New Financial Inclusion Programme Beneficial For Sector
BMI View: India's penetration of the formal banking sector is well below the regional average. We believe that the new programme for financial inclusion introduced by Prime Minister Narendra Modi will be a long-term positive for the sector.
We believe that the recent announcement by Indian Prime Minister Narendra Modi to introduce a new programme for financial inclusion called the Pradhan Mantri Jan Dhan Yojana during the country's Independence day on August 15 will be a long-term positive for the Indian banking sector, in particular consumer banking. The scheme aims at creating 150mn new bank accounts (two per family for 75mn households) by 2018. Each bank account will have a government guarantee overdraft facility of INR5,000 (USD83), micro insurance of INR100,000 (USD1,658) and a free debit card. This scheme will significantly deepen banking penetration in the country, improve the stability of the Indian banking sector and in turn lead to an expansion in credit growth over the coming years.
Opportunities For Banking Sector
|Well Below Regional Average|
|Asia - Account At A Formal Financial Institution, % Age 15+ (LHS) & Banking Sector Total Assets, % Of GDP|