ISLAMABAD: As many as 18 per cent of adults in South Asia own a debit card compared to 31pc in developing countries on average, says the World Bank suggesting that shifting payments for agricultural products from cash to accounts could help reduce the number of unbanked adults by up to 105 million.

South Asia has added 185m adults with new accounts since 2011, but there are clear opportunities to boost usage of accounts. 46pc of adults now own an account, up from 32pc three years ago.

The findings come in the latest edition of the ‘Global Findex’, the world’s most comprehensive gauge of progress on financial inclusion. Financial inclusion, measured by the ‘Global Findex’ as having an account that allows adults to store money and make and receive electronic payments, is critical to ending global poverty.

In 2011 the World Bank, with funding from the Bill and Melinda Gates Foundation and in partnership with Gallup, Inc., launched the ‘Global Findex’ in over 140 countries to study how adults save, borrow, make payments, and manage risk.
Studies show that broader access to, and participation in, the financial system can boost job creation, increase investments in education, and directly help poor people manage risk and absorb financial shocks.

From 2011 and 2014, 700m people became account holders at banks, other financial institutions, or mobile money service providers, and the number of “unbanked” individuals dropped 20pc to 2 billion adults.

Between 2011 and 2014, the percentage of adults with an account increased from 51pc to 62pc, a trend driven by a 13 percentage point rise in account ownership in developing countries and the role of technology.

The 2014 Findex found there is still more work to be done to expand financial inclusion among women and the poorest households. More than half of adults in the poorest 40pc of households in developing countries were still without accounts in 2014.

And the gender gap in account ownership is not significantly narrowing: In 2011, 47pc of women and 54pc of men had an account; in 2014, 58pc of women had an account, compared to 65pc of men.

Regionally, the gender gap is largest in South Asia, where 37pc of women have an account compared to 55pc of men (an 18 percentage point gap).

In South Asia, using a bank teller remains the most common way to make withdrawals; this practice was reported by 56pc of account holders in the region overall. Indeed, using an ATM is the most common way to withdraw money in all developing regions except South Asia. Within the region, a larger share reported making zero deposits or withdrawals in a typical month than reported making at least one such transaction – the only region where this was the case.

By paying private-sector wages and government wages and transfers digitally (as opposed to in cash), governments and the private sector can play a pivotal role in rapidly opening accounts and increasing financial inclusion. Globally, paying government transfers and government wages through accounts (instead of cash) can increase the number of adults with an account by up to 160m.

Globally, nearly all adults who reported owning an account in 2014 said that they have an account at a financial institution: 60pc of adults reported having a financial institution account only, 1pc having both a financial institution account and a mobile money account, and 1pc a mobile money account only.

Published in Dawn, April 17th, 2015

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