IIT report on financial inclusion: ‘Changes in banking, charges, KYC process’

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A report from IIT Madras has proposed significant changes in banking transactions, charges and know-your-customer (KYC) process to take banking facilities to low-income group and remote areas of the country.

The report has proposed easier cash in cash out (CICO) access by allowing individuals like kirana store owners and tradesmen to function as business correspondents (BCs) to reach the end customer, particularly in the remote parts of the country. Banking charges for even purely digital transactions like exceeding free number of transaction limit, insufficient balance, ECS bounce, standing instructions, SMS updates should be re-evaluated, according to the report prepared by IIT Madras Research Park (IITMRP), India’s first University-based Research Park, and IITM Incubation Cell.

It said individuals and senior citizens exempted from filing income tax returns (ITR) are still being charged TDS by banks, thus making filing returns a necessity. KYC process and need for PAN, OTP or biometric verification have made it cumbersome for low-income groups, the report said.

The report, ‘Financial Inclusion Challenges’, said in-person KYC (and live-video KYC) should be replaced by non-live (non-human) option, with encrypted liveliness checks built in.

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There are still significant hurdles in making a full-range of financial services available to all sections of the population in India. People in low-income groups and senior citizens often face challenges in accessing the full range of financial services from formal financial channels, the report said.

Ashok Jhunjhunwala, president—IITMRP, IITM Incubation Cell & RTBI, said: “In a country with a population of 90 crore adults, only a small percentage has ever made (at least one) digital transaction. Despite our achievements in the financial services sector, a large section of the Indian society is still struggling with fundamental financial inequities.”

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