Originally posted on Quartz:
When it comes to digital finance, India punches below its weight.
The 2014 Intermedia Financial Inclusion Insight (FII) Survey of 45,000 Indian adults found that 0.3% of adults use mobile money, compared to 76% in Kenya, 48% in Tanzania, 43% in Uganda, and 22% in Bangladesh.
This stems from a range of factors, but lack of innovation-friendly regulation has been barrier #1.
Most importantly, the Reserve Bank of India (RBI) historically allowed non-banks to participate in payment services in two restricted ways. They could build and manage an agent network on behalf of a bank; or they could issue a “semi-closed” wallet which allow customers to cash-in, buy airtime and other services, but not cash-out—not a particularly useful product for a poor customer.
This regulatory framework ensured that India’s banks controlled not only the market for savings and credit, but also payments. The problem is that banks have struggled globally…
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