Digital India has become the centrepiece of the current Union governments plans.

It is expected to be a key driver of

growth and governance, and Digital Indias stated mission is to transform India into a digitallyempowered society and
knowledge economy (1).Internet connectivity is key to such a digitally empowered society

The policy of the Indian government is necessarily dominated by supply side concerns provision of infrastructure.
On the demand side, it is dominated by one concern provision of e-governance. While there are three aims of
Digital India, providing Digital Infrastructure as a Utility to Every Citizen, Governance & Services on Demand and
Digital Empowerment of Citizens, a closer look at the nine pillars of Digital India that support the three vision areas
shows that the demand side is not a key concern for the government

In this regard, the creation of a National Digital Inclusion Mission 2020 could be timely. Such as mission
could focus on four key areas of digital exclusionaccess, information, services, and training and
livelihood.

2015 Set to be Big Year for

Digital Financial Inclusion in
India
15 January 2015
4comments

Kabir Kumar
Dan Radcliffe

When it comes to digital finance, India punches below its weight. The 2014 Intermedia
Financial Inclusion Insight (FII) Survey of 45,000 Indian adults found that 0.3% of adults
use mobile money, compared to 76% in Kenya, 48% in Tanzania, 43% in Uganda, and
22% in Bangladesh.
This stems from a range of factors, but lack of innovation-friendly regulation has been
barrier #1. Most importantly, the Reserve Bank of India (RBI) historically allowed nonbanks to participate in payment services in two restricted ways. They could build and
manage an agent network on behalf of a bank; or they could issue a semi-closed
wallet which allow customers to cash-in, buy airtime and other services, but not cashout not a particularly useful product for a poor customer! This regulatory framework
ensured that Indias banks controlled not only the market for savings and credit, but
also payments. The problem is that banks have struggled globally to shift away from
their reliance on branch-based approaches and legacy technologies to establish digital
payment connections in poor and rural communities. With this restriction in place, its
unsurprising that only 0.3% of Indian adults use mobile money
This all changed in 2014. In November, the RBI issued Payments Bank guidelines which
allow companies with significant distribution expertise (including mobile operators,
retail chains and existing agent managers) to offer deposit accounts and payments as a

stand-alone business. Payments Banks wont be able to directly offer credit, but they
can:

Build branch, ATM, and agent networks;

Issue debit cards;

Offer deposit accounts;

Process domestic and international remittances;

Process utility payments; and

Serve as an agent to distribute credit, insurance, and mutual funds on behalf of

other financial service providers.

Payments Banks will initially be restricted to holding a maximum balance of Rs.100,000
(US $1,600) per customer, but the RBI indicated that it would re-evaluate this limit as
the model evolves. Deposits will be covered under Indias Deposit Insurance Corporation
and accounts will be eligible for the RBIs simplified know-your-customer (KYC) norms.
Payments Banks have access to the national payment system and interbank markets for
temporary liquidity management. Despite misunderstandings in the press, Payments
Banks license applicants, like mobile network operators, will be permitted to leverage
their existing distribution networks and technology systems, creating a big opportunity
for those organizations to extend digital payment services into poor and rural
communities. The deadline for submitting license applications is February 2, 2015 and
several major players plan to apply.
The Payment Bank regulations are a game-changer, but they overshadow five other key
regulatory moves in 2014:

First, the RBI lifted its prohibition against banks establishing agents more than 30
kilometers from the nearest bank branch. The 30KM rule has befuddled the
financial inclusion sector for years by preventing smaller banks with limited
branch networks from building national agent networks. By lifting this restriction,
the RBI effectively leveled the playing field between large and small banks, at
least when it comes to agent banking. And once Payments Banks come online,
they will be able to establish agents without worrying about building brick and
mortar branches to comply with the 30KM rule.

Second, the RBI removed the requirement that customers provide proof of
current and permanent address for opening a bank account. This requirement
was particularly tricky for migrant laborers who have trouble securing documents
which prove their current address.

Third, non-bank finance companies (NBFCs) can now act as business

correspondents. This will allow Indias microfinance institutions many of which

already serve millions of poor customers to build agent networks on behalf of

banks.

