Fi strategies-reference framework-final-aug2012

Financial Inclusion Strategies
Reference Framework
AUGUST 2012

FINANCIAL INCLUSION STRATEGIES – REFERENCE FRAMEWORK 1
Version: August 2012
Reference Framework
August 2012
Prepared by the World Bank for the G20 Mexico Presidency
Online Version Available: www.worldbank.org/financialinclusion
Acknowledgements
This Reference Framework overview was prepared by the Financial Inclusion Global Practice of the Finan-cial
and Private Sector Development Network, World Bank. The lead authors of the Framework are Douglas
Pearce and Claudia Ruiz Ortega.
Substantive inputs and guidance were received from: the Ministry of Finance and Public Credit, Mexico (Juan
Manuel Valle); the Comisión Nacional Bancaria y de Valores, Mexico (Raul Hernandez-Coss); the Alliance
for Financial Inclusion (Robin Newnham, Alfred Hannig); the Bill & Melinda Gates Foundation (Rodger Voo-rhies,
Claire Alexandre, Sheila Miller); World Bank experts (including Gaiv Tata, Massimo Cirasino, Leora
Klapper, Samuel Maimbo, Nataliya Mylenko, Niraj Verma, Robert Cull, Rosita Najmi); IFC experts (including
Tony Lythgoe, Rolf Behrndt, Anushe Khan); CGAP (Tilman Ehrbeck); the G20 Global Partnership for Finan-cial
Inclusion (GPFI) Sub-Group on Data and Measurement; Bangko Sentral ng Pilipinas; and Bank Negara
Malaysia.
© 2012 International Bank for Reconstruction and Development / The World Bank
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Preface
Financial inclusion is emerging as a priority for poli-cymakers
and regulators in financial sector develop-ment,
with an increasing number of countries intro-ducing
comprehensive measures to improve access
to and usage of tailored financial services, informed
by a fast-growing body of experience and knowl-edge.
More than 60 countries have initiated finan-cial
inclusion reforms in recent years. The growing
priority placed on financial inclusion is illustrated by
the commitments made by financial regulators from
35 developing countries to financial inclusion and to
financial education under the Maya Declaration.
G20 leaders had previously committed to improve
access to financial services for the poor at the Pitts-burgh
Summit in November 2009, and a Financial
Inclusion Experts Group (FIEG) was created to ex-pand
access to finance for household consumers
and micro, small-, and medium-sized enterprises.
The FIEG developed the Principles for Innovative
Financial Inclusion, which were endorsed during
the Toronto Summit in June 2010.1 These nine prin-ciples,
derived from the experiences and lessons
learned from policymakers throughout the world, un-derpin
the Financial Inclusion Action Plan endorsed
at the Korea Summit in November 2010, which
called for the creation of the Global Partnership for
Financial Inclusion (GPFI) as the mechanism to ex-ecute
the G20 commitment. In 2011, the GPFI docu-mented
the experiences of 11 countries that have
already implemented some of the principles and
proposed a number of concrete recommendations
moving forward.2
Mexico has prioritized the commitment of G20 and
non-G20 countries to create national platforms man-dated
with achieving financial inclusion and to devel-op
national strategic action plans to meet financial
inclusion targets, alongside financial education and
consumer protection measures, in its “International
Financial Inclusion Agenda” for the 2012 G20 Presi-dency.
This Reference Framework was prepared at
the request of the Mexico G20 Presidency. It builds
on and profiles the following: country models and
examples, the work of the GPFI through its three
subgroups (Principles for Innovative Financial In-clusion
and Standard Setting Bodies Engagement,
SME Finance, and Financial Inclusion Data and
Measurement), the Alliance for Financial Inclusion
(AFI), IFC, CGAP, the World Bank, UNCDF, Asia-
Pacific Economic Cooperation (APEC), and others.
It is anticipated that future versions of this Frame-work
will be revised, as country inputs are received,
for example with technical inputs, models, and les-sons
learned submitted by ministries of finance and
financial regulators, development partners, and fi-nancial
sector bodies (such as industry associations
and responsible finance networks). An online version
of the Reference Framework will provide access to a
wide set of materials including country case studies,
facilitate experience and knowledge-sharing among
a broad set of actors, and complement AFI’s peer to
peer mechanism for financial regulators.
1 The Principles for Innovative Financial Inclusion are: leadership, diversity, innovation, protection, empowerment, cooperation, knowl-edge,
proportionality and framework.
2 Alliance for Financial Inclusion (AFI) 2011. The G20 Principles for Innovative Financial Inclusion: Bringing the Principles to Life, pre-pared
on behalf of the G20”s GPFI, available at www.gpfi.org

AFI Alliance for Financial Inclusion
AML/CFT Anti-money laundering and
combating financial terrorism
APEC Asia-Pacific Economic Cooperation
ATISG Access through Innovation
Sub-Group
ATM Automatic teller machine
BSP Bangko Sentral ng Pilipinas
CDD Customer due diligence
CEMLA Centro de Estudios Monetarios
Latinoamericanos
CGAP Consultative Group to Assist the
Poor
CNBV Comisión Nacional Bancaria y de
Valores
CNSF Comisión Nacional de Seguros y
Fianzas
CONDUSEF Comisión Nacional para la
Protección y Defensa de los
Usuarios de Servicios Financieros
CPFL Consumer Protection and Financial
Literacy
DFID Department for International
Development
ENEF Estratégia Nacional de Educação
Financeira
FAS Financial Access Survey
FATF Financial Action Task Force
FIDWG Financial Inclusion Data Working
Group
FIEG Financial Inclusion Experts Group
FSB Financial Stability Board
FSI Financial Soundness Indicators
G2P Government to person
GIZ Gesellschaft für Internationale
Zusammenarbeit
GPFI Global Partnership for Financial
Inclusion
HH Household
ICR Insolvency and creditor rights
IFC International Finance Corporation
IMF International Monetary Fund
INFE International Network for Financial
Education
KPI Key performance indicator
KYC Know Your Customer
MFI Microfinance Institution
MSMEs Micro, small, and medium
enterprises
NAFIN Nacional Financiera
OECD Organization for Economic
Development and Cooperation
POS Point of sale
RBI Reserve Bank of India
RDB Regional Development Bank
ROSC Reports on Observance of
Standards and Codes
SACCO Savings and Credit Cooperative
SBS Superintendencia de Banca,
Seguros y AFP
SMEs Small and medium enterprises
SSBs Standard-setting bodies
UNCDF United Nations Capital
Development Fund
Abbreviations and Acronyms

Table of Contents
Preface.......................................................................................................................................................2
I. Introduction..............................................................................................................................................6
II. Financial Inclusion Commitments........................................................................................................... 7
III. Financial Inclusion Strategies.............................................................................................................. 11
Financial Inclusion Strategy Components........................................................................................ 12
Responsible Finance and Financial Inclusion Strategies................................................................. 13
SME Finance Compact and Financial Inclusion Strategies............................................................. 15
IV. Financial Inclusion Data to Underpin Strategy Design and Monitor Progress..................................... 16
Dimensions of Financial Inclusion.................................................................................................... 17
How is Financial Inclusion Monitored at the Country-Level?........................................................... 18
Data Collection Efforts Worldwide.................................................................................................... 19
Core Financial Inclusion Indicators.................................................................................................. 22
Diagnostics as a Complement to Data............................................................................................. 25
V. Institutional Structure to Support a Financial Inclusion Strategy.......................................................... 26
VI. Public Sector Actions: Policies, Regulation, and Financial Infrastructure........................................... 29
Policies and Regulation....................................................................................................................30
Financial Infrastructure Development.............................................................................................. 35
Public Initiatives and Market Interventions....................................................................................... 37
VII. Private Sector Actions........................................................................................................................40
Accessible Financial Accounts......................................................................................................... 40
Innovative Retail Payments..............................................................................................................42
VIII. Implementation Support Framework................................................................................................. 44
IX. Conclusions........................................................................................................................................43
References...............................................................................................................................................56

