wl-6979-Digital Financial Inclusion: The Indian Case in Global Context

Digitalisation holds enormous promise for financial inclusion in taking the basic financial services to the last mile and their smallest user. The global advent of digital financial inclusion (DFI) so far has been in the form of a near-universalisation of the access to bank/mobile money accounts and a rapid spread of retail digital payments. DFI in India too has been spearheaded by digital payments, revolutionised by its Unified Payments Interface (UPI), followed by digital lending and digital insurance. Using a fixed effects panel model covering the period from 2011 to 2021, economic growth, urbanisation and digital infrastructural development emerge as the major macro-level determinants of DFI globally. Notwithstanding its promise, intra-population digital divides remain a key challenge in the path of DFI globally as well as in India. The Indian case bears out the role of micro-level, user-specific characteristics, such as gender, place of residence (rural or urban) and age in influencing DFI. Going forward, strengthening the digital financial infrastructure in a targeted manner to narrow the digital divide and designing conducive policy measures for a regulated growth of the FinTech sector is the way forward for India for enhancing DFI while preserving financial stability and consumer protection.