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Publication
Financial Inclusion for Refugees in India
A study on the practical access to banks and financial systems
India, despite hosting over 2 lakh refugees within its territory has been unable to provide the population, access to any financial institutions or services. This is primarily due to the absence of a uniform and institutionalised legal framework, lack of documentation and the subsequent lack of awareness about refugees in the public domain. This crisis further exacerbated in the aftermath of the demonetisation policy of 2016 which initiated the transformation of India into a cashless economy by ensuring bank accounts for every individual. However, for the refugees who have no access to banking services, the impact of this policy was devastating. Apart from being excluded from the mainstream economy, which was already the case, the policy rendered their cash savings worthless. Moreover, the “Aadhaar” issued by the Government of India to persons legally residing in India was made mandatory for accessing services, which cast further doubt over the socio-economic and financial inclusion of the population whose eligibility for acquiring this national ID card remained unclear. These policies led to refugees being side-lined with no means to access the formal economy.
Objectives
In this background, the Project sought to:
Undertake a comprehensive study of the evolving financial policies in India and identify legal avenues available for refugees to access financial systems and services;
Conduct pilot studies to test the practicality of the identified avenues and share the findings of the same with the refugee community and relevant stakeholders so as to inform future programmatic interventions;
Engage with the government and relevant authorities to create awareness about the specific needs of this population, advocate for their financial inclusion, and seek clarifications on the implementation of current financial policies; and
Design and implement a targeted financial literacy programme so as to equip refugees with the tools to initiate their inclusion in the mainstream economy.
Methodology & Intervention
For the purpose of the study, MAP undertook the following:
Meeting and interviews with refugee aid organisations to understand the existing situation and challenges;
Focus group discussions with the refugee communities to understand their demands and factors that inhibit their participation in the mainstream economy;
Desk review of the relevant legal and policy documents of the Government of India and RBI;
Pilot studies involving field work with selected refugees to understand the practical difficulties refugees face in accessing identity documents like Aadhaar, and financial products and services;
Engagement with bank officials, government authorities, policy think tanks, and CSOs to raise awareness, seek clarity, and explore potential alternatives to overcome barriers in accessing financial products and services.
Structure of the Report
The structure of the project is as enshrined below:
Section 1 provides the contextual background relevant to the study by giving an overview of India’s asylum framework and the documentation issued to refugees.
Section 2 outlines the legal and policy issues around access to bank accounts and the impact of the Aadhaar in accessing financial services in India.
Section 3 focuses on the barriers and challenges faced by refugees in India due to their exclusion from financial systems.
Section 4 sets out the possible avenues for financial inclusion of refugees based on the desk research undertaken as part of the Project.
Section 5 discusses the observations and findings of the pilot studies undertaken under the Project to test the practical viability of the avenues identified for refugees’ financial inclusion.
Section 6 highlights some relevant global best practices.
Section 7 sets out the conclusions derived from the Project and makes recommendations to address the identified gaps.