Fourth, the RBI concluded its pilot to determine if licensed prepaid issuers, such
as Airtel Money and Vodafone M-PESA, could allow their customers to cash-out. If
the RBI removes that restriction in 2015, it will create more options for non-bank
providers to offer payment services.

Lastly, the Telecommunications Regulatory Authority of India (TRAI) issued

guidelines which require mobile operators to provide banks USSD channel access
for mobile banking. This will ensure that banks can leverage mobile operators

communications channels when offering mobile banking.

These regulatory moves add up to a game-changing year, paving the way for a big
expansion in digital financial inclusion in the next 2-3 years. But 2014 was as much
about the Indian Governments policies as it was about regulatory changes. In parallel
to the RBIs interventions, Prime Minister Modi launched an ambitious financial inclusion
scheme called Pradhan Mantri Jan-Dhan Yojana (Prime Ministers Peoples Wealth
Scheme) - the only scheme from Indias technology-friendly Prime Minister that carries
his name. Digital transactions have not been the focus of previous financial inclusion
efforts in India which often rely on public sector banks to push accounts but without a
pathway to make those accounts transaction ready in a digital ecosystem. While PMJDY
also relies on public sector banks and has an initial focus on accounts opened, it also
breaks from the governments previous financial inclusion efforts by focusing on digital
transaction functionality and making full use of some extraordinary payments
infrastructure already in place. We expand on the PMJDY scheme in the next post.

Since independence we hear India is developing country. When are we going to hear India is
emerged country? The phase is slowly moving forward to compete with digital world. In order to
compete with digital world, we need to transform our country into a digitally empowered
knowledge economy. As result of high and forward thinking of our prime minister, a pan India
Programme called Digital India has been proposed in the Budget 2014.
Background
of
Digital
India
Programme:
Even though India is known as a powerhouse of software, the availability of electronic
government services to citizens is still comparatively low. Digital channels for delivery of sales
and service are the new normal. While a billion Indians are still discovering the power of Internet
and convenience of Digital Services, there are 200 million Indians for whom Online is THE ONLY
way to transact. The National e-Governance Plan approved in 2006 has made a steady progress
through Mission Mode Projects and Core ICT Infrastructure, but greater thrust is required to

ensure effective progress in electronics manufacturing and e-Governance in the country. The
Digital India vision provides the intensified impetus for further momentum and progress for this
initiative and this would promote inclusive growth that covers electronic services, products,
devices, manufacturing and job opportunities. India in the 21st Century must strive to meet the
aspirations of its citizens where government and its services reach the doorsteps of citizens and
contribute towards a long-lasting positive impact. The Digital India Programme aims to transform
India into a digitally empowered society and knowledge economy by leveraging IT as a growth
engine of new India.
What is Digital India? Digital India is an initiative by the Government of India to ensure that
Government services are made available to citizens electronically by improving online
infrastructure and by increasing Internet connectivity. It was launched on 1 July 2015 by Prime
Minister Narendra Modi. The initiative includes plans to connect rural areas with high-speed
internet networks.
Digital India Programme Includes various schemes worth over Rs 1 lakh crore like Digital Locker,
e-eduction, e-health, e-sign and national scholarship portal. The programme includes projects
that aim to ensure that government services are available to citizens electronically and people
get benefit of the latest information and communication technology. The Ministry of
Communications and IT is the nodal agency to implement the programme.
Three
Visions
and
Nine
Pillars:
There are 3 vision areas and 9 pillars that provide foundation for Digital India. There are solutions
that support these pillars and are enabled by technology that is viable and feasible.
The
three
visions

Digital
infrastructure
as
a
Utility
to

Governance
and
Services
Digital Empowerment of Citizens (Digital literacy)

