Indian financial system: Indian financial institutions rely on the good old system

India is going through a structural transformation that also embraces retro chic. If in fashion the bells are all the rage again, and in Hindi cinema storytelling is back in full force – this time via the streaming platform – then in banking the industry has again embraced the model of institutions Development Banks (DFIs) for infrastructure lending that was in vogue almost 30 years ago.

This tendency to replicate the “good old days” is also found in many of the Indian government’s inclusive policy programs that empower people at the lower economic strata, and women in particular. India’s mostly unrecognized ‘heroes’ have always known how to seize the opportunity whenever the occasion demanded it. Fast forward to 2022 and India has its fair share of businesswomen in its hinterlands offering financial services, payment advice, teaching lessons in financial planning and the virtues of small savings. . Essentially real wisdom that they don’t teach you in B schools.

This was made possible thanks to the correspondent banking (CB) model. It took on new life with the introduction of the Pradhan Mantri Jan Dhan Yojana (PMJDY) in mid-2014, a starting point woven around the use of the country’s economic resources for the welfare of the poor and marginalized. .

GoI data on the Sukanya Samriddhi Yojana (SSY) indicate that the maximum accretion occurred in Uttar Pradesh, Tamil Nadu, Maharashtra, Madhya Pradesh and Karnataka, which together account for just under the half of the total number of SSY. accounts opened so far – 2.73 crore as of the end of December 2021. In fact, around 1.43 crore accounts were opened between April 2018 and October 2021 itself, blunting successive waves of the Covid-19 pandemic .

What worked in favor of these states was probably another innovative GoI program under the aegis of Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM), that of the sakhis of British Columbia – known as ‘digital sakhis’, didis or dosts in many states. – that usher in another phase of revolution in the BC ecosystem, building bridges between self-help groups (SHGs) and BCs, promoting entrepreneurship while platforming adoption access and use digital services and financial products.

Rarely do well-intentioned policies meet socio-economic and cultural forces head-on, creating synergistic changes that alter the fabric of the nation, woven around equity and sustainability as its two great pillars of collaboration. India, in its 76th year, is delivering on the promise of becoming a great nation again within the next 25 years.

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Don F. Davis