India at the forefront of global bank account growth

Adult Indians are transacting more through their bank accounts and restricting the use of cash, a behavioural shift that could help improve the government’s tax revenues.

Four-fifths of Indian adults have opened bank accounts by 2017, compared with just 53% in 2014, when the incumbent government came to power, show data from the Global Findex Report that highlighted New Delhi’s contribution to global growth in financial inclusion.

The World Bank released the report late Thursday. Findex, launched with funding from the Bill & Melinda Gates Foundation, tracks data on how adults save, borrow, make payments, and manage risk.

The report shows the rapid increase in financial inclusion that has taken place in India, with an increasing number of account holders in the country. The share was just 35% of the adults in 2011.

The report recognizes the availability of bank accounts, debit cards and mobile connections in India, which would be critical in improving the account usage in the future.

A sizable 36% of account owners in India are already using their accounts to make or receive digital payments, the report says.

Digital payments could well be explored for receiving wages, payments against agricultural goods and utility transactions.

The report has cited the success of the Jan Dhan Yojana, the government’s pet project aimed at bringing the masses within the formal banking system.

The total number of Jan Dhan account holders has risen to 31.44 crore in March, 2018, up from 28.17 crore a year earlier, according to government data.

The report sources its data largely from surveys that were conducted in the summer of 2017.

India has huge potential to further improve the account usage, with the report pointing out the country’s holistic progress in expanding the reach of formal banking channels.

The total number of current and savings accounts in banks has risen to 157.1 crore in March, 2017, compared with 122.3 crore two years earlier.

The Jan Dhan programme is at the vanguard of the global growth in banking accounts. There are about 51.4 crore bank accounts opened globally between 2014 and 2017. The number of Jan Dhan accounts opened in India during the same period forms almost 55% of the global gauge, with an increasing share of women applicants.