RBI releases document for National Financial Inclusion Strategies (NFIS)

Reserve Bank of India under the aegis of Financial Inclusion Advisory Committee (FIAC) initiated the process of formulation of National Strategy for Financial Inclusion (NSFI) for the period 2019-2024 and formally released the document on January 10, 2020. The National Strategy for Financial Inclusion (NSFI) report on Friday sets forth the vision and key objectives of the Financial Inclusion policies in India to expand the reach and sustain the efforts through a broad convergence of action involving all the stakeholders in the financial sector. According to the report, “The document views universal access to financial services and providing a bouquet of basic financial services as the starting point of the strategy”.

The NSFI sets forth the vision and key objectives of the Financial Inclusion policies in India to expand the reach and sustain the efforts through a broad convergence of action involving all the stakeholders in the financial sector. According to the report, globally, the adoption of National Financial Inclusion Strategies (NFIS) has accelerated significantly in the past decade. While India has largely benefited from the Jan Dhan-Aadhaar- Mobile (JAM) trinity over the last few years, steps are needed to strengthen the digital financial services’ eco-system including increased awareness on usage of digital modes of transactions, increased acceptance infrastructure and a safe environment incorporating the principles of consent and privacy, the report said. Over the next few years, it is envisaged that ubiquitous physical and digital connectivity coupled with full financial inclusion is possible owing to the focused efforts being undertaken by the respective stakeholders. The report has also called for increasing outreach of banking outlets of scheduled commercial banks, payment banks, small finance banks, co-operative banks among others to provide banking access to every village within a 5 km radius of 500 households in hilly areas by March 2020. “Wider acceptance and adoption of digital payments will play a key role in financial inclusion,” it said. Therefore, along with financial institutions, other non-bank entities such as fertilizer shops, fair price shops, should also promote efficiency and transparency through digital transactions.”

The present financial inclusion policies are targeted towards specific sectors such as the small and medium businesses, agriculture, or specific regions such as the aspirational districts. Hence, the Central Bank envisages a need to develop a sector-specific action plan to monitor targets and review the progress, along with a strong regulatory and legal framework aimed at protecting the interests of the customers, promoting fair practices and curbing market manipulations. The report suggests “every willing and eligible adult who has been enrolled under the PMJDY (including the young adults who have recently taken up employment) to be enrolled under an insurance scheme (PMJJBY, PMSBY, etc.), Pension scheme (NPS, APY, etc.) by March 2020,”. The report also suggests about the making the public credit registry fully –database of credit information of borrowers–operational by March 2022 so that authorised financial entities can leverage on the same for assessing credit proposals from all citizens.