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In rural India, over-reliance on digital technology has worsen financial exclusion

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    6th January, 2021


  • In rural India, an over-reliance on digital technology alone has widened the distance between the rights holder and their entitlements. This is exemplified in the pursuit of financial inclusion.

Which of the digital initiatives were started for the financial inclusion?

  • The Direct Benefits Transfer (DBT) initiative is a technology induced step in improving financial inclusion among other stated goals.
  • Although DBT has been operational since 2011, it has become synonymous with the AadhaarPayments Bridge Systems (APBS) since 2015.
  • Various government programmes such as maternity entitlements, student scholarships, wages for MGNREGA workers fall under the DBT initiative where money is transferred to the bank accounts of the respective beneficiaries.

What problems people faced due to digital technologies?

  • Beneficiaries face many hurdles in accessing their money.
  • Workers have little clue about where their wages have been credited and what to do when their payments get rejected, often due to technical reasons such as incorrect account numbers and incorrect Aadhaar mapping with bank accounts.
  • lack of any accountability for APBS and AePS
  • Absence of grievance redressal would continue to impact all DBT programmes.
  • The workers/beneficiaries have rarely been consulted regarding their preferred mode of transacting.
  • Lack of adequate checks and balances.
  • This has created new forms of corruption as has been recently evidenced in the massive scholarship scam.

What had been done to deal with the problem?

  • To deal with these, banking kiosks known as Customer Service Points (CSP) and Banking Correspondents (BC) were promoted.
  • These are private individuals who offer banking services through the Aadhaar Enabled Payment Systems (AePS).

What could be done in the future?

  • This would minimally entail understanding that the right to work also includes the right to access your own money in a timely and transparent manner.
  • These rights must be protected through strengthening grievance redressal processes and setting accountability norms for all payment intermediaries.
  • A technological intervention must have a governance framework in which protection of rights must be fundamental and which provides more choices to the marginalised.