Figure 1 Financial Inclusion Strategy Components.................................................................................... 7
Figure 2 Responsible Financial Inclusion Strategies ............................................................................... 14
Figure 3 Support Framework for Financial Inclusion
Commitment and Strategies: Priorities, Mechanisms........................................................................... 45
Table 1 Financial Inclusion Strategy Components: Overview of Models and Examples............................ 8
Table 2 Comparison of Multi-Country Supply-Side Data Surveys of Financial Inclusion......................... 20
Table 3 Comparison of Multi-Country Demand-Side Data on Financial Inclusion.................................... 21
Table 4 Proposed G20 Basic Set of Financial Inclusion Indicators.......................................................... 23
Table 5 Financial Inclusion and Infrastructure Diagnostics...................................................................... 25
Table 6 Institutional Structure to Coordinate Financial Inclusion.............................................................. 27
Table 7 Options for Policy and Legal Reforms......................................................................................... 30
Table 8 Financial Infrastructure Options (Examples)................................................................................ 36
Table 9 Options for Public Initiatives and Interventions............................................................................ 37
Box 1 Evaluating Brazil’s Financial Education Program........................................................................... 18
Box 2 Supply- and Demand-Side Data.................................................................................................... 19
Box 3 Data Informing Financial Inclusion Reforms: Mexico..................................................................... 24
Box 4 The Institutional Structure of Financial Inclusion in Mexico............................................................ 28
Box 5 Bangko Sentral Ng Pilipinas (BSP): Enabling Regulatory Environment........................................ 31
Box 6 Moving Towards a Basic Bank Account in the European Union..................................................... 32
Box 7 Responsible Finance: Resources, Principles, Good Practices...................................................... 33
Box 8 Proportional AML/CFT Regulation that Promote Financial Inclusion............................................. 34
Box 9 Proportional Risk Assessments: Country Examples...................................................................... 35
Box 10 Government to Person (G2P) Payments..................................................................................... 38
Box 11 Accounts: Mzansi Accounts .........................................................................................................41
Box 12 Saving Accounts in Kenya............................................................................................................42
Box 13 Innovations in Retail Payments: Global Payments Systems Survey........................................... 43
Annex 1 Financial Inclusion Strategies/Frameworks................................................................................ 48
Annex 2 International Financial Inclusion Indicators................................................................................ 51
Annex 3 SME Finance Compact..............................................................................................................54

I. Introduction
Financial inclusion strategies can be defined as
road maps of actions, agreed and defined at the
national or subnational level, that stakeholders fol-low
to achieve financial inclusion objectives. Suc-cessful
strategies coordinate efforts with the main
stakeholders, define responsibilities among them,
and state a clear planning of resources by, for ex-ample,
prioritizing targets. A strategy can promote
a more effective and efficient process to achieve
significant improvements in financial inclusion and
is ideally prepared with the private sector in order
to establish and achieve shared, achievable goals
for financial inclusion.
A comprehensive approach to financial inclusion
addresses at least three aspects: access to finan-cial
services and products; usage of financial ser-vices
and products; and quality of financial services
and products, defined by consumer ability to ben-efit
from new financial services and products (and
linked to consumer protection and financial capa-bility).
Through expanded access, consumers are
able to adopt new financial services and products
from formal institutions. Actions to expand financial
access can first identify potential barriers faced by
institutions to reach lower-income and underserved
customers and then catalyze or implement mea-sures
to address these barriers. The second as-pect,
usage, refers to the regularity and frequency
of the adoption of financial services and products.
A comprehensive strategy promotes not only the
adoption of financial products and services, but
also the ability of customers to take full advantage
of them. The third aspect relates to the degree to
which consumers can benefit from financial ser-vices.
Financial capability and consumer protection
need to be priorities alongside financial inclusion in
order to increase the uptake of financial services,
lower the risks of increased access to finance, and
help ensure that customers benefit from financial
services. Financially capable consumers have the
knowledge, skills, and opportunities to be able to
select and make use of financial services in a way
that fits their needs.
This Reference Framework was prepared as a re-source
for policymakers, regulators, and partner
development agencies as an accessible reference
point for existing financial inclusion approaches or
for preparing new financial inclusion strategies. The
Framework consists of eight sections. In the first
section, a discussion of the key components that
define financial inclusion strategies is presented.
The second section centers on financial inclusion
data, including an analysis of available data and
diagnostics, and potential core financial inclusion
indicators. The third section presents recommenda-tions
from different experiences on the institutional
structure suitable to support financial inclusion strat-egies.
Options for public sector actions (policy and
regulatory reforms, financial infrastructure, and pub-lic
interventions) and then private sector responses
follow in the next two sections. Support frameworks
for design and implementation of financial inclu-sion
commitments and strategies from development
agencies are outlined in the final section.

II. Financial Inclusion Commitments
An increasing number of countries are committing
to improving access to and usage of financial ser-vices,
informed by a fast-growing body of country
experience and knowledge. While more than 60
countries have introduced reforms to stimulate an
expansion of financial inclusion in recent years,
there is an increasing emphasis on a compre-hensive
approach with a sequenced package of
reforms conducted by a range of relevant actors,
leading to more significant improvements in finan-cial
inclusion that are beneficial for new consumers.
Financial regulators from more than 20 countries
have made financial inclusion commitments under
the “Maya Declaration” to i) create an enabling en-vironment
that increases access and lowers costs
of financial services, including through new technol-ogy;
ii) implement a proportionate regulatory frame-work
that balances financial inclusion, integrity, and
stability; iii) integrate consumer protection and em-powerment
as a pillar of financial inclusion; and iv)
use data to inform policies and track results.3
This Reference Framework outlines the following
components for these comprehensive financial
inclusion strategies/plans with actions and exam-ples
set out for each. Table 1 outlines approach-es
that have been used by countries for each
component,and examples of how countries have
tailored country commitments to fit their individual
market structure, institutions, financial inclusion
characteristics, and political context.
FIGURE 1. FINANCIAL INCLUSION STRATEGY
COMPONENTS4
3For further information, see www.afi-global.org/gpf/maya-declaration
4Note: This is a highly stylized representation. Countries will be at different stages for each component, and components may not be
sequential.

TABLE 1. FINANCIAL INCLUSION STRATEGY COMPONENTS: OVERVIEW OF MODELS AND EXAMPLES5
COMPONENT:
SECTION OF
FRAMEWORK
POTENTIAL COUNTRY
COMMITMENT MODELS COUNTRY EXAMPLES
Data and
Diagnostics,
Targets/Objectives,
Progress
Monitoring
Sections IV, V,
VIII Stock-taking
to inform strategy
and targets, and to
monitor targets and
evaluate progress
Collect data, formulate
indicators, synthesize
recommendations and
insights from diagnostics,
align targets and broader
objectives.
Regulator/Household/
Enterprise Surveys, Financial
Inclusion & Responsible
Finance diagnostics
Data: India (National Sample Surveys),
Kenya (National Financial Access
Survey), Mexico (comprehensive data
approach), Peru (Financial Literacy
Survey), South Africa (FinScope,
Financial Consumer Protection report)
Align targets for financial
inclusion indicators and
broader objectives, and
monitor progress toward
achieving them.
G20 basic financial inclusion
indicators, supplemented by
tailored national indicators
Financial regulators increasingly track
financial inclusion indicators, e.g. RBI
India, SBS Peru.
Strategy-Building,
strategy-revision
Sections III, V, VIII
Strategy design
or modification,
institutional
structure to support
the strategy
Develop or update a strategy
document, whether as a
standalone document or as
a component of a broader
financial sector strategy with
buy-in from government,
regulators, and financial
sector.
Charters, strategies, action
plans, components of financial
sector strategies
Indonesia (Financial Inclusion
Strategy), Kenya (Financial Access
Partnership), South Africa (Financial
Sector Charter)
Put in place a cross-agency
coordination structure for
supporting and ensuring
strategy implementation.
Ensure that adequate
regulatory and supervisory
capacity is in place to
implement and monitor
reforms and to ensure that
financial inclusion does
not lead to instability or to
harmful consumer impacts.
National platform for
coordinating financial
inclusion (e.g. council, task
force) or a dedicated financial
inclusion unit in regulator or
ministry of finance
Brazil, India (Committee on Financial
Inclusion, 2008; Taskforce on MSMEs,
2010), Indonesia, Mexico (Financial
Inclusion Council), United Kingdom
(Financial Inclusion Taskforce)
5 This is an indicative rather than an exhaustive list. (CONTINUED)

COMPONENT:
SECTION OF
FRAMEWORK
POTENTIAL COUNTRY
Public Sector
Actions: Policy,
Regulation,
Financial
Infrastructure
Section VI
Commit to introducing
policy and legal reforms,
and to developing financial
infrastructure, in order to
promote responsible financial
inclusion (consistent with
financial integrity and stability
priorities), and enable/
stimulate the needed financial
sector response.
Banking agent regulation Brazil, India, Kenya, Mexico
Payments systems
development to underpin
electronic transactions, use of
technology
Regulation simplifying
procedures for access to
finance
Colombia, India (special provisions in
KYC guidelines, no-frills accounts),
Pakistan
Legislation allowing
alternative financial products/
services and e-money
Indonesia (Islamic finance and
development of Sharia banking
policies), Jordan (leasing law, secured
transactions and land registration
reforms), Philippines (e-money models,
including bank and non-bank)
Promote development of
market-level infrastructure
(national IDs, national
switches, credit information
systems)
India (UIDAI)
Channel social payments
(e.g. benefits), wages, and
procurement through financial
accounts
Brazil (Bolsa Familiar), India
(Bihar, health payments), Mexico
(Oportunidades)
Financial capability and
consumer protection initiatives
Brazil (consumer protection
framework), India (financial literacy
project launched by RBI), Peru
(financial literacy programs to teachers,
virtual classroom website)
(CONTINUED)
(CONTINUED)