Every
on

are
Citizen
Demand

Digital Infrastructure as a Utility to Every Citizen: The government is planning to provide

high-speed internet connectivity to 250,000 Gram Panchayats, which will be a core utility for
digital inclusion. The citizens will be provided with a digital identity which will be unique, lifelong,
online, and valid. There will be easy access to Common Service Centers and a shareable private
space for every citizen on a public cloud.
Governance and Services on Demand: Under this vision, all the government departments will
be seamlessly integrated with high-speed optical fiber, which will improve inter operability of
these organizations and will result in real-time service delivery from online or mobile platform.
Apart from this, the government is planning to make all citizen entitlements portable through
cloud for easy and country-wide access and to digitally transform the services for improving ease
of doing business in India. The government also plans to use the power of Geographic Information
Systems (GIS) for decision support systems & development.
Digital Empowerment of Citizens: This vision is to empower citizens through digital literacy
and universal access to digital resources. e.g. all documents/certificates to be available on cloud
and in Indian languages. Government also wants to provide collaborative digital platforms for
participatory governance. e.g. My Gov website for crowd sourcing ideas.

Nine Pillars are (Which is called Primary objectives of Digital India Programme)
i) Broadband Highways ii) Universal Access to mobile phones iii) Publics Internet Access
Programme iv) e-Governance Reforming government through Technology v) e-Kranti Electronic
delivery of services vi) Information for All vii) Electronics Manufacturing Target NET ZERO
Imports viii) IT for Jobs ix) Early Harvest Programmes.
Cyber Security in Digital India: Government of India started the Digital India initiative to
transform citizens life through digital medium to establish robust platform of modern
technologies to connect citizens to achieve necessary services at common service centers like
training, capacity building, registration, grievance redressed, technical support, enrollment in
government schemes. This is the new era in which the Government is looking forward for every
citizen to have access to Internet and ensure good governance via e-Governance by
implementing the Digital India initiative.
With such ambitious initiatives and growing security concerns, security has become one of the
most important focus areas which need to be looked from the perspective of protecting citizen
information, government agency details and critical infrastructure. There have been several
incidences of cybercrime on corporate and individual level in the past few years. Putting the data
of 1.2 billion people on the cloud could be risky and could threaten the security of individuals and
the nation. In digital age, we need to ensure that ecosystem is secured from various cyber
threats and espionage as they are growing at an exceptional rate. With threat landscape fierce as
never before, robust framework needs to be established for cyber security and this also
motivates the need to understand the root cause, and implement a proactive approach in order
to avoid any high impact to the government or organizations vision and business.
Thus, Digital India aims at making technology central to enable change. By creating this kind of
economy, cyber security will be one of the key concerns of the initiative since the impact of
losing the data gets higher when moving towards a digitized economy. Cyber-attacks at this level
would not only affect the public safety of citizens, but also the commercial integrity of
organizations and ultimately, global existence and competitiveness of India. Hence, the Digital
India project demands very strong network security at all levels of operation.
Conclusion: India would become a very powerful digitally connected world. This would lead to a
good architecture for electronic delivery of service. The Digital India project provides a huge
opportunity to use the latest technology to redefine the paradigms of service delivery. A digitally
connected India can help in improving social and economic condition of people living in rural
areas through development of non-agricultural economic activities apart from providing access to
education, health and financial services. However, it is important to note that ICT alone cannot
directly lead to overall development of the nation. The overall growth and development can be
realized through supporting and enhancing elements such as literacy, basic infrastructure, overall
business environment, regulatory environment, etc. Further, Security should be the most
important area at all level of operation for the digitally empowered knowledge economy of the
country.

A lot people who are financially excluded are the same people who find themselves digitally excluded as
well people on a low incomes, with disabilities, and older people for example. Its the link between digital
and financial exclusion particularly for this demographic aspect that Im really interested in.

LLOYDS1.PNG

Defining the key components of digital financial inclusion

Digital financial inclusion can be defined broadly as digital access to and
use of formal financial services by excluded and underserved populations.
Such services should be suited to customers needs, and delivered
responsibly, at a cost both affordable to customers and sustainable for
providers. There are three key components of any such digital financial
services: a digital transactional platform, retail agents, and the use by
customers and agents of a device most commonly a mobile phone to
transact via the platform.

A digital transactional platform enables a customer to use a device to

make or receive payments and transfers and to store value electronically
with a bank or nonbank permitted to store electronic value.

