As the issues resolve over time, AAs as Digital Public Infrastructure (DPIs) will play a pivotal role in enabling affordability, accessibility, and applicability of financial products, thereby driving financial inclusion in India.
“Poverty is the deprivation of opportunity,” said economist Dr Amartya Sen. For the financially weak, financial inclusion enables access to credit and channels their savings into investment. As per the global Findex database, published in 2018, 80% of Indians have bank accounts. Thanks to India’s digital public infrastructure, specifically India Stack, India took only six years to reach 80%+ bank account penetration, which otherwise would have taken 46 years. The India Stack consists of:
Payment Layer: Enabled by UPI and other payment technologies offered by NPCI.
Consent Layer: The Account Aggregator framework, launched as recently as August 2021, powers the digital sharing of standardised, high-provenance data, digitally signed and directly from the source. The first and most compelling use case is in lending.
While the first two layers of the India Stack enabled account opening and subsequent transactions (UPI recorded 14.04 billion transactions in May 2024), access to credit is still challenging for micro and small entrepreneurs. Credit is available to corporations and salaried people with relative ease; micro and small entrepreneurs are completely underserved, primarily due to a lack of data footprints. They are relatively ‘data dark’, i.e. there is no clear way to assess their creditworthiness since they have no formal access to credit and, hence, no repayment track record.
