2.5.2 In India, about one-third of account owners had an inactive account in the past year

FIGURE 2.5.2 In India, about one-third of account owners had an inactive account in the past year

Adults with an account (%), 2021

Source: Global Findex Database 2021.

additional 450 million Indians into the formal banking system.35 Most of the new accounts had already been opened when the Global Findex 2017 survey was conducted. The share of adults with an inactive account in India remained about the same between 2017 and 2021.

In developing economies, women account owners are, on average, 5 percentage points more likely than men account owners to have an inactive account. However, India is driving this gap with a 12 percentage point difference between women account owners who had an inactive account (42 percent) and men account owners who did so (30 percent). The data on account inactivity in developing economies, excluding India, reveal that women and men have, on average, equal rates of inactivity.

Adults in India did not use their accounts for three main reasons: distance from a financial institution, lack of trust, and having no need

To shed light on why a large share of adults in India has inactive accounts, the Global Findex 2021 survey asked those with an inactive account why they did not use it. The three most common reasons were that financial institutions were too far away; lack of trust in financial institutions; and no need for an account. Each of these reasons was cited by about half of adults with an inactive account. As for other reasons, nearly 40 percent said they did not have enough money to use an account, and about 30 percent cited not feeling comfortable using an account by themselves (figure 2.5.3). Notably, more men with an inactive account (34 percent) than women with an inactive account (26 percent) said they did not feel comfortable using an account by themselves. There was no income or educational attainment gap for inactive account holders who gave this reason.

Digitalizing payments, if offered in a context of reliable products and infrastructure, may increase the use of accounts by banked adults

Many account owners receive cash payments from a range of sources. For example, about 90 million account owners worldwide received a government payment in the form of a wage, pension, or transfer payment in cash, and 225 million account owners received a private sector wage in cash. In developing economies, 160 million account owners received cash payments for the sale of agricultural products. Although recipients

35.  Ministry of Finance, India (2022).