Informal Economy Workers & Financial Inclusion
Currently people are debating about the contribution of ‘Informal Economy‘ to the GDP. As per SBI’s Research department report, India’s informal economy has shrunk to 20% of its GDP.
To know more about it kindly refer the below mentioned blog.
Is India’s informal economy 20% or 50% of its GDP? (finshots.in)
When it comes to Financial Inclusion of Informal Economy Workers the big question is -
Lack of usage of Financial Products ?
Nowadays this is the point of discussion when it comes to Financial Inclusion
So institutions in this sector need to figure out the requirement
Flow of money 💸💸> Investments 🏛️🏛️> use this investment to consumptions 🔁🔁 (i.e. usage)
It involves looking beyond credit to other important aspects– availability of saving services, insurance, and investment opportunities.
The traditional bank and NBFCs need to come up with innovate ways of
Underwriting
Accessibility
Processing
Quantifying key parameters to assess progress made under financial inclusion is essential for designing suitable policy interventions from time to time.
As per National Strategy for Financial Inclusion 2019-2024 it need to be across the three dimensions of access, usage and quality.
Access
Physical Points of Service
Digital Points of Service
Quality
Financial Literacy and Capability
Grievance Redressal
Usage
Formally banked accounts
Adults with credit at formal institutions
Adults with insurance
Cashless and Mobile Based Transactions
Frequency of Account Usage
Remittances
So, lack of usage of the product is not the fault of the informal workers, but the fault of the product. To solve this we need to start with the basics i.e.
What they 👩🦰👱 want?
For this Financial Solutions provider first need to clear the assumption they have built around Financial Literacy and need to move away from marketing-led growth to Product-led growth (an end user-focused growth model).
Views expressed are personal. Please be free to give your suggestions/inputs or counter-arguments. I will be happy to discuss them. You can follow me on LinkedIn or Twitter