 "Union Finance Minister Arun Jaitley with United Nations resident Coordinator,Yuri Afanasiev during the conclave on Financial Inclusion , in New Delhi. Photo: PTI")
India needs regulatory reforms to protect people against fraud and misuse of data by unscrupulous elements, United Nations' Resident Coordinator in India Yuri Afanasiev said.
Current protocols for encrypted data transfer, from money to medical records, to be shared between many companies, people and institutions have raised questions on how this data will be stored and accessed by government and private entities, he said at a Conclave on Financial Inclusion organised by the UN here.
"Recent breaches only heighten these fears. These concerns warrant regulatory reforms that protect against fraud and misuse, especially for those with low financial and digital literacy," he said.
For India to herald an age of innovation that truly serves the millions who have been left behind, it must contend with issues of transactional privacy, while allowing for auditory and regulatory access, he noted.
Referring to the Pradhan Mantri Jan Dhan Yojana (PMJDY), the world's largest financial inclusion scheme, he said there are still various challenges that are to be addressed.
"Despite the push from Indian government, as many as 60 million people still don't have bank accounts, remote areas still don't have a mobile phone service or 3G/4G data networks," he said.
Noting that mobile telephony minimises the need for banks to set up physical branches, Afanasiev said last-mile connectivity remains a challenge.
"Mobile-based banking services, new-technology ATMs that are biometric and/or mobile, biometric handheld devices for use by banking correspondents, and smart cards are just some examples of how technology that is available today can be used to expand financial services to the unbanked and underbanked," he said.
The most significant roadblock to using these technological innovations in improving access to finance, among other things, is the concern over the robustness of the security architecture that protects citizen data, he said.
"Blockchain technology and quantum computing are likely going to lead the next revolution and it will change banking and e-services unrecognisably. India's Supreme Court has addressed the issue of confidentiality; government and business now need to adapt to allay these concerns," he said.
Besides, he said, most people registered for financial services are urban males, which means women, particularly rural women, remain disproportionately unbanked and possibly at risk of financial abuse, he said.
Highlighting other challenges, he said, access to formal finance is still a key barrier to the growth of small and medium enterprises.
"The formal economy and banking sector also don't do enough to recognise assets like cash, livestock, agricultural implements, self-built housing and workshops or jewellery, which unbanked groups invest in," he said.