COMPONENT:
SECTION OF
FRAMEWORK
POTENTIAL COUNTRY
Private Sector
Actions
Section VII
Financial institutions respond
to targets and the improved
enabling environment and
introduce products, delivery
mechanisms, and processes
that significantly and
responsibly expand financial
inclusion.
Development of viable
business models for low-income
customers is key.
Current business models still
limited.
Accessible financial accounts
for savings/payments
Brazil, Canada, India, Indonesia
(Tabunganku), Mexico, South Africa
(Msanzi accounts), United Kingdom,
European Union
Mobile banking products that
provide access to a broad
range of financial services
Still being developed – several high-profile
examples and a fast-evolving
area (e.g. Haiti, Kenya, and Tanzania)
Microfinance through retailer
networks, SME finance
through the supply chain
Mexico (Bancomer, Banorte, NAFIN,
OXXO)
Implementation
Support
Framework
Section VIII
Where demanded, donors
and technical partners can
provide technical assistance,
data, financing, and other
forms of support to the
design and implementation of
financial inclusion strategies.
Technical assistance, data
and analysis, financing,
risk-sharing, risk assessment
on financial integrity, and
capacity-building
Extensive support provided, but
nevertheless gaps and challenges
remain. Comprehensive packages of
support could be designed in parallel
with financial inclusion strategy design.
(CONTINUED)

III. Financial Inclusion Strategies
Key Messages:
n A financial inclusion strategy can be characterized
by six components: i) stock-taking: data and
diagnostics; ii) targets and objectives; iii) strategy-building
or revision; iv) public sector actions: policies,
regulation, and financial infrastructure; v) private sector
actions; and vi) progress monitoring.
n Each country context varies, including in terms
of availability of data and diagnostics, institutional
capacity to implement reforms, financial market
structure, level of financial infrastructure, and
political priorities. To fit each country context, tailored
approaches can be built by national entities using the
reference material, examples, and guidance set out in
this Framework. Many countries already have many of
the components of a financial inclusion strategy in place.
n Financial inclusion is interlinked with financial
stability, financial integrity, market conduct, and
financial capability of consumers and should be
prepared with reference to analysis and objectives
for those areas, irrespective of whether the financial
inclusion strategy is a standalone document or a
component of a broader financial sector development
strategy.
n Financial inclusion strategies (whether standalone
or part of a broad financial sector development
strategy) provide a framework for prioritizing
reforms and actions, including for priority areas at
country level, for example small and medium enterprise
(SME) finance, rural finance, or financial education.
National financial inclusion strategies (in whatever
form) have the potential to catalyze significant im-provements
in financial inclusion for households and
enterprises through a coordinated, prioritized, and
comprehensive framework for actions that ensures
maximum impact within institutional and resource
constraints. The aim of a financial inclusion strat-egy,
or action plan, can be to bring together initia-tives
from the public sector, financial and nonfinan-cial
institutions, and other stakeholders to expand
and improve financial inclusion while maintaining
sufficient focus on financial stability, integrity, and
market conduct. Policymakers and regulators, for
example, can implement an organized package of
reforms to encourage private sector activity and in-novation
in line with financial inclusion targets.6
Financial inclusion strategies can be broad in
scope, covering public and private sector actions.
They can stand alone or can be a component of
broader financial sector development strategies.7
Strategies can also focus on certain areas where
the need for actions has been highlighted, such as
SME finance (through a “compact,” for example) or
financial education action plans, or they can cover
a broader set of actions to address different bar-riers
to financial inclusion.8 Financial inclusion is
interlinked with financial stability, financial integrity,
market conduct, and the financial capability9 of con-sumers
and should be prepared with reference to
6 Policymaker and regulator roles include: building infrastructure, driving transaction volume and implementing an organized package
of reforms. See: Ehrbeck, Tilman, Mark Pickens, and Michael Tarazi. 2012. “Financially Inclusive Ecosystems: The Roles of Govern-ment
Today.” Focus Note 76. Washington, D.C.: CGAP, February.
7 For example the World Bank is working with seven African countries to support Financial Sector Development Strategies, all of which
include financial inclusion components.
8 Another area strategies have focused on is microfinance. For more information on microfinance strategies, see Duflos and Glisovic-
Mezieres (2008).
9 Financial capability encompasses the knowledge, attitudes, skills, and behavior of consumers with regard to understanding, select-ing,
and making use of financial services.

analysis and objectives for those areas, even if the
financial inclusion actions are not part of a broader
financial sector strategy.
The process of elaborating, implementing, and
monitoring a financial inclusion action plan, or strat-egy,
can be characterized by six components10: i)
stock-taking: data and diagnostics; ii) targets and
objectives; iii) strategy-building or revision; iv) pub-lic
sector actions: policies, regulation, and finan-cial
infrastructure; v) private sector actions; and
vi) progress-monitoring. Policy consensus can be
needed throughout and may to an extent be insti-tutionalized
through multi-year commitments, coor-dination
mechanisms, institutional mandates and
roles, and the involvement of civil society and the
private sector. As Asia-Pacific Economic Coopera-tion
(APEC) states, “The development of a National
Financial Inclusion Strategy needs commitment
from all the different actors but especially a strong
leadership from the government by including this
as an integral component of overall financial sector
growth and poverty reduction strategy.”11
Financial Inclusion Strategy Components
Country-level financial inclusion actions, as part of
a formal strategy or not, typically include the fol-lowing
components to some degree, although this
is a stylized typology and countries will be at dif-ferent
stages for each. The Reference Framework
explores each component in subsequent sections:
1. Stock-Taking: Data and Diagnostics: enable
policymakers, regulators, and stakeholders to
better understand the baseline or starting point
in terms of access to and usage of financial ser-vices,
barriers to financial inclusion, and how
to address them within limited institutional ca-pacity
and resources. Banks and other finan-cial
service providers can design products and
delivery mechanisms that are more viable and
tailored to the financial needs of the unbanked.
Data and analysis can therefore underpin re-forms
and innovation.
2. Targets and Objectives: targets and broader
objectives are determined at the country level.
Targets for financial inclusion indicators can be
informed by data and diagnostics, and progress
in meeting them can be tracked through those
indicators.12 Not all financial inclusion–related
objectives can yet be translated into measur-able
indicator targets – for example, financial
capability measurement techniques are yet to
be distilled into widely accepted headline indi-cators
and “proportionality” in regulation that
tailors implementation to level of risk implies an
approach rather than an exact measure – so
broader objectives are also appropriate. The
private sector should be encouraged to con-tribute
in setting targets and objectives, as they
will be key actors in reaching them. Targets
set without private sector involvement may be
unrealistic or may lead to suboptimal actions
designed to meet targets rather than to sus-tainably
scale up financial services. To some
degree, benchmarking indicator levels and
objectives progress relative to other countries
(such as regional neighbors or countries with
similar per capita income) can be helpful.
3. Strategy-Building or Revision: a strategy,
or action plan, can be set out – or an existing
strategy can be modified – to identify and align
activities and roles for all actors concerned
in meeting those targets and objectives, and
providing or identifying a coordination mecha-nism
or institutional structure to ensure that
the strategy is implemented. Commitments by
regulators and governments are essential to
enable and stimulate private sector actions.
The involvement of the private sector (and civil
society) is also important to ensure that the
financial inclusion strategy is achievable and
10 Not necessarily sequential – each country context is complex and some components will already be better developed than others,
while political economy, social, and technological factors vary.
11 For an APEC review of the development of financial inclusion strategies, see APEC Financial Empowerment Financial Inclusion
Working Group (2011).
12 The World Bank, with funding from the Russian Financial Literacy and Education Trust Fund, is working on a framework for assess-ing
financial capability.