Retail agents armed with a digital device connected to communications

infrastructure to transmit and receive transaction details enable

customers to convert cash into electronically stored value and to

transform stored value back into cash. Depending on applicable
regulation and the arrangement with the principal financial institution,
agents may also perform other functions.

The customer device can be digital (e.g., mobile phone) that is a

means of transmitting data and information or an instrument (e.g.,

payment card) that connects to a digital device (e.g., POS terminal).

DIGITAL-FINANCE.PNG

You cant have financial inclusion

without digital inclusion
Posted Jul 15, 2016 by Christoffer O. Herns (@hernaes)

Next Story

Christoffer O. HernsCRUNCH NETWORK CONTRIBUTOR

Christoffer O. Herns is vice president of Strategy, Innovation and Analysis at Sparebank 1 Group,
Norways second-largest financial institution.
More posts by this contributor:

The ethics of transhumanism

Banks should not underestimate Facebook Messenger
How to join the network

One of the most exciting aspects of fintech is the promise of delivering financial services to the
unbanked and underbanked population of the world. According to the World Bank, 2 billion
people are still unbanked in the world today.
Even though this is a high number, it still is a decrease of 20 percent since 2011. Of the 2.5
billion people who have no access to a traditional bank in 2011, 1 billion have cell phones and

services like M-Pesa has provided mobile money accounts to 12 percent of adults in Sub-Saharan
Africa. However, a study conducted by GSMA found that women are on average 14% less
likely to own a mobile phone than men, creating a gender disparity in financial inclusion.
Of the unbanked population, 1,5 billion people are unbanked due to their inability to prove their
identity through a valid birth certificate, passport, proof of residence through utility bill or some
other means to fulfil traditional KYC-procedures.

When there is no bank account, people only gain access to and underground economy and is on
the outside of vital economic and public services like education or welfare.
This has sparked the debate that digital inclusion if a prerequisite for financial inclusion,
as digital, and specifically mobile financial services accelerates financial inclusion.
The United Nations has stated as one of their sustainable development goals that providing a
legal identity for all of the worlds population by 2030 is a shared objective for the international
community. This is also backed by the World Bank through theIdentification for Development
(ID4D) program to assist developing countries achieve this goal.
However, it is no straightforward process to create a global digital identity and several
alternatives have been suggested. Estonia offers an e-residency, a transnational digital identity
available to anyone in the world interested in administering a location-independent business
online.

There are several benefits for countries offering such a digital residency, including tax on any
earnings generated through digital banking services on the identity, and is already investigating
the prospect of applying blockchain technology to the identity. This includes an e-voting scheme
for companies listed on Estonias stock exchange, as well as notarization services through
Bitnation.
Deloitte is developing a proof of concept for smart identity, including the ability to use a single
digital key to access any identity-restricted location, automated identification and verification of
customers, public records like driving licenses and passports, into a single digital record.

The use of blockchain in creating trust in digital identity concepts were also one of the key
subjects at the ID2020 conference, hosted at the United Nations in May with the goal of getting
governments and corporations on the same page as UN when it comes to solving the need for
global digital identities.
One of the initiatives seeking to provide a solution is a collaboration effort between ConsenSys,
Microsoft and Blockstack Labs that aims to create an open source, self-sovereign, blockchainbased identity system. Bitnation has also launched itsDecentralised Borderless Voluntary Nation
Constitution using Ethereum, promising users to create their own digital nation through smart
contracts.
Facebook is also taking matters into its own hands, and is creating a global digital
ecosystem revolving around ownership of their users digital identity. According to the founder of
Piratebay, Facebook can be considered the worlds largest nation with their own views on ethics
and censorship.

As our lives are increasingly entangled in digital services, social logins are shaping the future of
our digital identities. The European Commission is even proposing the idea of using national ID
cards to log in to online services, including Facebook, Twitter and even Uber. Thus strengthening
your Facebook profile as a borderless digital identity.
Despite notable efforts, technology alone will not solve the problem. The real hurdles are
borders, sovereign governments, global trade and businesses.
The first challenge is issuing and registering a digital identity. The problem disproportionately
affects children and women, where it is estimated that 750 million children have no legal identity
and as of 2012, the world has failed to account for the births of 230 million children under the
age of five.
This effectively puts millions of children at risk of being victims of human trafficking and child
labor. Therefore, birth registration must be a top priority for digital inclusion. A blockhain-based
approach could provide a starting point for an immutable record of legal identity. By applying a
decentralized approach, citizens are able to own and update their own personal identity, thus
removing the dependency on governmental intervention.

