Inclusive Financial Systems: Some Design Principles and a Case Study

This paper lays out several principles to be considered when designing inclusive financial systems. These design principles are discussed from the perspective of the provider, client and regulator. They include:

• Providers of financial services must be able to fully recover all the costs they incur in service provision;
• Risk in a lending or insurance business should be warehoused by institutions capable of managing them;
• Institutions that offer retail deposit taking and insurance services must have an adequate amount of financial capital to protect financiers;
• Point of access of financial services must not be more than an hours walk away from the clients residence;
• Hours of operation must be convenient to the client;
• Clients access to financial services must be comprehensive, and they must be able to choose from a range of services;
• Regulators should care about universality and quality of access, and provider sustainability;
• Regulators must be outcome-driven and model-neutral.

Finally, the paper discusses ICICI bank as a case study that is consistent with these principles and is designed for maximizing financial inclusion.