has wide ownership. Voluntary private sector
commitments can be an effective means of
promoting financial inclusion and financial ca-pability.
Spurred on by competition, the threat
of regulation, and monitoring, banks and other
financial institutions must take a leading role in
achieving financial inclusion in line with market
opportunities. Financial inclusion units in minis-tries
of finance or regulators can lead and mon-itor
the design and implementation of financial
inclusion strategies, while task forces or coor-dination
bodies can be set up with the private
sector to understand barriers, develop shared
objectives, engage wider participation, and en-courage
shared ownership. A national platform
for coordinating and/or monitoring implementa-tion
of the strategy can take the form of a finan-cial
inclusion council, task force, or other body.
4. Public Sector Actions: Policies, Regula-tion,
and Financial Infrastructure: the public
sector and regulators can implement a com-prehensive
package of reforms to encourage
financial sector activity and innovation in line
with the financial inclusion strategy targets. Fi-nancial
infrastructure, including credit informa-tion
systems, secured transaction frameworks,
and efficient and secure payments systems, is
essential to enable lower costs and risks for
financial service providers serving new low-in-come
customers. Regulation should target the
elimination of barriers and bottlenecks that im-pede
private sector action and should be pro-portional
(risk-based) and flexible enough to al-low
new business models and financial service
innovations that extend financial inclusion while
ensuring financial stability and integrity.
5. Private Sector Actions: the introduction of
financial services, new business models, and
delivery mechanisms that expand access to
and usage of financial services. Technology, fi-nancial
infrastructure, and enabling policy and
legal reforms can allow both for lower-income
and more “difficult to reach” consumers to be
viably served and for the introduction of a wider
and more appropriate suite of financial prod-ucts
to fit household and enterprise needs.
6. Progress-Monitoring: progress toward achiev-ing
the strategy’s targets would benefit from on-going
monitoring. Not only achievement of fi-nancial
inclusion targets and objectives should
be assessed, but also the effectiveness of the
reforms, products, or delivery mechanisms in-troduced
and associated risks, so that changes
can be made to the strategy implementation as
needed. Feedback distinguishing successful
actions from actions that are not can be used
to revise the strategy and increase its success.
Indicators can be tracked on a frequent and
regular basis, using data from national surveys
(and global cross-country surveys as a comple-ment),
while less-frequent impact evaluations
can provide a rigorous assessment of interven-tions’
effects and their cost-effectiveness.
Responsible Finance and Financial
Inclusion Strategies
Financial capability and consumer protection can
be components of a “responsible” financial inclusion
strategy. As access to financial services increases,
it is important that new customers and existing cus-tomers
with access to new services can make well-informed
decisions about how best to manage and
use financial services. In addition, since new pro-viders
and delivery mechanisms open up scope for
consumer fraud and abuse, proper consumer pro-tection
frameworks should be in place. Measures
to strengthen consumer protection frameworks
and enforcement and to raise financial consumer
awareness and capability need to be introduced
alongside or as part of financial inclusion strategies.
Responsible financial inclusion can lead to stron-ger
positive impacts and lower risks at the individ-ual,
institution, sector, and economy-wide levels.
Where consumers are not well protected or unable

to make informed decisions about any type of finan-cial
service or where products or institutions are not
well monitored, the impacts of financial inclusion
can be reduced or even negative. This was clearly
illustrated by the subprime housing loan crisis in
the United States, the recent payments protection
insurance scandal in the United Kingdom, and mi-crocredit
repayment crises in India, Morocco, and
elsewhere.
Consumer protection and financial capability can be
incorporated as pillars of financial inclusion strate-gies,
as “responsible” financial inclusion strategies,
or in parallel. In the case of Brazil, its National Strat-egy
for Financial Education (ENEF) promotes finan-cial
education activities that extend beyond finan-cial
inclusion, such as preparing consumers at all
income levels for complex financial decisions that
they are required to make, such as retirement plan-ning.
Brazil’s strategy is a public-private partnership
among four national financial system regulators
and supervisors; five ministries and state secre-tariat;
national, state, and municipal education bod-ies;
and nongovernmental entities. Peru’s Financial
Inclusion Strategy, on the other hand, promotes ac-tions
toward greater access and usage of financial
products and services, complemented with strong
consumer protection and financial capability com-
FIGURE 2. RESPONSIBLE FINANCIAL INCLUSION STRATEGIES

ponents, to help new clients develop the capacity to
make informed and responsible financial decisions,
and to reduce the negative effects from potential
abuses by financial service providers.
SME Finance Compact and Financial
Inclusion Strategies
The Global Partnership for Financial Inclusion
(GPFI) Sub-Group for SME Finance is committed
to support countries that wish to prioritize SME
finance within financial inclusion strategies or as
related initiatives. An “SME Finance Compact” is
envisaged that could be incorporated as a focus
area for a financial inclusion strategy. Central to
such a compact would be a focus on actions to
establish an enabling environment for SMEs’ ac-cess
to financial services, including i) formulation
of country-specific recommendations for a policy
framework for a feasible and implementation-ori-ented
program of SME development under three
optional areas: (1) legislation, regulation, and su-pervision,
(2) financial market infrastructure, and
(3) public intervention and support mechanisms;
ii) measures to improve women entrepreneurs’
access to capital informed by the “Strengthening
Access to Finance for Women-Owned SMEs in
Developing Countries” report; and iii) measures to
improve access to finance for agricultural SMEs,
building on the GPFI policy recommendations laid
out in the report “Scaling Up Access to Finance for
Agricultural SMEs.”

Corresponding Stages: Stock-Taking: Data and Diagnostics, Targets and Objectives,
Progress-Monitoring
IV. Financial Inclusion Data to Underpin
Strategy Design and Monitor Progress
Key Messages:
n Country-level data and diagnostic assessments
inform the design and sequencing of reforms
and can also be valuable to the private sector
for adapting the design and delivery of financial
services.
n Indicators for financial inclusion can be used
to set national targets and to monitor of progress
toward those targets. Core indicators consistent with
the proposed G20 Basic Indicators prepared by the
GPFI Sub-Group on Data and Measurement are as
follows:
1. Formally banked adults: Percentage of adults with
an account at a formal financial institution [can be
broken down by gender]
2. Adults with credit from regulated institutions:
Percentage of adults with at least one loan
outstanding from a financial institution [can be
broken down by gender]
3. Formally banked enterprises: Number or
percentage of SMEs with accounts
4. Enterprises with outstanding loan from a regulated
financial institution: Number or percentage of SMEs
with outstanding loan
5. Points of service: Number of branches per 100,000
adults
n Adoption of these indicators would allow for
ownership by each country to set its own targets,
as well as for benchmarking with peer countries.
Secondary indicators and targets can be developed
to further fit country priorities.
Data play a critical role in the policymaking process,
from design and implementation to monitoring and
evaluation. With rigorous, objective, and reliable
key performance indicators, policymakers can ac-curately
diagnose the state of financial inclusion,
agree on targets, identify existing barriers, craft
effective policies, and monitor and measure policy
impact. Private sector targets can also be devel-oped
based on household or firm data that financial
access surveys can provide.
Efforts to collect better data on financial inclusion
have been increasing in recent years. Countries
where the statistical departments are not sufficient-ly
developed can use data collected by external
sources in the interim while developing the neces-sary
infrastructure to collect their own data, since
external sources typically are less in-depth and tai-lored
than country surveys.13
This section is informed by the work of the GPFI
Sub-Group on Data and Measurement, includ-ing
the 2011 report “Financial Inclusion Data-As-sessing
the Landscape and Country-Level Target
Approaches;” the sub-group’s recommendations
on financial inclusion, data stock-taking and gap
analysis; key performance indicators;14 and initial
approaches to country-level target-setting.
13 Even in countries where statistical departments are not well developed, there have been efforts to conduct and support financial
inclusion household surveys. For instance, FinScope Survey collects detailed demand-side data in various African countries.
14 The Key Performance Indicators of the report are based on the AFI Core Set of Indicators developed by the AFI Financial Inclusion
Data Working Group (FIDWG), currently being piloted by 15 countries.

Dimensions of Financial Inclusion
Indicators can measure at least three dimensions:
access, usage, and quality.
Access: the capacity that financial institutions have
to provide financial services and products, which is
linked to the regulatory, market, and technology en-vironments.
Examining access requires identifying
potential barriers that institutions face in providing
their services and products or that clients encounter
in using them. Access indicators reflect the depth of
outreach of financial services, such as penetration
of bank branches or point of sale (POS) devices in
rural areas (information that can be obtained from
supply-side data) or demand-side barriers that cus-tomers
face to access financial institutions, such as
cost or information.
Usage: the way in which clients use financial ser-vices,
such as the regularity and duration of the
financial product/service over time (for example,
average savings balances, number of transac-tions
per account, number of electronic payments
made). In order to use financial products, firms or
households must have access to them. However,
having access does not mean that everybody will
use financial products. Thus, not every firm or indi-vidual
who does not use financial services should
be classified as “excluded” or “unbanked,” and
likewise every firm or individual that has theoreti-cal
access to financial services is not automatically
financially included. Usage indicators can be de-veloped
from demand-side information, which can
also capture financial services provided by informal
financial providers.
Quality: the ability of the financial service or prod-uct
to meet the needs of the consumer. Quality
measures reflect the degree in which financial
products and services match clients’ needs, the
range of options available to customers, and cli-ents’
awareness and understanding of financial
products. Indicators of quality proxy for conve-nience,
product-fit, transparency, safety, con-sumer
protection, and financial capability. Hence,
quality indicators can be developed with informa-tion
from both demand- and supply-side surveys.
However, to measure quality, these surveys must
contain more complex information, such as de-tailed
product characteristics, terms of the con-tract,
or awareness of consumers.
A fourth dimension to measure financial inclusion
is its impact on firms and households. Financial in-clusion
policies would benefit from more rigorous
impact evaluations that assess an intervention’s
effects and cost-effectiveness. Impact evaluations
can be complex and challenging to perform since
they require data beyond financial information and
statistical methodologies to convincingly attribute
causality rather than correlations. However, these
evaluations are needed to understand the influ-ence
that deeper financial inclusion has on firms’
and households’ outcomes, such as businesses’
performance or human capital investments. The
“Impact Assessment for SME Finance Policies
Framework” being developed by the World Bank
for the GPFI Sub-Group on SME Finance will pro-vide
resources for policymakers and regulators in
this area.

