There are significant and untapped opportunities to use technology better on behalf of citizens and communities. These include improved service planning, design and delivery, particularly to address the needs of disadvantaged groups and individuals.

The digital divide is a challenge of both access and the ability to effectively use information and communications technologies (ICTs).  ICT consists of connectivity, computer hardware and software, content, services and education. Inclusion can no longer just be seen as having a device and a connection.

Stressing on linkages, Mihir Shah, Member, Planning Commission said, “inclusion and reform need to be taken very carefully together in an understanding of what we need, when we say that we want the benefits of growth to reach out to the large amount to the people of this country.”

He said genuine partnership and empowerment was needed by looking at Business Correspondent (BC) model, what is coming up in the UID Project, and more importantly, the modern technology offerings that are available today. Shah, who has covered a lot in terms of marrying the BC/BF model along with NREGS payments and the Panchayati Raj Institutions, said the entire notion of delivery needs to be questioned and replaced by notion of partnership. He pointed out that though “we have a great beginning with NREGA programme,” the incentives for banks to reach remote areas is not sufficient as on date and we need to have an estimate of the total cost of involvement as far as the project is concerned. He stressed on the viability of the BC model to make it a possibility in the long run.

At the heart of digital inclusion, however, lies the fundamental issue of IT accessibility. The concept is quite straight-forward: people cannot be included in something they cannot access. IT accessibility, a statement of IT capability or enablement, most commonly enables digital inclusion by addressing ability or age-related barriers that prevent a person from accessing or interacting with information or services that are delivered electronically. In addition, IT accessibility supports digital inclusion by helping remove barriers to using or benefiting from online information and services based on a person’s technical proficiency, native language, or literacy level. 

Incorporating accessible technology in governmental initiatives to develop digital communities helps agencies to improve productivity in municipal services and deliver better social and community outcomes.

Vijay Mahajan, CEO, Basix, said, “perhaps we need to offer a five-step process to get the excluded go all the way up to a lifestyle which can be digitally enhanced.” He spoke about the payment issue with the National Social Assistance Programme and the digital means for its implementation. “Between NREGA and the old-age pensions, the payments for pregnant women and those various types of payments that government is already making, the government should resolve that this shall be done only through digital mode and through a digital gateway,” he added.

Through digital inclusion we are trying to achieve some elements of providing services to the large mass of people in this country who are unreached, said K V Eapen, Joint Secretary, Ministry of Finance. One of the key services is financial services and bank accounts. Achieving financial inclusion is a concern and the BC/BF model needs to be tried out as mobile systems are yet to take off completely, he said adding that there is a need to look at the microfinance institution model. 

There is growing evidence that digital technology can greatly enhance both quality of services and quality of life – particularly for the most disadvantaged citizens and communities

Revisiting Financial inclusion

Financial inclusion is not an option but a compulsion, as over 45.9 million farmer households in the country, that is a little more than 50 per cent, and 51.4 per cent of the total of 89.3 million households in the country do not access credit either from institutional nor from non-institutional sources. To widen the scope of financial inclusion, commercial banks, regional rural banks and micro-finance institutions need to develop a suitable mechanism to reach out to the underprivileged and the marginalised.  

According to C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister, to hasten steps for promoting greater financial inclusion, it was important that suitable capacity building steps were undertaken in the financial services industry, as a change in the mindset of industry people was essential. He said that it was also important that the industry simplify procedures to give the business/ banking correspondent model the push it needs.  Simultaneously, it was important that financial institutions rework cost factor, making it worthwhile for the institutions, the intermediaries and the customers to accept such inclusion initiatives.

On his part, V K Sharma, Executive Director, Reserve Bank of India, mentioned how the Bangladesh Central Bank was supporting microfinance institutions in the country and the novel bank guarantee concept that they have implemented.  He said that the RBI should make availability and access an integral component when allowing new bank branches. Detailing the RBI’s initiatives, he said that the central bank’s regional offices were seeking to identify about 160 villages, 7-8 for each regional office, to ensure 100 per cent financial inclusion not as a proof of concept but as a model that is sustainable and that can finally be upscaled to promote universal financial inclusion.

Pointing out that it was important for the financial institutions to understand the economic profile of the targeted people, their credit, savings and insurance needs, Jayshree Vyas, Managing Director, Shri Mahila SEWA Sahakari Bank Ltd, said that this was important as it would then enable them to design and market products more innovatively. “What is important in any inclusion initiative is that there is greater hand-holding between the institutions and the excluded.  Such hand-holding, according to Alok Bharadwaj, Sr Vice President, Canon India, can only be facilitated with the use of appropriate technology initiatives.  Such technology will also ensure sustainable spread of inclusive growth. 

