- First, individuals incurred multiple out-of pocket expenses in opening simple deposit accounts. These non-bank fees for transportation, photocopies, and other incidental expenses range from an average of Rs.100-200.
- Second, opening an account involved a significant time commitment. The typical person spent between 8-13 hours, across an average of two visits, before a simple deposit account was opened.
- Third, documentation and paperwork requirements were the dominant factors in both out of pocket expenses and time spent to open an account. In addition, documentation requirements were vague and inconsistent across urban and rural banks: while nearly all banks required at least three forms of documentation, more than half of all urban accounts required individuals to provide five or more forms of documentation.
|Raghuram Rajan at a press event in September 2013 (Photo Credit: Indian Express)
Thankfully, Mr. Rajan was an early champion of the idea that broad access to finance was central to economic growth, stating “financial sector reform is both a moral and an economic imperative.” As Chairman of the Committee on Financial Sector Reforms, his 2009 report, A Hundred Small Steps, laid out a comprehensive agenda to improve access to finance. India is now bearing the costs of not tackling financial inclusion reforms sooner.