{"id":75676,"date":"2021-01-06T19:41:22","date_gmt":"2021-01-06T14:11:22","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=75676"},"modified":"2021-03-04T16:13:00","modified_gmt":"2021-03-04T10:43:00","slug":"digital-technology-worsen-financial-exclusion-in-rural-india","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/digital-technology-worsen-financial-exclusion-in-rural-india\/","title":{"rendered":"Digital technology worsen financial exclusion in rural India"},"content":{"rendered":"<p><span style=\"font-family: georgia, palatino, serif;\"><b>Synopsis-\u00a0<\/b>Internet Services&#8217; base payment system is worsening the\u00a0financial\u00a0exclusion prevalent\u00a0in rural India.\u00a0<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt;\"><b>Introduction<\/b> Financial Exclusion in rural India<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif;\">Internet services have provided much comfort to the user. But for the majority of the rural population digital technology has become troublesome due to a lack of technical knowledge and nexus of service providers, middlemen, government officials, and others. \u00a0<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif;\">We need to find solutions so that the fruits of digital technology will be borne by all the rural population.\u00a0<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt;\"><b>Introduction of the digital payment based solution in rural India<\/b>\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\">Direct Benefits Transfer (DBT) was launched with an aim of improving financial inclusion in 2011. Since 2015,\u00a0it has become synonymous with\u00a0the\u00a0<b>Aadhaar<\/b><b>\u00a0Payments Bridge Systems (APBS)<\/b>.\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\">Money is transferred to the various beneficiaries\u00a0of\u00a0programs under DBT\u00a0such as\u00a0maternity entitlements, student scholarships,\u00a0and wages\u00a0for MGNREGA.\u00a0\u202f\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\">To deal with the\u00a0<b>\u201clast mile challenges\u201d<\/b>\u00a0facing beneficiaries\u00a0in accessing their money; banking kiosks, known as Customer Service Points (CSP) and Banking Correspondents (BC), were promoted.\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"2\"><span style=\"font-family: georgia, palatino, serif;\">These are private individuals who offer banking services through the\u00a0Aadhaar\u00a0Enabled Payment Systems (AePS).\u202f\u00a0<\/span><\/li>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"2\"><span style=\"font-family: georgia, palatino, serif;\">At these\u00a0kiosks, beneficiaries\u202fcan perform basic banking transactions such as small deposits and withdrawals.\u00a0\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-family: georgia, palatino, serif;\">However, it doesn\u2019t solve the basic issues that are being faced by the lower strata of the rural areas in receiving their own money from their bank accounts.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif;\"><span style=\"font-size: 14pt;\"><b>What are the issues faced by rural population in acessing their payments?<\/b><\/span>\u00a0<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif;\">The process of transition from older payment systems and the APBS technology needs to be scrutinised which impact all DBT programmes.\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"3\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\"><b>Lack of technical knowledge<\/b>&#8211; Workers have little clue about where their wages have been credited and what to do when their payments get rejected, often due to technical reasons such as incorrect account numbers and incorrect\u00a0Aadhaar\u00a0mapping with bank accounts.\u00a0<\/span><\/li>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"2\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\"><b>Lack of accountability<\/b>&#8211;\u00a0State governments have not set any\u00a0accountability for APBS\u00a0and\u00a0AePS\/payment intermediaries and there is no\u00a0grievance redressal\u00a0mechanism for the same.\u00a0\u00a0<\/span><\/li>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"2\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\"><b>Lac<\/b><b>k of consultation<\/b>&#8211; The workers\/beneficiaries have rarely been consulted regarding their preferred mode of transacting.\u00a0<\/span><\/li>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"2\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\"><b>Creation of new forms of corruption\u00a0<\/b><b>\u2013<\/b>\u00a0All the above factors have resulted into new form of corruption.\u00a0For Example;\u00a0Massive scholarship scam took place in Jharkhand, where many poor students were deprived of their scholarships owing to a nexus of middlemen, government officials, banking correspondents and others.