Timeline

1. This phase is defined by learning the case of financial inclusion in India and how it played out globally. In India, history since 1950 show change in FI strategies in quick succession. Large part of this period, banks attempted FI as per their institutional norms and practices. RBI spearheading the policy and regulatory space, assigned operations related to FI to the discretion of banks.

2. An RBI report in Nov. 2019 brings to notice that nearly 40% families are still left unreached. Thus far, banks led and controlled the FI operational process, except that of one and only external intervention. This intervention came into being in 2016 as National Payments Corporation of India (NPCI) 1-driven technology provision for aadhaar-enabled payment system (AePS). The AePS payment technology liberated FI operations from stringent bank-led payment norms and protocols; however, is ensuring highest standards of safety and customer protection. It also helped remove conventional approaches of area- and sub-service area-based banking approaches. Despite complying with the technology-based provisions of National Payments Corporation of India (NPCI) , bank-led processes seem yet to respond to the urgency of reaching the unreached.

For DoRD, this period was a learning curve. While learning the technicality of the subject, it was a phase of contesting the normal. The phase helped appreciate the fact that banks as commercial entities may not be the best vehicle to take FI to the poor. Also, that the State is mandated to support the FI process on the ground and consider affirmative action to aid the poor and the marginalized. DoRD’s interventions must be in advantage of the poor _ first, by deepening the FI apparatus and subsequently through several other measures. While May 21’ 20 announcement of the CM underlined State’s commitment to the poor; the GO dated June 09’ 20, sent the first vibe of constructive partnership between banks and the Government, the later endowing a range of operational costs for the first 6 months

Driving digitization into the wrong side of the divide; deepening into the strata of the unreached, is a decisive step forward. Approx. 87% of BC candidates use smartphones. Almost all Self Help Group (SHG) are reported to have access to smartphone with one or some of its members. A BC at the doorstep, mobile-app driven accounting & reporting system and handheld device-operated financial transactions, make an assured and viable case for digitization in the remotest rural locations. All of UPSRLM program staff and community cadres should be engaged in financial and digital literacy campaigns and should create an enabling ecosystem for the poor.

The http://upsrlm.org portal would be another effective vehicle for not only spread of financial and digital literacy content, this would help track the Self Help Group (SHG)’/ unreached customers’ transition from cash-based to digital transaction. This could help quantify effect of financial literacy campaigns undertaken by the banks, partner banks/ FIs and UPSRLM.

Poor’s affinity to technology and its aspirational trajectory are uninformed territories. Within the space of financial operations and outcomes thereof, the BC program would throw nuanced intel about change in poor’s financial behaviour along time/ seasonality and priority/ preference. DoRD would access such intricate operational intel to be able to empower the poor with reciprocal financial & institutional measures. Understanding of poor’s aspirations would be a critical input. Digitized instruments such as micro-credit plan (e-MCP) would compel a reverse bottom-up approach; potentially change operational dynamics and workflow on the ground.

Economic empowerment of the poor through cheap and subsidized financial products would impact the poor’s bargaining power vis-a-vis the State’s modest value of the service delivery programs. Along the poor’s increasing economic status, service delivery targets by various State departments would change. Expectedly, poor’s improving economic status would reduce burden of govt. expenses on entitlements and service provisions. Aspirations of the poor understood and reciprocated with livelihood support and range of financial assistance with riders such as moratorium, risk hedging etc. would help catalyse such changes.

Banking practices have already been disrupted by technology. Slow in its process of change, conventional profitability of the banks is threatened by the potent use of algorithms, big data, blockchain, peer-to-peer lending and crowdsourcing. Meaning, role of intermediary is changing. Banks now face competition from other intermediaries in their core business (viz. fintech).

With the State as an emerging player in capitalizing pro-poor financial products and services, the settled financial market would see proportionally reciprocal and qualitative change. Not just banks, all capital market players would feel the disruption. Operational cost would drop with the State infusing capital into the business segment. Not just the BCs as operators, the demand side too would be more efficient and assertive in financial interaction than in the past. In all probability, financial markets would embrace the disruption - - high volumes generated by the transactions of the Self Help Group (SHG) poor, high frequency back-to-back loan conversions, would set forth robust terms of negotiation with the conventional players.

Banking practices have already been disrupted by technology. Slow in its process of change, conventional profitability of the banks is threatened by the potent use of algorithms, big data, blockchain, peer-to-peer lending and crowdsourcing. Meaning, role of intermediary is changing. Banks now face competition from other intermediaries in their core business (viz. fintech). With the State as an emerging player in capitalizing pro-poor financial products and services, the settled financial market would see proportionally reciprocal and qualitative change. Not just banks, all capital market players would feel the disruption. Operational cost would drop with the State infusing capital into the business segment. Not just the BCs as operators, the demand side too would be more efficient and assertive in financial interaction than in the past. In all probability, financial markets would embrace the disruption - - high volumes generated by the transactions of the Self Help Group (SHG) poor, high frequency back-to-back loan conversions, would set forth robust terms of negotiation with the conventional players. Structural preparedness for Financial Institution; with specific aim of reaching out to the unreached, is accomplished. While this document is being finalized, 4,892 Banking Correspondent have been trained and certified by IIBF. Onboarding of the BCs and enabling them to stabilize their operations on the ground; make it financially viable, would be an ensuing challenge. There are several other short-run milestones that UPSRLM would need to achieve; simultaneously stepping up efforts towards developing appropriate and pro-poor financial products and services. An indicative list of such upcoming tasks has been delineated below along a timeline.

UPSRLM and a technical support entity assisted by the Gates Foundation had preconditioned a deadline for handing over to BC Sakhi technology platform on July 7th, 2022. It was believed that UPSRLM would not only be able to takeover and operate the technology & the data-system seamlessly, rather, would be able to progressively advance the architecture as per the dynamisms of the program on the ground. Despite timely handing over, the technology system could not be operated by UPSRLM and was handed back to the Triline, the creator of the technology system within 2-3 months.

The program reached two significant milestones: the first, GoUP issued a Government order towards launching Ultra Poor ~ DBT service guarantee pilot project with the BC Sakhis as a formal coordinate in rendering banking & financial services to all identified Ultra-poor families in rural UP. This emerged as a customer-landscape identified as DBT-beneficiaries, which would help BC Sakhis in (a) map their clientele for future _ immediate to interim, and (b) help in estimating requirement of liquidity to stay prepared to cater to the clientele.

BC Sakhi program was considered significant as a coordinate for economic development of the lowermost strata in rural Uttar Pradesh. An integration of the BC Sakhi portal was called with CM Dashboard (Dashboard for Analytical Review of Projects Across the Nation), also known as CM Darpan (https://up.cmdashboard.nic.in/). BC Sakhi portal developed on a private domain is one of the very few to be integrated with CM Darpan.