How is Financial Inclusion Monitored at
the Country-Level?
Financial inclusion is measured through indicators
that summarize information provided by users of
financial products and services (through demand-side
surveys to individuals, households, or micro,
small, and medium enterprises – MSMEs) or infor-mation
obtained from financial providers (through
supply-side surveys to financial institutions or
through reporting to financial regulators). Demand-and
supply-side data are complementary rather
than substitutes and should be used in combination
for better policymaking.
Demand-side data collection efforts can consist of
either adding financial inclusion questions to na-tional
surveys, such as a census or household bud-get
survey, or implementing a standalone survey on
financial inclusion. These country-level efforts can
be broader (covering larger samples of the popula-tion)
or deeper (collecting more detailed informa-tion
related to access, usage, quality, and impact of
financial services).
The advantages of collecting new data via a stand-alone
survey dedicated to financial services usage
include the breadth of topics that can be covered
and the level of detail in the questions. The survey
designer can also choose the unit of analysis (in-dividuals,
households, MSMEs, or financial institu-tions).
The disadvantages are that these surveys
can be very costly to implement and thus are often
done in a one-off manner. This makes it much hard-er
to achieve the continuity necessary for effective
monitoring over time.
The advantage of using existing surveys is that the
survey methodology is already established, and
thus the marginal costs of adding questions on us-age
of financial services is low. This also helps to
ensure continuity over time – once a financial ser-
BOX 1. EVALUATING BRAZIL’S FINANCIAL EDUCATION PROGRAM
To evaluate the impact of the National Strategy for
Financial Education in Brazil (ENEF) on students’ fi-nancial
behavior, schools were randomly assigned to
either treatment (participating in the financial educa-tion
program) or control groups (not participating in
the program). Preliminary findings from this evalua-tion
suggest that students from schools participating
in the program experienced significant and sizable in-creases
in their average level of financial proficiency.
The financial education program is estimated to have
increased participating students’ financial knowledge
by 3.6 points. Compared with students from the control group, students in the financial education program also
reported improved financial attitudes and behaviors, such as higher scores for financial autonomy, larger fraction
of students with intention to save, and larger fraction of students actually saving some of their income. Spending
habits also improved for students in the treated schools: 16 percent of students in the treatment group reported
keeping a monthly list of their expenses, a behavior encouraged by the financial education curriculum, compared
with 13 percent in the control group. Students in the program were also less likely to shop with a credit card or to
buy things using installment plans, showing more self-control and planning behaviors.
Source: Bruhn et al. (2011).
40% 42% 44% 46% 48% 50% 52%
Treatment
Control
Savings Behavior Reported at the Mid-Term Evaluation
Percentage of students reporting that they save some income

vices module is embedded within a larger multitopic
survey, it is likely to remain in the survey. The disad-vantages
of this approach are that space for finan-cial
questions is typically very limited, survey mod-ule
designers may have little control over which
questions eventually get in, and the unit of analysis
is dictated by the design of the multitopic survey.
Data Collection Efforts Worldwide
There are a number of cross-country data initiatives
available to regulators in order to develop standard-ized
indicators of financial inclusion. These initia-tives
range from demand-side surveys to supply-side
information, and they vary in the scope of
countries that are covered, and in the frequency in
which they are collected. Tables 2 and 3 presents
the most widely available surveys.
Of note, a substantial new effort to collect global
data on financial inclusion is ongoing by the World
Bank and Gallup, with support from the Bill & Melin-da
Gates Foundation. This is the first source of data
on financial inclusion to offer a periodic tracking of
individuals’ financial choices over time. The “Glob-al
Financial Inclusion Indicators” (Global Findex),
available since April 2012, is a new public database
that can be used to track global policy and progress
to improve access to financial services. Its goal is to
reliably measure financial inclusion in a consistent
manner over a broad range of countries and over
time, allowing for cross-country comparisons. The
data were collected through interviews with at least
1,000 people per country in 147 countries about
their finances through the Gallup World Poll survey
over the 2011 calendar year. The Gates Founda-tion
has funded three triennial rounds of compre-hensive
data collection. In addition, annual data will
be available on the use of formal bank accounts
and credit. This new public database will document
financial access across genders, ages, geographic
regions, national income levels, and other indica-tors.
This data will allow researchers and policy-
BOX 2. SUPPLY- AND DEMAND-SIDE DATA
Demand-side data offer detailed information directly from users of financial services (e.g., individuals and firms).
This information is important to understand financial needs (met and unmet) of users, barriers encountered when
seeking formal financial services and products, and user information by socioeconomic and demographic char-acteristics
(e.g., degree of financial inclusion by income, occupation, age, or gender groups).
Supply-side data typically offer information from regulated financial institutions. These data allow for the iden-tification
of relevant financial inclusion issues such as geographical access (by location of branches), pricing of
different products and services, and penetration or usage of products and services.
While demand-side data offer detailed information on many dimensions of financial inclusion directly from us-ers,
household and firm surveys are costly and thus less frequent. Supply-side data, on the other hand, offer a
low-cost alternative with more frequent data at the expense of a set of rather broad indicators on only formal and
regulated providers in general.
Ideally, countries can measure and monitor financial inclusion by combining frequently collected supply-side
data with more detailed and rich demand-side information. Because supply-side data can be collected on a more
frequent basis, these data allow trends to be assessed at an institutional level and are particularly important in
managing the nexus around inclusion and stability from a supervisory point of view. Demand-side data can help
guide policies to groups where inclusion has not reached or identify which population groups concentrate the use
of financial products and services.

TABLE 2. COMPARISON OF MULTI-COUNTRY SUPPLY-SIDE DATA SURVEYS ON FINANCIAL INCLUSION
SURVEY DESCRIPTION FREQUENCY
COUNTRY
COVERAGE
PUBLICLY
AVAILABLE
IMF Financial Access
Survey (FAS)
Cross-country data on penetration and
usage of financial services collected from
regulators
Annual Global Yes
Global Payment
Systems Survey
(World Bank)
Snapshot of the payment and securities
settlement systems in both advanced and
emerging economies
Biannual Global Yes
Global Remittance
Prices (RPW)
database
Data on the cost of sending/receiving small
amounts of money from one country to
another.
Every 6 months Global Yes
MIX Detailed operational and financial statement
data from microfinance institutions
Irregular Over 110
countries
Partially
BankScope Database with information on public and
private banks. Detailed balance sheet and
income statements per bank
Irregular Selected
countries
No
FinStats Data on validated equities, gilts, fund prices,
currencies, dividends, and indices
Irregular Selected
countries
No
IMF-International
Financial Statistics
(IFS)
Collects eight financial inclusion indicators
from regulators of roughly 190 countries
Varies Global Yes
IMF Financial
Soundness Indicators
(FSI)
Indicators of financial soundness that
assess strengths and vulnerabilities of
financial systems
Varies Global Yes
Source: Adapted from IFC (2011).
makers to measure and compare how individuals
use bank accounts and other financial products and
to make evidence-based financial policies. Indica-tors
developed from this survey may complement
other sources, including country-led efforts.
Another value of this dataset is the questionnaire,
which was piloted and executed in 147 countries
around the world, and translated into 142 languag-es.
15 Countries are free to adopt questions from this
survey into their own data collection. For example,
if a country were to include these questions in a
triennial survey, the country could use the Global
Findex annual series to complete a panel over time.
15 Available at www.worldbank.org/globalfindex

TABLE 3. COMPARISON OF MULTI-COUNTRY DEMAND-SIDE DATA ON FINANCIAL INCLUSION
SURVEY DESCRIPTION FREQUENCY
COUNTRY
COVERAGE
PUBLICLY
AVAILABLE
Findex Cross-country, nationally representative
survey of households’ finances
Triennial
rounds, annual
rounds for
selected
questions
Global Yes
Enterprise Survey
(World Bank)
Firm-level surveys, representative sample
of a country’s private sector. Broad range
of business environment topics including
access to finance measures
Every few years Over 125
countries
Yes
Consumer Protection,
Financial Capability
Surveys (World Bank)
Nationally representative survey of financial
capability, consumer protection awareness,
money management, and usage of financial
products
One time, with
potential to
repeat
Selected
countries: 17 to
date
Yes
Living Standards
Measurement Study
(LSMS)
Multitopic, nationally representative
household data. Module on access to and
usage of financial services available for
some countries
Irregular Selected
countries
Partially
FinScope Nationally representative study of
consumers' perceptions on financial services
and issues
Irregular 14 in SSA,
Pakistan, and
India
No
MECOVI Information about the people’s living
conditions with data on financial
access rates
Irregular 12 in LAC No
Financial Diaries Year-long household survey that examines
financial management in poor households
One year-long
survey
South Africa,
India, and
Bangladesh
No
Source: Adapted from IFC (2011).
Note: SSA = Sub-Saharan Africa; LAC = Latin America and the Caribbean.

