Occupation profile is the prime factor that drives the need and preference for banking in low-income households, said a report by Grameen Foundation and JPMorgan.
The preference for banking was influenced by factors such as prioritizing liquidity over depositing savings in a bank account.
“Any supply-side intervention must be anchored in the context of its demand… ability to craft solutions that balance convenience against safeguarding informational privacy, security and costs lies at the heart of using digital financial services to achieve the synergistic effects of the Jan Dhan, Aadhar and Mobile (JAM) trinity,” said the report released on Wednesday.
The study was conducted between May 2016 and November 2016, covering a total of 24,966 individuals in 3,450 households across 34 villages of Uttar Pradesh and 2,000 households across Delhi/ National Capital Region (NCR).
Nearly 48% of women exhibited a preference for depositing money in formal banks and 72% in rural banking institutions compared to men who preferred to keep it at home, the survey found.
If an individual had both a Pradhan Mantri Jan Dhan Yojana (PMJDY) account and a regular savings account, irrespective of gender the odds of the regular savings account being infrequently used were very high (80%). This comes with the fact that PMJDY offers sweeteners such as both life and accident insurance cover and over draft facility.
In the study sample, workers employed under Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) were 75% more likely to opt for a PMJDY account and having used such an account to receive payments, the same workers were 39% more likely to opt for a savings account.
Across the 34 villages surveyed in Uttar Pradesh, the average distance to a bank branch was 4kms while it was as high as 70kms for some really remote villages. Further, the greater the distance to the branch, the likelihood of an account having zero balance was nearly 80%.