payments.
The announcement comes on the first anniversary of Prime Minister Narendra Modi's flagship financial inclusion programme Pradhan Mantri Jan-Dhan Yojana (PMJDY).
The new partnership with the Better Than Cash Alliance, made up of governments, companies, and international organisations, is an extension of Indian Government's commitment to reduce cash in its economy, according to a statement released here by the alliance.
"The scale of ambition of Pradhan Mantri Jan-Dhan Yojana has been much higher than for any other financial inclusion initiative in the past. The project has been instrumental in bringing almost all families of the country into the formal financial system and enabling citizens at grassroots level to perform financial transactions and keep their hard-earned money safe," Jaitley said in the statement.
"As a next step, the aim is to utilise these accounts for extending insurance, pension, and credit facilities to those who are currently excluded from these benefits," he said, adding that India has been recognised by the Guinness World Records for opening over 1.8 crore bank accounts in a week.
Under PMJDY, in one year, 175 million new accounts have been opened, with deposits totaling more than $3.4 billion.
India's announcement comes ahead of next month's United Nations special summit here when Modi and other world leaders will launch the adopted Sustainable Development Goals (SDGs).
Digital financial services are a key tool for the implementation of the goals, and advocates hope India's leadership inspires other governments to harness the power of digital payments as a strategy for achieving the SDGs, the statement added.
"India's leadership and progress are inspirational for countries around the world," said Dr. Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance.
"By making the digitization of payments to achieve financial inclusion a top priority, the Indian Government is showing its commitment to improving the lives of its people and driving inclusive growth." Other recently joined members of the Alliance include Rwanda and Ghana.
Advocates hope India's membership of the Better Than Cash Alliance will inspire other governments to harness the power of digital payments as a strategy for achieving the Goals.
Hasmukh Adhia, Secretary for the Department of Financial Services of the Government of India, said: "PMJDY has been a game changer in the country's financial inclusion efforts. The initiative has demonstrated that when we converge the efforts of all stakeholders, and work in unison with clearly defined goals, unprecedented results follow."
The financial inclusion programme, along with Aaadhar biometric unique identity cards that make it easier for the Government to identify social benefit recipients and the widespread use of mobile phones, are driving financial inclusion in India.
It is also resulting in cost savings. The fuel subsidy programme, which is the world's largest cash transfer programme, saved USD 2 billion (131 billion Rupees) by paying cooking gas consumers directly into their bank accounts, according to a new paper by Columbia University.
By joining the Better Than Cash Alliance, the Indian Government will have a research, technical, and policy partner as it continues to create a digital financial economy.
Other Government members of the Alliance will also benefit by gaining access to the lessons and insights of India's experience and growing expertise, the statement said.
Source : The Economic Times
