Definition – Accessibility of banking and availability of credit

Challenges & Way forward

• Making products broadly available is bridging the gap between supply and demand of capital. In a financially integrated world, capital is agile. Yet owing to a limited risk appetite, low or thin-file data on customers and challenging regulatory oversight, capital remains a constraint in designing bespoke products. For India to overcome these challenges, the existing infrastructure must be adapted to our new purpose, providing easy-to-use, customer-centric experiences
• Bankers and private financial institutions erroneously believe that a poor person takes a microcredit loan because she cannot save. But in reality, they are able to save because of village postal agents who collect their savings from their doorstep. Greater accessibility has major benefits for not only the customer but also the supplier.
• It is also critical we recognise that the conventional method of one-size-fits-all is no longer viable. Products must be designed and delivered intelligently to meet the customer where they are, and by keeping in mind that they use products to reach their goals. This involves tailoring the products to the needs and income profile of the customer, including being cognisant of their environment, geography, and demography. Example: Mann Deshi Bank to design and launch a cash credit product for women. Since its launch, hundreds of women vendors in the area have benefited from the product.
• In the traditional financial system, the design and distribution cost on financial products at sachet size is high. Expensive technology development and brick-and-mortar infrastructure all contribute to an impractical model.
• Financial service providers are consequently dissuaded from attempting to reach rural, financially excluded groups, and the availability of financial services, therefore, remains an urban privilege. By using the power of machine learning and cloud infrastructure, we can significantly lower operating costs while offering customers affordable, bespoke financial products that help them reach their goals.
• While the above are supply side issues, the demand side has its own set of challenges. Financial literacy and technology readiness are two critical issues. Financial education assists people in making sound financial decisions. These are not just challenges of the Indian market, but other economies too.
• Despite constraints, rural women entrepreneurs follow the motto “my courage, my capital”. It is our responsibility as financial service providers to create an ecosystem for them to deploy this capital of courage