DPI’s transformative impact on India extends beyond inclusive finance: World Bank | Latest News India - Hindustan Times
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DPI’s transformative impact on India extends beyond inclusive finance: World Bank

Sep 08, 2023 11:04 AM IST

World Bank’s G20 Global Partnership for Financial Inclusion document said this ahead of the meeting of heads of the governments and states of the world’s 20 largest economies over the weekend

Digital Public Infrastructure (DPI) has had a transformative impact on India, extending far beyond inclusive finance, World Bank’s G20 Global Partnership for Financial Inclusion document has said.

India assumed G20’s presidency in December. (REUTERS)
India assumed G20’s presidency in December. (REUTERS)

Union minister Rajeev Chandrasekhar this week said India has volunteered to host a global repository of DPI and this was one of the focus areas of the digital working group of G20 during the country’s presidency of the grouping.

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India assumed G20’s presidency in December and has since held a series of meetings related to 32 sectors. The events will culminate with the meeting of heads of the governments and states of the world’s 20 largest economies in New Delhi over the weekend.

The World Bank document highlighted the groundbreaking measures the government of Prime Minister Narendra Modi has taken and the pivotal role of its policy and regulation in shaping the DPI landscape over the past decade.

The document notes that India has achieved in just six years what would have taken about five decades. It said JAM (Jan Dhan-Aadhaar-Mobile) Trinity has propelled the financial inclusion rate from 25% in 2008 to over 80% of adults in the last six years, a journey shortened by up to 47 years thanks to DPIs.

“While DPIs’ role in this leapfrogging is undoubtable, other ecosystem variables and policies that build on the availability of DPIs were critical. These included interventions to create a more enabling legal and regulatory framework, national policies to expand account ownership, and leveraging Aadhaar for identity verification.”

The number of Pradhan Mantri Jan Dhan Yojana accounts opened tripled from 147.2 million in March 2015 to 462 million by June 2022. Women have 56% of these accounts (more than 260 million).

The Jan Dhan Plus programme encourages low-income women to save, resulting in over 12 million women customers (as of April 2023) and a 50% increase in average balances in just five months, as against the entire portfolio in the same time period. It is estimated that by engaging 100 million low-income women in savings activities, public sector banks in India can attract approximately 25,000 crore ($3.1 billion) in deposits.

In the last decade, India built one of the world’s largest digital government-to-person (G2P) architectures leveraging DPI. This approach has supported transfers amounting to about $361 billion directly to beneficiaries from 53 central government ministries through 312 key schemes.

As of March 2022, this resulted in savings of $33 billion, equivalent to nearly 1.14% of GDP. More than 9.41 billion transactions valuing about 14.89 trillion were transacted in May 2023 alone. For the fiscal year 2022–23, the value of the Unified Payments Interface (UPI) transactions was nearly 50% of India’s nominal GDP.

The DPI has also enhanced efficiency for private organisations through reductions in the complexity, cost, and time taken for business operations. Some Non-Banking Financial Corporations have also enabled an 8% higher conversion rate in SME lending, a 65% savings in depreciation costs, and a 66% reduction in costs related to fraud detection.

According to industry estimates, banks’ costs of on boarding customers in India decreased from $23 to $0.1 with the use of DPI.

India Stack has digitised and simplified KYC procedures, lowering costs. Banks that use e-KYC lowered their cost of compliance from $0.12 to $0.06. The decrease in costs made lower-income clients more attractive to service and generated profits to develop new products.

The UPI-PayNow interlinking between India and Singapore operationalised in February 2023 aligns with G20’s financial inclusion priorities and facilitates faster, cheaper, and more transparent cross-border payments.

India’s Account Aggregator Framework aims to strengthen India’s data infrastructure, enabling consumers and enterprises to share their data only with their consent through an electronic consent framework regulated by the Reserve Bank of India.

As many as 1.13 billion cumulative accounts are enabled for data sharing, with a 13.46 million cumulative number of consents raised in June 2023.

India’s Data Empowerment and Protection Architecture grants individuals control over their data, enabling them to share it across providers. This promotes tailored product and service access without requiring new entrants to invest heavily in pre-existing client relationships, fostering innovation and competition.

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