G20: Digital public infrastructure has had a transformative impact on India, says World Bank paper

Jan Dhan, Aadhaar, and mobile phones had pushed the financial inclusion rate from 25 percent in 2008 to over 80 percent in the last six years, the paper says.

India’s digital public infrastructure has had a transformative impact on the country, extending far beyond inclusive finance, a G20 Global Partnership for Financial Inclusion document prepared by the World Bank has said.

The paper, released on September 8, said JAM (Jan Dhan, Aadhaar, and Mobile) trinity propelled the financial inclusion rate from 25 percent in 2008 to over 80 percent of adults in the last six years.

This document has been prepared by the World Bank as an implementing partner of the Global Partnership for Financial Inclusion (GPFI) with and inputs from the finance ministry and the Reserve Bank of India.

GPFI is a platform for all G20 countries, interested non-G20 countries and relevant stakeholders to carry forward work on financial inclusion, including the implementation of the Financial Inclusion Action Plan.

“While DPIs’ role in this leapfrogging is undoubtedly, other ecosystem variables and policies that build on the availability of DPIs were critical. These included interventions to create a more enabling legal and regulatory framework, national policies to expand account ownership, and leveraging Aadhaar for identity verification," the paper said.

Since the launch, the number of jan dhan accounts tripled from 147.2 million in March 2015 to 462 million by June 2022. Women own 56 percent, or more than 260 million of these accounts, the paper said.

The government-to-person payments had built one of the world’s largest digital G2P architectures, leveraging digital public infrastructure.
"This approach has supported transfers amounting to about $361 billion directly to beneficiaries from 53 central government ministries through 312 key schemes," the paper said.
More than 9.41 billion transactions valuing about Rs 14.89 trillion were transacted in May 2023 alone. For the fiscal year 2022–23, the total value of UPI transactions was nearly 50 percent of India’s nominal GDP, it said.

The UPI-PayNow interlinking between India and Singapore operationalised in February aligns with G20's financial inclusion priorities and facilitates faster, cheaper, and more transparent cross-border payments, it said.

India’s digital public infrastructure also enhanced efficiency for private organizations through reductions in the complexity, the cost and the time taken for business operations.

Follow our live blog for the latest on the G20 summit

"Even some NBFCs have been enabled 8 percent higher conversion rate in SME lending, a 65 percent savings in depreciation costs and 66 percent reduction in costs related to fraud detection," the paper added.

World Bank paper has also lauded the lower cost of compliance for banks for KYC.

"India Stack has digitized and simplified KYC procedures, lowering costs; banks that use e-KYC lowered their cost of compliance from $0.12 to $0.06. The decrease in costs made lower-income clients more attractive to service and generated profits to develop new products," the paper said.

It went on to say that the country’s Data Empowerment and Protection Architecture grants individuals control over their data, enabling them to share it across providers.

"This promotes tailored product and service access without requiring new entrants to invest heavily in pre-existing client relationships, fostering innovation and competition," the paper said.