Financial inclusion providing the entire range of banking

India has taken a series of steps to ensure the common man has access to financial services, SBI chairman Arundhati Bhattacharya said as she called for collaboration among the government, the banking system and the technology providers to make it successful.

"Financial inclusion as we see it today is not only providing the entire range of banking services, but also insuring that we provide opportunities for investment, insurance and pension products to every single Indian, no matter how small or how remote," Bhattacharya said in her address at the Bloomberg Global Business Forum yesterday.

Financial inclusion she said has four key aspects -- accessibility, affordability, quality and usability.

Giving a brief picture of the activities in India towards financial inclusion, she cited the example of the Unified Payment Interface for seamlessness of payments between various organisations.

Bhattacharya said the presence of these platforms has actually reduced the cost of transactions to probably the lowest anywhere in the world.

"This is the way that we have gone ahead with financial inclusion hoping thereby to empower the population to have the benefit of the financial system, in order to scale whatever they are doing. However, there is one thing that is a major challenge. And that one thing is, in the initial stages, such accounts are really not commercially viable, she said.

As a result, Bhattacharya said, "If this really had to have traction and be successful in any country, there has to be collaboration."

"Collaboration amongst the government, the banking system and the technology providers," she said.

"It becomes extremely difficult if the banking system is privately owned, because privately owned banks, even though they may feel that this is the right way to go, they don't have the ability to do so, because quarter and quarter they have to report results," Bhattacharya said.

Noting that in the initial phases, the amount that one has to invest in such accounts is not going to show quarterly results, she said therefore, there needs to be a rethinking from the point of view of investors as to what they are going to give a premium on and what they're going to discount.

"Very often, and because we are owned 57 per cent by the government, we are told very frequently that there is a discount, on account of the fact they know we have to carry out certain government mandates, such as these programmes, she said.

"I think it's high time that society at large realise that if you're going to have a stable society, if you are going to have a sustainable growth, then this is the way to go. And therefore, any organisations that are part of such things should actually be given a premium, and not a discount," Bhattacharya argued.

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