Originally written by Anjana Ravi and Eric Tyler for the Wall Street Journal.

In the early 2000s, India launched a massive drive to bring most of its population under the formal banking system.

However, 90% of the 100 million accounts opened under the plan are unused and close to half of India’s 1.2 billion-strong population still don’t have bank accounts.

The main problem is Indian banks and other financial service providers haven’t found a way to serve poor customers located in far-flung areas and still make a profit, shows a study by the New America Foundation and MicroSave.

The government, banking regulator and banks will have to collaborate to develop products that appeal to the poor and are also viable for banks, the study found. In the interim, the government should provide financial incentives to banks to serve poor customers.

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