BARRIERS TO BASIC BANKING: RESULTS FROM AN AUDIT STUDY IN SOUTH INDIA

Principal Investigators: Amy Jenson Mowl, Camille Boudot
Research Team: Amy Jenson Mowl, Camille Boudot
LEAD Centre: Centre for Microfinance (CMF)
Focus Area: Credit
Project Geography: Chennai, Tamil Nadu
Partner: NSE
Status: Completed

Background:

In a new study from NSE and IFMR, researchers use a “mystery shopping” approach where trained auditors, posing as low-income customers, attempt to open BSBDA (Basic Savings Bank Deposit Account) and low-cost accounts at banks in Chennai. The researchers rigorously document the barriers faced by potential customers, including complete recording of all interactions between auditors and bank staff. Their study finds that bank staff almost always refuse to offer the BSBDA, and aggressively discourage customers from opening other low-cost accounts. The researchers suggest immediate intervention to monitor ongoing financial inclusion policy implementation, and caution against driving G2P transfers until banks demonstrate capacity and willingness to meet basic standards of service and client protection.

Related Resources:
WORKING PAPER: Barriers to Basic Banking: Results from an Audit Study in South India
EXTERNAL PUBLICATION: Barriers to Basic Banking: Results from an Audit Study
EXTERNAL PUBLICATION: Banks raise barriers to basic banking
EXTERNAL PUBLICATION: New Research on Barriers to Basic Savings Accounts Is a Cautionary Tale for India’s Financial Inclusion Push
EXTERNAL PUBLICATION: Financial Inclusion 2020: Round-Up 2014
POLICY RESULTS: Incognito bank visits to check service: RBI