Government of India is joining the UN-based Better Than Cash Alliance. The announcement comes on the first anniversary of Prime Minister Narendra Modi’s flagship financial inclusion programme Pradhan Mantri Jan-Dhan Yojana (PMJDY).
Under PMJDY, in one year, 175 million new accounts have been opened, with deposits totaling more than $3.4 billion (223 billion Rupees), as revealed by the Government of India.
The new partnership with the Better Than Cash Alliance, made up of governments, companies, and international organizations, is an extension of Indian Government’s commitment to reduce cash in its economy. Digital financial services lower the cost of providing financial services and make it more convenient for poor people to access their accounts.
Union Finance Minister Arun Jaitley said: “The scale of ambition of Pradhan Mantri Jan-Dhan Yojana has been much higher than for any other financial inclusion initiative in the past. The project has been instrumental in bringing almost all families of the country into the formal financial system and enabling citizens at grassroots level to perform financial transactions and keep their hard-earned money safe.”
India’s announcement comes ahead of next month’s United Nations special summit in New York, when Prime Minister Modi and other world leaders will launch the adopted Sustainable Development Goals (SDGs). Digital financial services are a key tool for the implementation of the goals, and advocates hope India’s leadership inspires other governments to harness the power of digital payments as a strategy for achieving the SDGs.
“India’s leadership and progress are inspirational for countries around the world,” said Dr. Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance. “By making the digitization of payments to achieve financial inclusion a top priority, the Indian Government is showing its commitment to improving the lives of its people and driving inclusive growth.”
One year ago, the Indian Government announced PMJDY with a goal of covering every household with a bank account in less than five months’ time. The programme focuses on citizens excluded from the formal financial sector, including women, small farmers, and labourers. To ensure that these accounts are actively used, the Government is delivering financial products, such as credit for economic activity, as well as remittance facilities, insurance, and pension directly into the accounts.
“We have been recognized by the Guinness World Records for opening over 1.8 crore (10 million) bank accounts in a single week,” added Finance Minister Jaitley. “As a next step, the aim is to utilize these accounts for extending insurance, pension, and credit facilities to those who are currently excluded from these benefits.”
Hasmukh Adhia, Secretary for the Department of Financial Services said: “PMJDY has been a game changer in the country’s financial inclusion efforts. The initiative has demonstrated that when we converge the efforts of all stakeholders, and work in unison with clearly defined goals, unprecedented results follow.”
By joining the Better Than Cash Alliance, the Indian Government will have a research, technical, and policy partner as it continues to create a digital financial economy. Other Government members of the Alliance will also benefit by gaining access to the lessons and insights of India’s experience and growing expertise.