Jan-Dhan and other schemes cannot be a success till banks don’t resolve the interoperability problem
While over Rs22.37 crore accounts and Rs1.26 lakh bank mitras were added under the Jan Dhan Yojana (JDY), some gaps are undermining India’s financial inclusion efforts.
The Economic Times says that a National Payments Corporation of India (NPCI) review found that the failure rate for interbank transactions—for JDY accounts—was a whopping 80%. Unlike in urban areas, where one can withdraw cash from ATMs, account-holders in rural areas rely on a network of bank mitras and customer-service points (CSPs) to open accounts, make deposits and even withdraw cash.
But, with the CSPs being associated with different banks, they may not always be able to successfully carry out transactions made with RuPay or ATM cards from other banks—this was the case in this instance. The current fiasco will raise concerns over the plan to introduce more point-of-sale devices to reduce reliance on cash.
The NPCI has now initiated an audit of the financial inclusion tech of banks and aims to bring down the rate to 20%. The government cannot afford such failures, especially when it aims to reduce the cash-use and mobilise JDY accounts via schemes like Direct Benefit Transfer.
While the government has issued over Rs18 crore RuPay cards and linked almost half of the accounts with Aadhaar, the success of its transfer schemes, the Aadhaar-enabled payment systems and RuPay cards will depend on its ability to allow seamless transactions.