Two questions that will be asked annually by the
Gallup World Poll are:
• Do you, either by yourself or together with
someone else, currently have an account at
a bank, microfinance institution, [insert all ap-plicable
institutions, such as a credit union, a
cooperative, the post office, etc.], or another
financial institution? An account can be used
to save money, to make or receive payments,
such as with a debit card, or to receive wages
and remittances.
• In the past 12 months, have you, personally,
borrowed any money from a bank, [insert finan-cial
institutions displayed in previous question],
a microfinance institution, or another financial
institution?
Both supply- and demand-side data are useful to
develop indicators to monitor progress in financial
inclusion. Annex 2 discusses four sets of indicators
in more detail, which can be used by policymakers
to improve their financial inclusion monitoring.
Core Financial Inclusion Indicators
Indicators for financial inclusion can be used for
the national process of setting financial inclusion
targets and monitoring progress toward them. The
G2016 endorsed a “Basic Set” of headline, or core,
indicators at the G20 Summit in June 2012, shown
in Table 4. These indicators are derived from coun-try-
led data gathering, including financial institution
data collected by financial regulators, and house-hold
and firm surveys, and need not be dependent
on the global surveys listed in the third column of
Table 4.
16 Implementing Partners for the GPFI Sub-Group on Data and Measurement are IFC, CGAP, and World Bank

Core indicators consistent with the proposed G20
Basic Set, prepared by the GPFI Sub-Group on
Data and Measurement and underlined in Table 4,
are as follows.
1. Formally banked adults. Percentage of adults
with an account at a formal financial institution
(can be broken down by gender)
2. Adults with credit from regulated institu-tions.
Percentage of adults with at least one
loan outstanding from a financial institution
(can be broken down by gender)
3. Formally banked enterprises. Number or per-centage
of SMEs with accounts
4. Enterprises with an outstanding loan from
a regulated financial institution. Number or
percentage of SMEs with an outstanding loan
5. Points of service. Number of branches per
100,000 adults
The first four indicators measure the usage di-mension
and can best be obtained from demand-side
data. Countries that do not collect data to
develop these indicators can use Findex or Enter-prise
Survey data or can include questions from
these surveys in their national surveys. The fifth
indicator can be obtained from supply-side data
collected by the central bank or ministry of finance
and measures geographical access of formal fi-nancial
providers at the national level. These core
indicators then can be tailored (through sub-indi-cators)
to monitor context-specific issues, such
as the fraction of women with financial accounts,
the proportion of female-owned firms with a bank
loan, or the fraction of adults from rural areas us-ing
formal credit.
TABLE 4. PROPOSED G20 BASIC SET OF FINANCIAL INCLUSION INDICATORS
CATEGORIES INDICATORS
EXISTING GLOBAL
SOURCE
(IF RELEVANT)
DIMENSION OF
FINANCIAL INCLUSION
MEASURED
1 Formally banked adults % of adults with an account at a formal financial
institution
Global Findex Access, Usage
Number of depositors per 1,000 adults OR
number of deposit accounts per 1,000 adults
IMF FAS
2 Adults with credit by
regulated institutions
% of adults with at least one loan in the past year
from a regulated financial institution
Global Findex Access, Usage
Number of borrowers per 1,000 adults OR
number of outstanding loans per 1,000 adults
IMF FAS
3 Formally banked
enterprises
% of SMEs with an account at a formal financial
institution
WB Enterprise
Surveys
Access, Usage
Number of SMEs with deposit accounts/
number of deposit accounts OR number of SME
depositors/number of depositors
IMF FAS
4 Enterprises with
outstanding loan or line
of credit by regulated
institutions
% of SMEs with an outstanding loan or line of
credit
WB Enterprise
Surveys
Access, Usage
Number of SMEs with outstanding loans/number
of outstanding loans OR number of outstanding
loans to SMEs/number of outstanding loans
IMF FAS
5 Points of service Number of branches per 100,000 adults IMF FAS Access

BOX 3. DATA INFORMING FINANCIAL INCLUSION REFORMS: MEXICO
Data collection and analysis play a central role
in Mexico’s financial inclusion strategy. The
National Banking and Securities Commission
(CNBV) has pursued a comprehensive data col-lection
strategy to understand the dimensions
of the finance access challenge, inform policy
decisions, influence the business models of pro-viders,
and monitor progress.
The first step taken was to analyze existing data
from financial survey providers. Information from
financial inclusion reports, such as the percent-age
of municipalities without bank branches,
drew immediate public attention to the issue of
financial inclusion. The data collected began to
influence public policy and private sector deci-sion
making. For example, Bansefi, the major
national savings development bank, used the
CNBV’s database to plan the installation of a
large number of POS devices to manage pay-outs
of government cash transfers. Further, the CNBV’s pursuit of data has created a clear focal point for the
national debate on financial inclusion and has supported the creation of partnerships with other agencies. For
example, in a partnership with CONDUSEF, the consumer protection agency, CNBV will carry out focus groups
on financial literacy.
The 2011 National Household Survey of Financial Services Usage was designed and collected to construct a
complete view of financial inclusion in Mexico. This national demand-side survey includes household motivations
for using financial services as well as barriers to greater usage. The survey is expected every three years and
will complement other CNBV initiatives to deepen and broaden its financial inclusion data efforts. The survey has
been designed by CNBV and is housed at the National Institute of Statistics and Geography (INEGI). Drawing on
the institutional capacity and reputation of the INEGI is intended to ensure sustainability and confidence among
those people interviewed.
Sources: AFI (2010a and 2010b) and Hernandez-Coss (2010).
Box 3 illustrates how data and diagnostics are helping shape implementation of the financial inclusion
strategy of Mexico.
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0
100
200
300
400
500
600
700
800
900
Commercial
Banks
State-owned
Banks
Cooperatives Microfinance
institutions
Mexican Municipalities with Financial Providers
# of municipalities with access % of municipalities with access
Source: CNBV Presentation of FinancialInclusion Report to World Bank, September 2010

Diagnostics as a Complement to Data
Diagnostics provide an analytical and often in-depth
assessment of financial inclusion and financial in-frastructure,
which can be very valuable in inform-ing
the design, prioritization, and sequencing of
policy and legal reforms and of public interventions.
Diagnostic assessments can be comprehensive in
scope or focused on a particular sector or issue.
Financial Sector Assessment Program diagnostics
are the most comprehensive and in-depth tool, and
the World Bank is introducing a stronger focus on
financial inclusion to those assessments. These are
complemented by a range of detailed assessments
on key areas relevant to financial inclusion, includ-ing
those outlined in Table 5.
TABLE 5. FINANCIAL INCLUSION AND INFRASTRUCTURE DIAGNOSTICS
DIAGNOSTIC ASSESSMENTS DESCRIPTION
COUNTRY
EXPERIENCE
Financial Sector Assessment
Programs (FSAPs), FSAP Updates
(WB)
Provide a comprehensive and in-depth analysis of a
country’s financial sector (strengths and vulnerabilities)
and assess its potential contribution to growth and
development.
Global coverage.
12 currently
planned
Insolvency and Creditor Rights
Reports on Observance of
Standards and Codes (WB)
Provide summary assessments of the observance of
selected standards relevant to private and financial sector
development and stability.
Multiple countries
covered; 7
currently planned
Remittance and Payment
Diagnostics (WB)
Provide an in-depth analysis of payment, securities
settlement, and/or remittance systems based on
international standards, and recommendations to
authorities.
Over 100
conducted
Credit Reporting Diagnostics (WB) Provide an in-depth analysis of credit reporting systems
based on international standards, and recommendations
to authorities.
5 currently
planned
“Color” books (WB) Describe the payment and securities settlement systems
of selected countries with a view to identify possible
improvement measures.
23 published
Consumer Protection, Financial
Capacity Diagnostics (WB)
Systematic analysis of the legal, regulatory, and
institutional frameworks for consumer protection in
financial services, programs of financial education.
15 conducted;
action plans in 12
Corporate Governance (WB) Assesses corporate governance of financial sector. Multiple countries
covered
UNCDF (“MAP”) Financial Inclusion Roadmap Exercise: comprehensive
methodology linked to FinScope surveys.
Planned
Note: Diagnostics not publicly available are submitted to the regulator or ministry of finance, which decides how to share the findings.
WB = World Bank.

