Let me begin by quoting a anonymous person but a relevant quote as far as ICT in India in concerned: “Liberalization without regulation is like kids playing football before you have the referee and the playing lines.” – anonymous

ICTs are transforming the way life goes about. They have a huge potential to transform the paradigms of governance. ICTs entail connectivity and networking thereby making the delivery of services offered by governments better. While talking of governments, local self-governments deserve maximum attention as they are at the cutting edge and immensely affect the daily lives of citizens.

Financial Information Network & Operations (FINO) being a sectoral resource in India is playing a major role in the ICT based rural financial delivery for which we were even awarded by the financial times recently.
FINO conducted a primary research on ”Understanding the ways in which rural and urban low-income households access and use financial services from formal and informal providers, including microfinance providers”. Our work involves

Investigating ways in which the use of technological solutions to enable various aspects of financial service delivery can result in cost-effective and scalable operations for providers and cheaper, better quality finance for the poor. To this end, we are working on understanding the Financial, Social and Usability factors involved for effectively deploying technologies to improve financial service delivery to the micro poor clients.

Background
In my opinion one of the most important issue that we face today as a country is the extreme poverty within which almost a quarter of our population lives and the very vulnerable status of almost an equal number, giving over 700 million people who are forced to live well below the level at which they could become active participants in the larger economy.
Concern: Though high GDP growth rates would definitely help reduce this number, the main concern is that causality could actually be working in the reverse direction and that it could prevent the economy from realizing its full potential
1. Mainly on account of existence of large poverty levels
2. Associated deficiencies in the health and educational sectors can lead to retarded growth rates

Belief: The poor already have a keen sense of the manner in which many of the challenges that they face may be best addressed. Therefore instead of trying to push poorly designed subsidised services at the poor they can be given the means to better realize their aspirations on their own terms. Through an improved access to high quality financial services the poor should be able to find their own way out of the “poverty trap” Through the means of such improved access.

What is Improved access: It is defined as the ability of economic participants (individuals and enterprises) to obtain a broad range of financial services (including savings, investments, money transfer across geographies, loans, insurance services and hedging instruments against price fluctuations) suited to their specific requirements to manage price, yield and other risks that affect the income of the household, as also expenditure, with ease and at reasonable prices.

Access to finance: It leads to improvement in individual productivity because it permits:
1. Higher levels of consumption for basic items
2. Investment in education and
3. Skill building : specialization in a few activities instead of over diversification
4. Improvement in risk taking ability.
5. Positive effects on the local economy through a general increase in wage labour opportunities and better utilization of surplus labour

Demand V/s Supply
However, I also feel that the scenario of supply of formal financial services within India is $200 to $300 million against an estimated demand for credit ranging from $3 to $9 billion annually the formal sector is barely able to provide; less than 20% of rural populations have a bank account (contrasted with a figure of over 100% for urban populations); against a total of over 600,000 villages there are barely 30,000 bank branches and while products such as health insurance are completely inaccessible to the poor even the most basic life and accident insurance products remain out of reach. It is entirely possible that the 700 million people that were referred to earlier have never been to bank, have never bought any insurance product and have been completely dependent on uncertain and very limited supply of credit, savings and money-management services made available by the informal sector at exploitative and usurious rates.