Not by Digital Alone

Context: An analysis of how over-reliance on tech can worsen financial exclusion in rural India.

A list of “last mile challenges” : (hurdles in accessing money in bank account) due to over-reliance on digital technologies: -

• Related to Customer Service Points (CSP) and Banking Correspondents (BC):
  • Issues related to network and electricity: hamper the banking services through the Aadhaar Enabled Payment Systems (AePS).
  • Illegal service charged: Some workers get charged (45 % in Jharkhand) for transacting at CSPs/BCs.
• Lack of knowledge among the beneficiaries: Workers have little clue about where their wages have been credited and what to do when their payments get rejected.
• Lack of accountability and grievance redressal: Lack of any accountability for Aadhaar Payments Bridge Systems (APBS) and AePS and absence of grievance redressal for Direct Benefit Transfer (DBT).
• Lack of consultation: with the workers/beneficiaries regarding their preferred mode of transaction.
• Lack of checks and balances: gives payment intermediaries a freehand due to the absence of accountability framework for payment intermediaries.
• Gives rise to new forms of corruption: E.g. Scholarship scam in Jharkhand, based on a nexus of middlemen, government officials, banking correspondents and others.
• Struggles in withdrawing money from account: A survey by LibTech India on Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) workers shows -
  • 42 % of people in Jharkhand and 38 % in Rajasthan took more than four hours to access wages.
  • An estimated 45 % had to make multiple visits to the bank for their last transaction. 40 % of beneficiaries had to make multiple visits due to biometric failures.
  • Average travel cost for one visit to a bank in Jharkhand is Rs 50. 
  • Two-thirds of time workers were denied the facility to update their passbooks at banks. ( passbook is the only way for rural bank users to keep track of their finances).
• Low bank penetration: Just 14.6 bank branches per 1 lakh adults in India which sparser in rural India. 

Conclusion: A technological intervention must have a governance framework in which protection of rights must be fundamental and which provides more choices to the marginalized.