Corresponding Components: Strategy-Building and Revision; Progress-Monitoring
V. Institutional Structure to Support
a Financial Inclusion Strategy
Significantly improving and expanding financial in-clusion
can require a coordinated partnership and
participation among regulators, government agen-cies,
the private sector, and civil society. A coordi-nation
council or task force can provide a national
platform for the leadership and the momentum to
implement the strategy commitments. The coor-dination
entity may need official authorization to
empower their leadership, such as a parliamentary
decree or being chaired at a sufficient senior po-litical
level (for example by the Office of the Prime
Minister or President), or it could achieve credibil-ity
by being representative of the leading actors in
implementing the financial inclusion strategy.
Key Messages:
n Leadership – the first Principle for Innovative
Financial Inclusion – is needed to coordinate
actions and maintain drive and momentum for
reforms. A national platform for financial inclusion
can play this role and can also ensure that progress
in reaching targets is monitored and that changes to
strategy content are identified and implemented to
improve effectiveness.
n A dedicated unit in a financial regulator or
ministry of finance can provide an operational lead
on public sector actions, including on regulation,
policies, and financial infrastructure. A broad range
of public sector actors also have roles to play.
A financial regulator or ministry of finance can
take an operational lead for public sector actions
on regulation, policies, and financial infrastructure
because they can most effectively place financial
inclusion in the broader context of financial stabil-ity,
financial integrity, and market conduct priorities.
An amendment to the remit of the financial regula-tor
may be needed to formally recognize financial
inclusion as a goal. A broad range of public sector
actors – such as financial intelligence units, labor
and employment ministries, and tax and customs
agencies – can have roles to play and can be rep-resented
in the overall coordination structure.
Cooperation is one of the G20 Principles for Inno-vative
Financial Inclusion, and it is important that
public sector leadership is fully engaged with the
private sector. This G20 Principle is as follows: “cre-ate
an institutional environment with clear lines of
accountability and coordination within government;
and also encourage partnerships and direct con-sultation
across government, business and other
stakeholders.” Table 6 summarizes the institutional
structure established to coordinate financial inclu-sion
in various countries.

TABLE 6. INSTITUTIONAL STRUCTURE TO COORDINATE FINANCIAL INCLUSION
COUNTRY COORDINATION BODY
Brazil In 2009, the Financial Inclusion Project at the Central Bank was created with the objective of
integrating various stakeholders to develop effective policies for financial inclusion. A major part of
the project was the collection, organization, and analysis of data and research on various issues
related to financial inclusion (such as the expansion of correspondent banking across regions in
Brazil). In November 2011, the National Partnership for Financial Inclusion was launched.
Indonesia The Vice President’s (VP) Office in Indonesia is responsible for coordinating all efforts toward
financial inclusion. The VP Office coordinates national policy initiatives in close consultation with
the central bank or Bank Indonesia (BI). Since the VP Office took responsibility, several steps to
advance financial inclusion in the country have been taken.
Kenya In Kenya, financial inclusion monitoring is supervised by the Central Bank (CBK). In 2005, CBK
partnered with the Financial Sector Deepening (FSD) Kenya and other financial sector players and
stakeholders under a private-public partnership arrangement, the Financial Access Partnership
(FAP), to monitor and measure levels of access to financial services with reliable data collected in a
regular basis.
Korea The Financial Supervisory Commission (FSC) is Korea’s lead agency for financial inclusion policy.
FSC works closely with other agencies such as the Small and Medium Business Administration. In
addition, the Money Lending Policy Council is responsible for monitoring money lending regulations.
Mexico To provide an institutional mechanism to facilitate coordination among these agencies, the National
Council on Financial Inclusion was created in 2011 (see Box 4). The objective of this Council
is to organize the different entities working on financial inclusion in the country, from regulatory
agencies to social development and consumer protection agencies. For countries like Mexico,
with a variety of social programs that can be leveraged to promote financial inclusion, this Council
represents an important achievement. The Council will coordinate proposals for financial inclusion
policies and their implementation, formulate guidelines of a National Policy on Financial Inclusion,
define medium- and long-term goals for financial inclusion, propose the necessary changes in the
financial sector, and obtain information from the private sector on programs and actions related to
financial inclusion.
Philippines The Bangko Sentral ng Pilipinas created a Microfinance Unit in 2002, which was transformed into
the Inclusive Finance Advocacy Staff in 2007, in recognition of the importance of a broader objective
of financial inclusion.
United Kingdom In the United Kingdom, the Financial Inclusion Taskforce was an independent body that advised HM
Treasury and monitored and evaluated progress on financial inclusion. The taskforce was launched
on February 2005 and was composed of members drawn from the private, public, and nonprofit
sectors, who served in a personal capacity and on a voluntary basis. The taskforce concluded its
work in March 2011, making final recommendations for government and the private sector.
United States To support financial literacy in the United States, the Financial Literacy and Education Commission
was established with the Financial Literacy and Education Improvement Act of December 4, 2003.
The act named the secretary of the treasury as chairperson of the commission and mandated the
commission’s composition to include the heads of 20 federal agencies, such as the labor, education,
and agriculture departments, the Federal Deposit Insurance Corporation, the Board of Governors of
the Federal Reserve System, and the White House Office of Public Engagement (FLEC 2011).
The public sector structure for supporting financial inclusion in Mexico is set out in Box 4.

BOX 4. THE INSTITUTIONAL STRUCTURE OF FINANCIAL INCLUSION IN MEXICO
In Mexico, the Ministry of Finance and Public Credit has been the coordinator of the financial sector. Two Ministry
of Finance agencies are involved in financial inclusion: the National Banking and Securities Commission (CNBV)
and the National Commission for the Protection of Users of Financial Services (CONDUSEF).
CONDUSEF is a public institution aimed at consumer protection. It is in charge of promoting financial education
among the Mexican population; developing products and tools that give support, advice, and orientation to users
of financial services; and pursuing an equal and fair relationship between financial institutions and users of their
products and services. CNBV carries out the supervisory and regulatory functions regarding the operation of all
financial entities, and within its regulation branch, the Access to Finance Unit was created in 2007 to concentrate
all issues related to access to finance in Mexico.

Corresponding Component: Public Sector Actions
VI. Public Sector Actions: Policies,
Regulation, and Financial Infrastructure
“Market failures related to information gaps, the
need for coordination on collective action, and con-centrations
of power mean that governments ev-erywhere
have an extensive role in supporting, reg-ulating,
and sometimes directly intervening in the
provision of financial services.” (Demirguc-Kunt,
Beck, and Honohan 2008)
An increasingly rich set of guidelines and technical
resources is available17 to countries in designing,
prioritizing, and sequencing policy and legal re-forms
and measures to strengthen financial infra-structure.
This section provides an overview frame-work
of reference, referring to further materials,
resources, and country models for more detailed
guidance. The menu of options available includes
regulatory reforms, financial infrastructure, and
public interventions. Reforms can remove barriers
to financial service innovation and delivery and to
households and firms accessing financial services.
Financial infrastructure development lowers costs
and risks of providing financial services and can
enable innovation and new products and services.
Complementing these policies, public interventions
can potentially compensate for deficiencies in the
market or in the enabling environment or catalyze
private sector supply-side responses, for example,
through channeling payments through bank ac-counts
and electronic transfers or through a risk-sharing
mechanism that encourages banks to lend
to new sectors and clients.
Surveys confirm that the introduction of compre-hensive
reform programs and clear mandates
can accelerate progress toward financial inclu-sion.
18 Regulators with a financial inclusion strat-egy
are likely to have more financial inclusion top-ics
under their purview and more resources and
staff dedicated to working on these matters. This
can more effectively catalyze the private sector
response that is needed to dramatically raise
financial inclusion. For example, reforms that
strengthen financial infrastructure underpin the
introduction of low-cost and lower-risk products
and delivery models that are critical to expanded
financial inclusion.
Key Messages:
n Policy and regulatory reforms and financial
infrastructure development that are based on good
quality diagnostics and data can enable the expansion
of financial inclusion to the benefit of households and
firms.
n Public sector initiatives and market interventions
can be justified in certain cases due to market failures
or to incentivize private sector actions in the interim
while reforms and financial infrastructure are put in
place.
17 Annex I lists key references. The Global Partnership for Financial Inclusion, the Alliance for Financial Inclusion, the APEC Finan-cial
Inclusion Working Group, and entities such as the World Bank, CGAP, IFC, and OECD, have developed materials and provided
fora for exchange of country experiences and models. The Peer Learning Program, referred to in the later Implementation Support
Framework section, will further facilitate cross-country information sharing and technical dialogue, including online.
18 For example, the CGAP/World Bank Financial Access 2010 Report

