Fintech companies encouraged to prioritize the development of offline payment alternatives by the Department of Financial Services Secretary.
In a significant stride towards financial inclusion, fintech companies in India are increasingly focusing on offline payment solutions, aligning closely with the United Nations Sustainable Development Goals (UN SDGs). The initiative aims to overcome the challenge of poor internet connectivity and digital infrastructure in rural and remote areas, thereby enabling wider access to digital financial services for underserved populations.
The Department of Financial Services (DFS) Secretary, M Nagaraju, has recently urged fintech companies to prioritize the development and deployment of offline payment solutions. This move is crucial for bringing marginalized communities into the formal financial system, supporting inclusive growth and poverty alleviation.
Offline payment solutions ensure that those without reliable smartphones or internet can still participate in the digital economy. By enabling secure, accessible financial transactions without internet dependence, fintechs are helping poor and rural populations access financial services like savings, credits, and insurance, reducing poverty risks.
India's digital ecosystem is heavily concentrated around a few online platforms, which poses systemic risks and limits inclusivity due to their requirement for online connectivity. Offline payment systems powered by fintechs can democratize access and provide alternatives that are less vulnerable to such dominance and external disruptions.
Some fintechs are partnering with banks and government bodies like NPCI to integrate offline payment functionalities into existing payment infrastructures (e.g., UPI) to facilitate seamless transactions without active internet. This reduces friction and expands usage among lower-income and digitally marginalized users.
These offline payment innovations support the UN SDGs focused on reducing inequality and promoting economic opportunity. By enabling offline digital payments, fintechs are contributing to SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequality).
Before the launch of the Pradhan Mantri Jan Dhan Yojana (PMJDY) in 2014, only about 35% of adults in India had access to a bank account, as estimated by the Global Findex Database. The PMJDY scheme, which has been instrumental in opening bank accounts for millions of Indians, has been successful in integrating a large number of Indians into the formal financial system. As of the current date, 99% of adults in India have bank accounts due to the PMJDY scheme.
The PMJDY scheme has played a crucial role in improving financial access in India, enabling a majority of Indian adults to have bank accounts and participate in the digital economy. The scheme has been effective in enabling lakhs of Indians to open bank accounts and integrate into the formal financial system. The PMJDY scheme has been instrumental in improving financial access in India, a significant factor in poverty alleviation on a global scale.
Financial inclusion is increasingly recognized as a major factor in economic growth. Nagaraju made these remarks at the CII Summit on Financial Inclusion and FinTech, emphasizing the importance of improving access to financial services for the unbanked and under-served populations. Offline payment solutions are a key area of focus for enhancing financial inclusion, as they enable secure, accessible financial transactions without internet dependence.
In summary, fintechs in India are advancing financial inclusion through offline payment innovations that support the UN SDGs by enabling secure, accessible financial transactions without internet dependence, thus promoting economic participation for the unbanked and underbanked.
- The Department of Financial Services (DFS) Secretary, M Nagaraju, urges fintech companies to prioritize the development and deployment of offline payment solutions to bring marginalized communities into the formal financial system.
- Offline payment solutions, such as those developed by fintechs, are helping poor and rural populations access financial services like savings, credits, and insurance, which can reduce poverty risks.
- Integrating offline payment functionalities into existing payment infrastructures, like UPI, by fintechs and partners will facilitate seamless transactions for lower-income and digitally marginalized users.
- By enabling offline digital payments, fintechs are contributing to achieving UN SDGs focused on reducing inequality, promoting economic opportunity, and alleviating poverty. For instance, the PMJDY scheme, which has been instrumental in opening bank accounts for millions of Indians, has been effective in improving financial access and a significant factor in poverty alleviation on a global scale.