Storage, authentication, authorization and audit are key factors when creating a digital identity
and different biometric factors as a means of authorizing an authenticating contain appealing
properties to create a frictionless digital identity. Identity theft is an increasing problem, and
a blockchain-based digital identity could potentially provide provenance for digital identities.

The importance of providing legal digital identities to the world stretch far beyond financial
inclusion, and has the potential to provide better gender equality in developing economies, help
people gain access to basic public services like health and education and secure rights for
refugees just no name some of the benefits stated by the United Nations.
Technology alone is not the answer, but the promise of blockchain could act as an enabler for a
decentralized global identity database, where the people owned their own identity and no single
government or corporation could assert sovereignty.
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CONCLUSION

Highly digitally capable consumers enjoy greater financial resilience they make
savings deposits 50% more often. Their savings deposits are also on average
four times bigger. One of the key hallmarks of financial resilience is the ability to
future-proof and deal with unplanned financial events. For highly digitally capable
consumers, saving is more of a habit,
Highly digitally capable consumers are better able to monitor their finances and
make informed buying decisions, and therefore avoid some of the financial anxieties
experienced by those less-digitally capable
This index will measure UK financial and digital capability over time This new
analysis provides greater clarity on the inclusion landscape from a financial
capability and digital capability perspective. In doing so, we have learned that there
are 13.1m people in the UK with low financial capability and 11.1m with low digital
capability; 3.2m have low digital and financial capability and have the most to gain.
Annualising the report and utilising longitudinal data will enable ongoing
observation of the evolution of consumer trends. The report will be annualised in
order to observe the evolution of consumer trends year-on-year. Being more
digitally capable can help consumers make the most of their financial circumstances
Consumers from all financial backgrounds and capabilities are utilising the Internet
for savings on their spending from lower utility costs and cheaper insurance to
daily deals and discount vouchers. On average, online consumers stand to benefit
from 744 in annual savings on their digital spend. For low-income consumers, this
can represent a significant proportion of overall spend. Importantly, unbanked
consumers are also using price comparison tools, though they are often unable to
make use of the savings they find; this constrains their ability to benefit from the
digital dividend. Greater financial capability does not necessarily drive consumers to
use online tools and services Financially excluded and highly financially capable
consumers alike can be equally digitally engaged. There are a potential 7.8m
consumers who have high financial capability but are not capitalising on online
benefits. Age has a significant impact on the Consumer Index scores Regional
differences in the data are relatively slight compared to those relating to age. We
have highlighted opportunities for regions to focus on lower-capability consumers,
but believe that it is the annual tracking of regional scores that will be of most
interest. From an age perspective, our data shows that digital capability decreases
with age, and financial capability increases; consumers of 4049 are at the
equilibrium of this. This highlights the opportunity to provide digital training and
engagement activities for this older cohort, therefore they can act as ambassadors
for others. Conversely, there is an opportunity to educate younger people on the
benefits of money management and making the most of their financial skills.
Digitally capable consumers exhibit more financially resilient behaviours Highly
digitally capable consumers are making savings deposits of four times the value
and are making those deposits 50% more often than less digitally capable people .
This enables them to better manage unplanned financial activities. There is much to

be gained from tackling the barriers to financial and digital inclusion Aside from
monetary value, highly digitally capable consumers are seeing a vast array of
lifestyle benefits from being online; they feel better informed, have more time to
spend on things they enjoy and are better connected to the people that matter to
them. They also report greater feelings of overall financial wellbeing. Of those using
online money management tools, 96% say it is useful to manage money 24/7 and
86% say it helps them track and control finances. Importantly, 86% also report
that they worry less because they can monitor their money. For the digitally and
financially excluded these benefits are less accessible. Across both excluded groups
(7.1m UK citizens), an overall annual savings