Creating sustainable models for the bottom of the pyramid is something which needs to be very carefully looked at, said Dharma Krishnan from the Department of Information Technology.  Any product that is targeted at this segment needs to be superior in price to performance ratio, as it is only this that will attract the excluded.  In this context, he pointed out that the financial sector needs to come out with innovative hybrid models to promote greater financial inclusion, leveraging technology to ensure optimal delivery. 

According to S S Tarapore, Distinguished Fellow, Skoch Development Foundation,  the excessive obsession with the KYC (know your customer) norms was becoming a bottleneck in promoting greater financial inclusion. Here, bankers must use their own judgement, implementing only the mandatory norms to ensure greater accessibility. In this connection, he said that the government could consider granting banking licenses to post offices also, and take advantage of their spread to promote inclusive growth. Tarapore also urged the senior management of the financial institutions to undertake incognito visits to banks to obtain a first-hand account of the actual operations at the grassroots level.  In this context, he emphasised that it was important for the organised banking sector to have closer links with the indigenous financial system.

Sanjoy Mohanty, CEO, Zero Mass Foundation started with the Orissa project and then looked at the fixed cost model for the project to be implemented through a service provider mechanism. In two and half years Zero has covered 5.4 million people across 6,234 Gram Panchyats and disbursed nearly Rs 450 million.  This project has cost them about Rs 250 million. They have received support both from NIC and DIT for this.   Interoperability is an issue where they are working with RBI, IDRBT and IBA and the business model of the BC has undergone a sea change as far as the last few months are concerned and appropriate institutional architectures are being put in place.  Certain minimum standards are definitely required to be evolved and the BC is to be literate enough to ensure that the operations are successful.

With regard to biometrically enabled technology leveraged delivery of payments, interoperability first has to happen at the backend and then at the front-end.

Deepak Phatak of IIT-B, Mumbai favoured conformance to standards and interoperability and said that several people who say that they are meeting the standards when you actually put together heterogeneous products, interoperability becomes an issue.  He took smart card as an example of a project in which he was involved and finally said that for end-to- end multi-applications to be permitted on the deployed technologies it should be possible to ensure not only the mandatory fields, the additional fields also are able to comply with each other so that interoperability is assured.  Finally he said that schemes which are completely self-viable are the schemes which in the long run will be able to take off.

Most of the analysts and experts referred to linkages between financial inclusion and digital inclusion. M V Tanksale, Executive Director, Punjab National Bank, stressed that the poor are also bankable. Giving the example of the 40 plus projects PNB has implemented with 6 million no-frills accounts, he said that these pilots today have upscaled, thanks to technological inputs. More importantly, the BC/BF model is an option which they are seriously looking at and BC agent to establish the credibility if this project is to be taken in the long run. The feasibility and proliferation of mobile banking is also something that the bank is exploring.

“Achieving financial inclusion is a concern and the BC/BF model needs to be tried out as mobile systems are yet to take off  completely. There is a need to look at the microfinance institution model.”

—K V Eapen, Joint Secretary, Department of Financial Services Ministry of Finance

K Ramakrishnan, Chief Executive, Indian Banks’ Association said, we need to look at digital inclusion more than financial inclusion. In addition, one needs to examine the issue of analogs, digital immigrants and digital natives, and have clearly defined affordable technology solutions. 

In fact, as the recent United Nations’ E-government Survey 2008 reveals, governments are increasingly looking towards e-government-as-a-whole concept, which focuses on the provision of services at the front-end, supported by integration, consolidation and innovation in backend processes and systems to achieve maximum cost savings and improved service delivery.

As the NeGP advances on the ground in terms of infrastructure, we need to look at issues related to change management, availability of applications, national integration of various services and players offering such services, among others. A critical challenge that e-governance movement in India today faces is that while the programme has been underwritten by the DIT, the drivers have to come from the respective domain ministries, both at the Central and State levels.

The social and economic benefits of digital technology can be profoundly empowering. Increasingly, technology supports every aspect of our lives – at home, at work, in the community, in how we communicate and in the services that we use. There is growing evidence that digital technology can greatly enhance both quality of services and quality of life – particularly for the most disadvantaged citizens and communities. Digital inclusion is fundamental if we are to maximise our potential for economic growth, prosperity and social cohesion.