India Flag
  • India, officially the Republic of India is a diverse, populous and historic nation in the south of Asia.
  • It gained independence in 1947.
  • In 1990, India started taking steps to liberalize the economy and open to free trade. Since then, the growth rate, which was stagnant from independence has averaged to around 7% and the nation has rapidly developed and industrialized in to an economic powerhouse, sporting one of the highest GDPs, most active stock exchanges, and one of the highest rates of FDI inflow, which only increased after further reforms in 2014 and 2015.1
  • In November 2016, the government initiated a demonitisation program to ostensibly rid the country of large bank notes used for criminal activities and money laundering. 
  • Demonetisation of high-value banknotes from November 2016 has spurred the use of DFS products.2
[1] CIA (2017) India, available at
[2] Forbes (2016) A Cashless Future Is The Real Goal Of India's Demonetization Move, available at


  • 3,287,263 sq km
  • India is in Southern Asia, bordering the Arabian Sea and the Bay of Bengal, between Burma and Pakistan.
  • New Delhi is the capital, and the most populated city is Mumbai.
  • 1.3b (2016 est.)
  •  Hindi is the most commonly spoken language, though English is used also for national, political, and commercial communication
  • US$8.721 trillion (2016 est.)
  • Per Capita: US$6700 (2016 est.)
Financial Inclusion (2014)2
  • 53.1% of Indian's have a financial account
  • 52.8% have an account at a traditional financial institution
  • 2.4% have a DFS account
[1] CIA (2017) India, available at
[2] World Bank (2014) Findex, available at
  • There has been slow take-up of DFS in India

  • The market is mostly feature phone-based.

  • Non-banks have been able to offer prepaid payment instruments. However, the semi-closed PPIs (so called ‘wallets’) permitted for non-banks did not allow for cash-out. This made it difficult to offer a valuable product to unbanked and underbanked users.

  • India moved away from a closed banks-only model and introduced a new enabling framework characterized by a new ‘Payments Bank’ concept developed by the Reserve Bank of India (RBI). 

  • MNO Airtel was the first to launch a payments bank in India.1 Their customers use their mobile number as an identifier for the account number. The bank will be fully digital and paperless, with even account opening being done using Aadhaar-based eKYC.

  • Airtel entered into a pact with Kotak Mahindra Bank, which agreed to acquire a 20% stake in the new payments bank.

  • The government introduced the biometric-based Aadhar identity scheme as part of the the 'India Stack,' which allows residents access to many new government and payment services.

  • The telecommunications regulator TRAI has set a cap on USSD pricing as well as setting the number of menu items for USSD sessions.3

  • Demonetisation introduced in November 2016 has spurred the use of DFS products.2
[1] Times of India (2016) Airtel Rolls Out India’s First Payments Bank, available at
[2] Forbes (2016) A Cashless Future Is The Real Goal Of India's Demonetization Move, available at
[3] Economic Times (2016) TRAI lowers ceiling tariff for USSD-based service to a third, at 50 paise per session, available at 
Communications: Telecommunications Regulatory Authority of India (TRAI)
  • TRAI's primary goal is to increase teledensity and media access in India, particularly rural India in order to be competitive in an increasingly knowledge driven world.
  • It also sets USSD pricing and session menus for DFS transactions
Mahanagar Doorsanchar Bhawan (next to Zakir Hussain College) 
Jawaharlal Nehru Marg (Old Minto Road) 
New Delhi: 110 002
E-mail ID :
Phone No. : +91-11-2323 6308 (Reception)
Fax No. : +91-11-2321 3294 (Reception)
Central Bank: Reserve Bank of India (RBI)
  • The RBI is split in to many regional banks, all of which are state owned.
  • One of its major goals is to increase rural financial inclusion which stands much lower than urban financial inclusion, primarily due more to financial illiteracy rather than lack of access.
  • They have committed to DFS as a way to increase financial inclusion.
Shahid Bhagat Singh Marg, Fort Mumbai -400 001
AML: Financial Intelligence Unit – India
  • The FIU of India is the main body in charge of AML and Anti-Terrorist Funding law
Financial Intelligence Unit - India
6th Floor, Hotel Samrat
Kautilya Marg, Chanakyapuri
New Delhi -110021, INDIA
Competition: Competition Commission of India (CCI)
The CCI attempts to ensure that the ‘common man’ has access to a broad range of goods at competitive prices. They attempt to regulate companies to ensure that they are not engaging in anti-trust, particularly in the fields of graft and mergers and acquisitions. They also attempt to reduce barriers to new business. While India is a free market economy, there have been complaints about bureaucratic boundaries and immense amounts of graft money required to obtain the necessary licenses. The CCI attempts to find these sticking points and remove them. One strategy employed has been making the process electronic. By removing people from the equation, it hopes to standardize the process for everyone and remove graft opportunities. 
The Hindustan Times House
18-20, Kasturba Gandhi Marg,
New Delhi: 110001, India
Legal System1
  • The Indian legal system is a common law system based on the English common law; separate personal law codes apply to Muslims, Christians, and Hindus.
DFS Model Type2
  • India has a bank-based approach to DFS.
  • Until 2016, MNOs and other non-banks could not participate in DFS at all, except to provide ancillary services such as telecommunications and agent services.
  • In terms of the new Payments Bank regime introduced in 2016, these non-banks can participate as stand-alone participants, but through the new specialized Payments Bank banking regime.
  • Unlike Tier 1 banks, Payment Banks are restricted to transaction-type services and prohibited from lending.
  • They generally fall under the compliance regime of Tier 1 banks, but on a proportional risk basis.
  • Interoperability is not mandated in India, although payments are sent through a single facility: the National Payments Corporation of India.
Isolation of Funds Arrangement4
  • There is no specific requirement to use a trust or fiduciary, however payments banks are required to invest minimum 75% of its "demand deposit balances" in Government securities/Treasury Bills, and hold maximum 25% in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.
[1] CIA (2017) India, available at
[2] RBI (2014) Guidelines for Licensing of Payments Banks, available at

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