\u00a0\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-family: georgia, palatino, serif;\"><span style=\"font-size: 14pt;\"><b>Findings of the new report by\u00a0<\/b><b>LibTech<\/b><b>\u00a0India<\/b><\/span><b>\u00a0<\/b>\u00a0<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif;\"><b>LibTech<\/b><b>\u00a0India recently released a research report based on a survey of nearly 2,000 MGNREGA workers across Andhra Pradesh, Jharkhand, and Rajasthan.<\/b>\u00a0The survey explains the experiences of workers in obtaining wages in hand after they were credited to their bank accounts.\u00a0\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\"><b>Access to wages from banks becomes arduous<\/b>&#8211; Rural banks are short-staffed and tend to get overcrowded. Hence, it requires more hours\u00a0and multiple visits to access wages from banks.\u00a0\u00a0<\/span><\/li>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\"><b>Technical issues<\/b><b>&#8211;<\/b>\u00a0CSP\/BCs appeared to be a convenient alternative to banks due to their proximity. However, an estimated 40 per cent of them had to make multiple visits to withdraw from CSPs\/BCs due to biometric failures.\u00a0<\/span><\/li>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\"><b>Too much travel cost is in<\/b><b>volved<\/b>\u00a0&#8211; To get their DBT share, MGNREGA workers need to spend too much for travel\u00a0leading in addition to loss\u00a0of\u00a0their daily wage on the day of travel. E.g.\u00a0<b>the average travel cost for one visit to a bank in Jharkhand is\u00a0<\/b><b>Rs<\/b><b>\u00a050 which becomes\u00a0<\/b><b>Rs<\/b><b>\u00a0100 for two bank visits<\/b><b>.<\/b>\u00a0\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\"><b>Passbook related issues<\/b>&#8211; The only way for rural bank users to keep track of their finances is through their bank passbooks. However, more than two-thirds of time workers were denied the facility to update their passbooks at banks, some workers are even charged\u00a0<b>(45 per cent in Jh<\/b><b>arkhand)<\/b>\u00a0for\u00a0this free service by\u00a0CSPs\/BCs.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt;\"><b>Way forward<\/b><\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif;\">The right to access your own money in a timely and transparent manner is a basic right of every individual that must be protected by the government at any cost.\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"4\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\">There are just 14.6 bank branches per 1 lakh adults in India. This is sparser in rural India. Despite the hardships of access, most workers preferred to transact at the banks. Hence\u00a0<b>Branch expansion<\/b>\u00a0into rural unbanked locations will significantly reduce poverty.\u00a0<\/span><\/li>\n<li data-leveltext=\"\u25cf\" data-font=\"Calibri\" data-listid=\"4\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span style=\"font-family: georgia, palatino, serif;\"><b>The technological <\/b><b>solutions must be coupled with a governance structure,<\/b>\u00a0in which protection of rights and choices of individuals must be fundamental<b>.\u00a0<\/b>\u00a0<\/span><\/li>\n<\/ul>\n<blockquote><p><span style=\"color: #ff0000;\">Read Also :<a style=\"color: #ff0000;\" href=\"https:\/\/forumias.com\/blog\/mains-question-bank-and-answers-for-upsc-subject-wise\/\" target=\"_blank\" rel=\"noopener noreferrer\">MAINS QUESTION BANK AND ANSWERS for UPSC<\/a><\/span><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Synopsis-\u00a0Internet Services&#8217; base payment system is worsening the\u00a0financial\u00a0exclusion prevalent\u00a0in rural India.\u00a0 Introduction Financial Exclusion in rural India Internet services have provided much comfort to the user. But for the majority of the rural population digital technology has become troublesome due to a lack of technical knowledge and nexus of service providers, middlemen, government officials, and&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/digital-technology-worsen-financial-exclusion-in-rural-india\/\">Continue reading <span class=\"screen-reader-text\">Digital technology worsen financial exclusion in rural India<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":75741,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[1278],"class_list":["post-75676","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-9-pm-daily-articles","tag-eco_4","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/01\/Digital-technology-worsen-financial-exclusion-in-rural-India.jpg?fit=1280%2C720&ssl=1","views":{"total":0,"cached_at":"","cached_date":1704886415},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/75676","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=75676"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/75676\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/75741"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=75676"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=75676"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=75676"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}