GI - Technology

Even after six decades of independence, a large majority of Indian population remains underserved. This has led to financial instability and pauperism among the low wage groups. To overcome this issue, the Reserve Bank of India backed by the Government has been pushing to implement the concept of financial inclusion. On Global Financial Inclusion Index, India had scored inadequately on financial inclusion parameters when compared with the global average, said the Reserve Bank of India in its annual report. The report quoted a World Bank study in April 2012, which had shown half of the world’s population held accounts with formal financial institutions. The study said only nine per cent of the population had taken new loans from a bank, credit union or microfinance institution in the past year. In India, only 35 per cent have formal accounts versus an average of 41 per cent in developing economies.

India also scored poorly in respect of credit cards, outstanding mortgage, health insurance, adult origination of new loans and mobile banking. “Financial inclusion remains a substantially unfinished agenda,” said the report.

However, the past couple of years India has witnessed significant achievements in its efforts to migrate from traditional payment methods through cash to modern electronic payment systems. While there has been significant progress made on various parameters, a lot still needs to be done in the next few years to gain 100% financial inclusion.

With the emergence of payments bank model is a step in the right direction to foster and encourage financial inclusion in India.

The concept has been put forth to counteract the below issues:

A motivational platform to save money:

The lower wage group has been under poverty for a significant period due to absence of savings. The absence of savings makes them a vulnerable lot. Presence of banking products and services act as facilitators to save money.

Providing formal credit channels:

So far the unbanked population has been vulnerably dependent on informal channels of credit like family, friends and moneylenders, which lacked transparency in lending. Availability of adequate and transparent credit from formal banking channels shall allow the entrepreneurial spirit of the masses to increase outputs and prosperity in the countryside. A classic example of what easy and affordable availability of credit can do for the poor is the micro-finance sector.

Avoiding delivery inconsistencies in public subsidies and welfare programmes:

A considerable sum of money that is meant for the poorest of poor does not actually reach them. While this money meanders through large system of government bureaucracy much of it is widely believed to leak and is unable to reach the intended parties. Government is therefore, pushing for direct cash transfers to beneficiaries through their bank accounts rather than subsidizing products and making cash payments. All these efforts require an efficient and affordable banking system that can reach out to all. Therefore, there has been a push for financial inclusion.

Features under financial inclusion- highlights:

Of the many schemes and programmes pushed forward by RBI the following need special mention.

Initiation of no-frills account

These accounts provide basic facilities of deposit and withdrawal to accountholders makes banking affordable by cutting down on extra frills that are no use for the lower section of the society. These accounts are expected to provide a low-cost mode to access bank accounts. RBI also eased KYC (Know Your customer) norms for opening of such accounts.

Business Correspondent network

The banking systems have started to adopt the business correspondent/agent mechanism to facilitate banking services in those areas where banks are unable to open brick and mortar branches for cost considerations. Business Correspondents provide affordability and easy accessibility to this unbanked population. Armed with suitable technology, the business correspondents help in taking the banks to the doorsteps of rural households.

EBT – Electronic Benefits Transfer

To plug the leakages that are present in transfer of payments through the various levels of bureaucracy, government has begun the procedure of transferring payment directly to accounts of the beneficiaries. This system based transfer of payment without the intervention of humans, is expected to provide better benefits and relief to the beneficiaries while reducing government’s cost of transfer and monitoring.

India is at an interesting point in its payments journey wherein the foundation is laid, but its future growth depends on innovation in products, business models, consumer interfaces, security and infrastructure under the umbrella of enabling regulations.

Since the inception of GI technology, we have focused on all the above aspects and have been successful in providing innovative solutions to various banks and businesses to make financial services cheaper, accessible and secure. Our Primary focus has always been reaching out to the underserved segment through ubiquitous presence of interoperable point of sale devices that allow our customers to transact in an affordable and secure way.

Through our strong technology capabilities, GI contributes to 80% of IMPS based domestic remittances in India using our own switching capabilities. Our I cash prepaid Card has been instrumental in reaching out to underserved segments. With over 80,000 business correspondent’s network spread across; provide last mile connectivity to our customers located in the rural households and we have continued to issue () I cash wallets on a monthly basis.

GI’s goal is to provide financial inclusion solutions to all 74,414 villages with population over 2000. We understand there is a long road ahead but we are positive that given our technological capabilities, innovative line of products and our sustainable business model with a strong focus on risk and compliance, we will achieve that goal sooner or later.