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Modernizing the Payment System to Increase Financial Inclusion in India

March 31, 2016

Author(s): Sean Creehan

Payments in India remain heavily cash reliant. This dependence creates economic inefficiencies and limits efforts to include the unbanked in the formal financial system. In response, the government has introduced a number of policies to promote non-cash payments, bolster the payments infrastructure, provide hundreds of millions of new payment-capable accounts to the unbanked, and encourage new technology and innovation by non-traditional firms. This Asia Focus reviews the role non-cash payments can play in India’s financial inclusion efforts, summarizes recent government policies to develop a national payment system that includes the unbanked, and assesses the challenges and implications of ongoing reforms.

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