The Jan Dhan Scheme has brought an additional 310 million people into the banking system.
The percentage of adults in possession of a bank account in India has grown to cover 80% of the population, according to a study by the World Bank, as concerted government efforts to bring residents into the mantle of the formal financial system appear to be gradually paying off.
The Jan Dhan Scheme, launched in August 2014, brought an additional 310 million Indians into the banking system by March 2018, the report noted, with improving levels of account ownership enabling India to keep up with more mature economies in the region like Malaysia at 85%, Hong Kong at 95.5%, and Japan and Singapore both at 98%.
The gap between the likelihood of the richest 60% having an account more than the poorest 40% has also narrowed from fifteen to five percentage points. Around a fifth of those with an account use it for savings purposes for emergency needs, the World Bank observed.
Despite improving levels of financial inclusion, however, India is still home to around 190 million unbanked who still receive their private sector wages in cash. This figure is second only to China which is home to 225 million unbanked adults.
The banking system has also been wracked by scandals that have put trust in the banking system at an all time-low further aggravated by a chronic bad debt problem. Widespread concerns about a looming cash crunch is also prompting a surge in ATM withdrawals in the recent months as the country still reels from the 2016 demonetisation.
However, opportunities exist to further expand financial inclusion especially through digital technologies as nearly seven in 10 (69%) of adults are in possession of a mobile phone and high patronage of mobile wallets for various purchases.
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