India still among countries with poor access to banking: Report

More than half of population without access to banking lives in 7 developing countries: World Bank

By Madhumita Paul
Published: Tuesday 05 July 2022
The Global Findex database, which surveyed how people in 123 economies use financial services throughout 2021, was released June 29, 2022. Photo: Victor Grigas/ Wikimedia Commons

India is among seven countries home to half the world’s 1.4 billion adults without access to formal banking, a recent World Bank report has flagged.

The report also noted that in Sub-Saharan Africa, young adults (ages 15–24) make up almost 40 per cent of those without access to banking. But in some European and Central Asian countries, older adults are more likely to lack access.

Large shares of the global population without formal banking (130 million and 230 million, respectively) lives in India and China because of their size. Pakistan, with 115 million unbanked adults and Indonesia, with 100 million, have the next-largest population without banking access. 

People without an account at a financial institution or a mobile money service provider have been classified as unbanked. 

These four countries, together with Bangladesh, Egypt and Nigeria, have 54 per cent or 740 million people of the global unbanked population.

The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19 also found that women are more likely to be unbanked than men. 

Brazil, China, Kenya, Russia and Thailand have relatively high account ownership rates, yet a majority of those still unbanked are women.

Women are often excluded from formal banking services because they lack official forms of identification, do not own a mobile phone or other forms of technology and have lower financial capability, the report said.

Globally, 64 per cent of unbanked adults have primary education or less. In Sub-Saharan Africa, 74 per cent of the unbanked have only primary education or less. 

The Global Findex 2021 also conducted a survey to find out why 24 per cent of adults are unbanked globally. The survey found lack of money as one of the multiple reasons. 

Worldwide, 36 per cent of unbanked adults said in the survey that financial services are too expensive. This share was almost twice as high (60 per cent) in Latin America and the Caribbean. In Brazil, Colombia, Honduras, Nicaragua, Panama, Paraguay and Peru, more than 60 per cent of unbanked adults cited cost as a barrier.

Distance is a barrier for 31 per cent of unbanked adults. In some economies, the share was higher, with 53 per cent of unbanked adults in Liberia saying that financial institutions were too far away. Other countries with a higher share of unbanked adults cited distance as a barrier were Bolivia (47 per cent), India (43 per cent) and Uganda (41 per cent).

Globally, 30 per cent of unbanked adults said they do not have an account because a family member already has one.

Only 10 per cent of the unbanked adults globally cited religion as a barrier. In Iraq and Morocco, 24 per cent and 19 per cent of the unbanked, respectively, cited religion as a barrier.

The survey also noticed that mobile phone ownership and identification documents are significant barriers to mobile money accounts, especially for women in Sub-Saharan Africa. 

Larger gender gaps among the unbanked with no ID were observed in Benin, Cote d’Ivoire and Liberia.

Mobile money has become an important enabler of financial inclusion in Sub-Saharan Africa. Especially for women, it is both a driver of account ownership and account usage through mobile payments, saving and borrowing. 

The report suggests that the gender gap in mobile access must be addressed to ensure equitable progress on financial inclusion.

This Global Findex database, which surveyed how people in 123 economies use financial services throughout 2021, was released June 29, 2022.

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