Does financial technology(FinTech) provide for better financial inclusion in India thereby attaing attaining the goals of inclusive growth ? Elaborate (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 5 years
KEY POINTS
Fintech is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services.It is an emerging industry that uses technology to improve activities in finance.
Improving financial inclusion
· Financial technology reduces the paperwork, middle men thus helping Government's services to reach the people effectively. Ex: One can transfer money to their relatives, friends with few steps using applications like BHIM.
· Further the mobile applications can also be used in normal mobile phones which increases the penetration of services deep into the hinterlands.
· This not only improves the effeciency of maintaing the data bases but also curbs the wrong doings of anti-social elements, preventing the leakages of direct benefit transfers in the value chain.
· As smartphone penetration rises, India must leverage its powerful tech infrastructure to reduce the need for brick-and-mortar banking in every locality. This would truly democratise finance.
· Now, following the Supreme Court’s verdict, the government’s step to amend the Aadhaar Act in a manner that will allow Aadhaar to be used voluntarily by the people will certainly boost digital financial inclusion.
Obstacles to financial inclusion
· India still has wider digital divide due to lack of internet connectivity especially in rural areas and the penetration of smart phones is less in India when compared with other countries.
· Digital India scheme is still penetrating in the hinterlands but suffers due to lack of effective implementation, monitoring at grass root level.
· Lack of training to personnel at local level, lack of better human resources, skills of graduates are the main reasons.
· Eventhough Government of India established Common service centres across rural areas for betterment of financial inclusion lack of electricity, faulty electronic devices are causing huge problems.
· In Chattisgarh ration shops use Aadhar identity for distribution of entitlements, but faulty Point of sale machines denying rations for entitled beneficiaries preventing process of inclusive growth.
