Financial Inclusion and Telecommunication in India : A Study on Spillover Effect

Financial inclusion is one of the major policy concerns for governments across the world, particularly for developing countries. There are various initiatives taken by RBI to achieve the objective of financial inclusion in India to open bank accounts. The extraordinary growth of cellular telephony in India provides an opportunity that can be harnessed to expand access to financial services to unbanked sections of the population. Merely opening of bank accounts is not enough, but other aspects are also extremely vital, such as awareness, the ability to use services, and usability of the services. Several significant aspects have been covered in the study. Telecom can play a vital role in providing major support for the growth and transformation of the banking industry. The results indicate a noticeable impact of telecom on financial inclusion and vice versa. This implies a causal relationship between telecommunication and financial inclusion variables in both states despite differences in the development of the state. Although the impact of telecom on financial inclusion is comparatively more, the reverse is also significant. The results point toward the need for concerted and cooperative steps by both the industries. The extraordinary growth of cellular telephony in India provides an opportunity that can be harnessed to expand access to financial services to unbanked sections of the population. The telecom companies joining banks can promote financial inclusion; the step would benefit both the industries.