03/08/2023 Banking & Finance, Corporate & Commercial By LawWiser

Financial inclusion has never been more crucial to policymakers as it is right now. Geographical constraints, a lack of banking infrastructure, widespread financial illiteracy, and our country’s high population density make it extremely difficult for rural Indian business owners to obtain official financial services and products.


In order to enable small business owners, particularly in rural India, to have access to low-cost formal financial products and services, effective programs like the Pradhan Mantri Jan Dhan Yojna and Pradhan Mantri Mudra Yojna collaborate with digital financial infrastructures like the Aadhaar-enabled Payment System (AePS) and UPI.


The problem of accessibility and affordability

India’s small rural businesses lack safe access to formal banking facilities for lending and savings. Those that do so, lose time associated with travelling to unsuitable locations for banks. Furthermore, when formal banking solutions are available, the strict lending criteria become obstacles to their ability to accept loans, showing that accessibility does not always mean obtainability.


How can UPI be used to increase financial inclusion for rural MSMEs?

Mobile phones are the answer to the issue facing India’s millions of rural traders. First, UPI may be utilised to offer MSMEs digital payment solutions that would allow them to securely and conveniently accept payments from clients.


Are digital financial infrastructures truly inclusive?

When digital financial services are mentioned, the debate regarding access to reliable internet connections keeps coming up. UPI 123 Pay, a recently launched immediate payment system, was introduced by the Reserve Bank of India as a straightforward yet effective response to this pressing issue. It would enable users to conduct UPI transactions without a network connection.


Kirana stores as micro ATMs – Changing the landscape of rural banking

In rural India, micro ATMs are quickly becoming an extensively used financial infrastructure. The Indian entrepreneurial spirit is represented through the kirana ecosystem. They simplify the lives of local residents by providing basic banking and financial services.


In conclusion, emerging nations like India, where mobile phones are more common than bank accounts, digital payments are a crucial tool for increasing financial access. Financial inclusion may become a reality with consistent and fair implementation, which can change how rural business owners run their operations to make better decisions and save a lot of money and resources.

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