54 cr bank accounts stay inactive: WB

In India, about one-third of bank account owners or 540 million people had an inactive account in the past year, finds a study by the World Bank.

The share of account owners with an inactive account varies across developing economies, but it is especially high in India at 35 per cent, the highest in the world. That share is about seven times larger than the 5 per cent average for all developing economies, excluding India.

In developing economies, 9 per cent of adults overall—13 per cent of account owners—have what could be considered an inactive account—that is, an account with no deposits or withdrawals, or no incoming or outgoing digital payments in the past year.

According to the study, one reason for India’s high share of account inactivity may be that many of these accounts were opened as part of the government’s Jan Dhan Yojana scheme to increase account ownership. Launched in August 2014, the programme had by April 2022 brought an additional 450 million Indians into the formal banking system.

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

While 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 42 per cent women account owners who had an inactive account and 30 per cent men account owners with an inactive status.

Further, in developing economies, 1.6 billion adults with an account made merchant payments only in cash and of this 670 million were in India.