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Increasing the uptake of financial products and services across India’s poorest districts

The AMAL Unit’s Financial Services for the Poor (FSP) team worked to identify behavioral and operational barriers that prevent people in poverty from using formal financial services. IDinsight tested SMS reminders to improve banking agent performance, savings devices to increase formal savings, and training interventions to increase the uptake of digital payments for remittances.

Decision-maker’s challenge

The Indian government has made a significant investment in promoting wider access to formal financial services by expanding the range of financial products available to people. Despite this, the use of formal financial services by people living in poverty remains critically low. There is also a gender gap in financial inclusion, with far fewer women accessing services. 

Impact opportunity

The Indian government’s central policymaking unit, NITI Aayog, seeks to transform the country’s 100 poorest districts, which consistently lag on health, education, and economic indicators. IDinsight set up the AMAL (Action-focused Measurement And Learning) Unit within NITI Aayog to improve and scale up NITI Aayog’s programs based on evidence-based decisions. In 2017, NITI Aayog launched the ‘Transform Aspirational Districts’ initiative. 

The initiative aims to significantly improve socioeconomic outcomes in 100+ of India’s poorest districts, home to approximately 250 million people. 

The thrust of the initiative is to promote an outcome-based management approach among states and districts, thereby promoting a federal governance structure that fosters competition amongst public entities to chase outcomes while encouraging cooperation to share learnings and best practices.

As part of this initiative, the AMAL Unit’s Financial Services for the Poor (FSP) team aims to identify behavioral and operational barriers that prevent the poor from using formal financial services. 

Our approach

The FSP team partnered with private and public decision-makers to design and test low-cost programs in 27 districts. We tested SMS reminders to improve banking agent performance, savings devices to increase formal savings, and training interventions to increase the uptake of digital payments for remittances. We also recommended responses to a number of other challenges, including women’s low usage of bank accounts, limited uptake of insurance and pension products, and the government’s financial inclusion communication strategies. We provide more details for each project below. 

Non-NITI projects

Impact evaluations of programs to improve Business Correspondent services – IDinsight’s FSP team implemented several Decision-Focused Evaluations to understand how to improve financial service delivery by banking agents. We tested various types of behavioral messaging through SMS reminders, tested the impact of savings calendars on transactions, and assessed the impact of product updates shared at the business correspondents’ service outlets.1

Impact evaluation of a training program to increase the use of digital payments for remittances – Digital payment applications can provide migrant workers with a way to remit money quickly, safely, and for free. In partnership with Good Business Lab, we developed and tested a program to train migrant workers to use digital payments applications. The program was delivered to female migrant workers at select Shahi Exports garment factories in Bangalore. Before the program, the vast majority (86 percent) of workers reported remitting money the previous month, but only 5 percent of remitters had sent money using digital payments. Most remitters were using time-consuming and paid services to transfer money. To test the impact of the program, we conducted a 600-participant randomized controlled trial. 

Theory of change and customer research for a doorstep banking program to encourage women in rural Maharashtra to save formally Mann Deshi Mahila Sahakari Bank, a women-focused cooperative bank in Maharashtra, planned to offer doorstep banking for savings products in rural areas. IDinsight conducted qualitative fieldwork with women in rural Maharashtra to understand their existing savings behaviour, their perception of savings accounts, and what features they wanted from doorstep banking for savings. We also developed a theory of change outlining the program’s path to impact and the data that Mann Deshi would need to make key decisions about program design.

COVID-19As part of our work to improve business correspondent services, the FSP team conducted qualitative phone interviews in Telangana and Andhra Pradesh about the economic impact of COVID-19. Respondents included regular customers with accounts at the BC points as well as business correspondents themselves. We also contacted the female migrant workers participating in the digital payments study one month into the COVID-19 lockdown in India, to understand the effects of the pandemic on their financial behavior. 

NITI projects

Increasing use of bank accounts We conducted an evidence review to identify the factors preventing people from using (savings) bank accounts. We then designed behavioural “nudges” to address these barriers. The team has conducted prototyping exercises to further develop these nudges, which will aim to improve the people’s usage of bank accounts in the NITI focus districts.

IndicatorsFrom May 2018 to November 2019, IDinsight collected three rounds of household financial surveys in 27 Aspirational Districts across 8 Indian states for NITI Aayog. The surveys produced estimates on a variety of indicators, from enrollment in government financial schemes to savings preferences. 

Financial communications – The Indian government offers a series of pro-poor financial products to enhance access to and usage of financial services. However, enrolment in these schemes remains low, in part due to low awareness. The FSP team conducted research and preference elicitation to identify which design elements in posters are most likely to encourage people to enroll in the government’s pro-poor financial products. 

The results

Non-NITI Projects

Impact evaluations of programs to include Business Correspondent services: One randomized evaluation found that sending SMS reminders about performance monitoring to agents thrice a week over a 4-week period increased pension enrolments. Two other randomized evaluations found that sending these SMS reminders increased enrollment in insurance products, too, but only for agents working with one of two banks. Overall, the results from these evaluations suggest that SMS reminders can be a cost-effective way to motivate agent performance, but only within a supportive ecosystem. Finally, one randomized evaluation found that household savings calendars increased withdrawals from agent points prior to the pandemic, without an effect on deposits. 

Impact evaluation of a training program to increase the use of digital payments for remittances: Training on how to use digital payment apps was effective at addressing knowledge barriers, but it only marginally increased the use of digital payment apps. The key reason for low usage was that migrant workers were not able to meet the requirements for setting up a digital payments account, such as phone number-bank account linkage. Organizations seeking to increase use of digital payments among migrant workers thus need to address infrastructure barriers (such as access to smartphones and a reliable internet connection) in addition to knowledge barriers. Our policy brief provides detailed recommendations for how nonprofits, banks, and private sector organizations can use these insights to increase the use of digital payment applications among migrant workers. 

Theory of change and customer research for a doorstep banking program to encourage women in rural Maharashtra to save formally: Our study indicated that among potential customers, access was the biggest barrier to using savings accounts. Doorstep banking for savings could thus help address this barrier, particularly if complemented by support services such as training to use ATMs. The Theory of Change workshop summarized the existing evidence base, identified key decisions that were pending, and made recommendations for how Mann Deshi could use the data it had to inform these decisions. 

Female migrant workers in Bangalore
: Many workers and their families reported facing increased financial strain and food scarcity. The number of workers sending remittances home dropped drastically, even though the workers continued to receive their salaries in full. We found that digital applications can address some of the barriers to sending remittances during a lockdown, as workers who were already using digital payment apps for remitting money were more likely to remit during the lockdown compared to workers who did not use digital payment apps. 

NITI Projects

Indicators: Indicator estimates were shared periodically with NITI Aayog, as well as the Bill & Melinda Gates Foundation in the wake of the COVID-19 pandemic. 

Financial communications: Based on the design elements identified by our behavioral research, a design agency developed new posters for the pro-poor products. We initiated an impact evaluation to test whether the redesigned posters were effective at increasing uptake and usage of the schemes. Unfortunately, the impact evaluation was interrupted and ultimately canceled due to the COVID-19 pandemic. 


  1. 1. This work was in collaboration with two Business Correspondent Network Managers (BCNMs)- FIA Technology Services and Sub-K IMPACT Solutions.