During 2009, countries implemented responsible
financial inclusion-related regulations that spanned
from promoting rural finance (42 countries) to regu-lating
microfinance institutions (45 countries) and
enabling regulations for branchless banking (36
countries).19 The three most frequent regulations
were on consumer protection (56 countries), know
your customer requirements (48 countries), and
reforms aimed at improving access to finance for
SMEs (47 countries). Regarding consumer pro-tection,
most countries regulated their disclosure
requirements and recourse mechanisms. Many of
these countries are in the early stages of drafting
a strategy on consumer protection. While countries
were very active in consumer protection reforms,
they were not as active in financial literacy policies.
Policies and Regulation
Regulators and supervisors play a key role in the
design and implementation of an enabling environ-ment
for financial inclusion. An enabling policy and
regulatory environment is needed to promote the
expansion of financial inclusion. Sound legal and
regulatory frameworks that are effectively enforced
promote market development and competition
while subjecting financial institutions and agents
to sound and appropriate prudential regulation and
rules of conduct in order to protect consumers and
depositors, as well as to ensure market stability.
Thus, several objectives, including financial inclu-sion,
need to be balanced.
The role of government as rule maker is crucial to
enable innovative financial inclusion business mod-els
and to stimulate greater competition, comple-mented
by prudential regulation and supervision.
The subprime crisis in the United States illustrates
the consequences of an improper prudential reg-ulation
that encouraged clients to borrow beyond
their ability to pay. As stated in the World Bank’s Fi-nance
for All,20 “The same competition that can help
foster access to financial services can also result in
imprudent lending binges if it is not accompanied
by a proper regulatory and supervisory framework.”
A challenge that governments face is that regula-
TABLE 7. OPTIONS FOR POLICY AND LEGAL REFORMS
OPTIONS NOTABLE EXAMPLES
Regulation (or voluntary private sector commitment) for accessible financial accounts European Union, India, South
Africa, United Kingdom
Responsible Finance:
„„ consumer protection frameworks
„„ dispute resolution systems
Australia, Indonesia, Malaysia,
New Zealand, Peru
Nonbank financial institution regulation, licensing, supervision:
„„ including for microfinance, leasing, and factoring
„„ reforms to enable agents to deliver financial services
„„ proportionate regulation and supervision of small depository institutions, e.g.,
financial cooperatives
Brazil, Egypt, India, Mexico,
Pakistan
Laws and regulation underpinning safe and efficient payment systems and enabling the
growth of electronic money
Laws and regulation enabling the operation of a modern and comprehensive credit
reporting system
19 Consultative Group to Assist the Poor (CGAP) and World Bank. 2010. Financial Access 2010. Washington, DC: CGAP and World
Bank.
20 Demirguc-Kunt, Asli, T. Beck, and P. Honohan. 2008. “Finance for All: Policies and Pitfalls in Expanding Access.” World Bank, Wash-ington,
DC.

tion and legislation must be flexible and up to date
enough to adapt to the increasingly complex finan-cial
inclusion technologies, such as mobile bank-ing,
POS device networks, or electronic money, and
to the roles that nonbanks can play in delivering fi-nancial
services.
Options for policy and legal reforms are listed in
Table 7, as an indicative list highlighting promising
reforms, rather than an exhaustive one, because
the range of available policy and regulatory tools
is very wide.
The Philippines central bank has made it a priority to
provide an enabling environment for innovation while
maintaining an emphasis on the safety and integrity
of the financial system and the protection of consum-ers.
Box 5 outlines examples of this approach.
Kenyan financial regulators demonstrated flexibil-ity
toward innovations in financial service delivery
by allowing Safaricom to develop a mobile phone
money transfer service widely known as M-Pesa.
This has reached more than 15 million registered
users in Kenya and is an example of the develop-ment
of a new business model that introduced not
BOX 5. BANGKO SENTRAL NG PILIPINAS (BSP):
ENABLING REGULATORY ENVIRONMENT
Expansion of Financial Access Points through Micro-banking Offices
BSP issued regulations (Circular 694, 14 October 2010) to allow banks to expand their physical network even
in smaller, hard-to-reach markets, by allowing a simplified branch called a micro-banking office. This provides
additional access points to a wide range of financial services (loans, savings, remittances, e-money conversion,
bill payment, pay-out services, and limited foreign exchange purchases) while helping address issues of cost and
branch viability.
Expanding the Virtual Reach of Banks through an Electronic Money Framework
Through Circulars 649 (09 March 2009) and 704 (22 December 2010), the BSP created a platform for an elec-tronic
money ecosystem and efficient retail payments platform. Banks can create linkages with e-money service
providers such as telecommunications companies or become e-money issuers either directly or through out-sourcing
arrangements.
Enhancing Loan Transaction Transparency and Consumer Protection
BSP issued Circulars (730 in 2011 and 754,755 in 2012) that require credit-granting entities (banks, nonbank
financial institutions and nonsupervised credit-granting institutions) to calculate and disclose an effective interest
rate, and to use a standard format of disclosure to ensure that every borrower is provided with information related
to their loan in a manner that is simple and easy to understand and that is comparable across providers.
Source: BSP.

only a financial service but a whole new financial
ecosystem. Although mobile electronic transfers
are still a very limited form of financial service, Ke-nya
is finding that mobile transfers can be a plat-form
to electronically link customers to the formal
financial system, enabling a subsequent “product
ladder” that can leverage – at least in part – the cost
of acquiring and serving customers.
Another prominent case in which regulation re-leased
barriers that the private sector faced in ex-panding
financial services was the central bank
of Brazil’s relaxation of restrictions on agents as
access points for financial services. Brazil’s “cor-respondent”
network program consists of partner-ships
between banks and 150,000 agents and ac-counts
for about 62 percent of the total number of
service points in the financial system, making it the
largest network of this kind in the world. Every mu-nicipality
in Brazil now has at least a minimum level
of access to financial services.
Accessible bank accounts, or “basic” bank ac-counts,
are increasingly being promoted or man-dated,
as described in Box 6. However, experience
has been mixed, with limited enthusiasm from both
banks and consumers in many cases, despite often
impressive outreach numbers. These will be ex-plored
in more detail in the Private Sector Actions
section later in this Framework.
BOX 6. MOVING TOWARD A
BASIC BANK ACCOUNT IN THE
EUROPEAN UNION
In the European Union, a substantial fraction
of adults are denied access to basic bank ac-counts.
The European Commission therefore
recommended all its members ensure that all
consumers have access to a basic payment ac-count
that promotes financial and social inclusion
for individuals across Europe. Such accounts are
expected to become available at a reasonable
charge to consumers, regardless of their coun-try
of residence in the European Union or their
financial situation. The recommendation stated,
“Services inseparably linked to basic payment
accounts should include the facility to deposit and
withdraw cash into and from the account. They
should enable the consumer to make essential
payment transactions such as receiving income
or benefits, paying bills or taxes and purchasing
goods and services, including via direct debit,
credit transfer and the use of a payment card.”
By July 2012, the Commission will monitor and
assess progress made and will propose any ac-tions
needed, including legislative measures, in
order to ensure that the objectives of the recom-mendation
are achieved.
Source: European Commission (2011).

Financial consumer protection sets clear rules
of conduct for financial firms regarding their retail
customers. It aims to ensure that consumers (1) re-ceive
information to allow them to make informed
decisions, (2) are not subject to unfair or deceptive
practices, and (3) have access to recourse mecha-nisms
to resolve disputes. Clear rules of conduct
for financial institutions, combined with improved
financial capability for consumers, will inevitably in-crease
consumer trust in financial markets and will
support the development of these markets.
While consumer protection laws should be con-text-
specific, the G20 High Level Principles on
Financial Consumer Protection list the following
attributes characterizing financial consumer pro-tection
regulation:
• Fair market practices. Terms of contracts of
products and services offered by financial pro-viders
must be fair to consumers, and sales
promotion materials must not mislead them.
BOX 7. RESPONSIBLE FINANCE: RESOURCES, PRINCIPLES, GOOD
PRACTICES
In November 2010, the G20 Summit asked the Financial Stability Board to work in collaboration with the Orga-nization
for Economic Cooperation and Development (OECD) and other international organizations to explore
options to advance consumer finance protection and to report by the November 2011 meeting. At the G20’s
request, a Task Force on Financial Consumer Protection was established. The OECD has also developed Good
Practices for Financial Education and Awareness as well as specific good practices on financial education and
awareness relating to credit, insurance, and private pensions. In 2008, the OECD created the International
Network on Financial Education.
The World Bank has developed Good Practices on Financial Consumer Protection21 in a consultative process,
including with FinCoNet, OECD, the FSB Task Force on Consumer Protection, and the OECD Task Force on
Financial Consumer Protection. The Good Practices can be used as an assessment methodology for detailed re-views
of a country’s legal, regulatory, and institutional consumer protection framework. So far, the Good Practices
have been applied by the World Bank to more than 16 countries, with recommendations for action plans arising
from these assessments. The World Bank is developing a financial capability measurement toolkit with the Russia
Trust Fund for Financial Literacy and Education.
The Consultative Group to Assist the Poor (CGAP) has published consumer protection reports, policy notes on
consumer protection, as well as a set of client protection principles targeted to microfinance lenders, developed in
collaboration with Accion and other organizations. CGAP’s research and advisory services on financial consumer
protection focus on the particular consumer protection needs, behaviors, and experiences of consumers at the
base of the pyramid and the development of appropriate policy responses for this consumer segment.22
21Available at www.worldbank.org/financialinclusion
22 For more information, see Brix, Laura, and Katharine McKee. 2010. “Consumer Protection Regulation in Low-Access Environments:
Opportunities to Promote Responsible Finance.”

BOX 8. PROPORTIONAL AML/CFT REGULATIONS THAT PROMOTE
FINANCIAL INCLUSION
Under the AML/CFT guidelines for India, special provision is made for low-income customers who are unable to
produce the standard identification documentation and who seek to open low-balance accounts. In these cases,
banks are allowed to open an account as long as the potential client is introduced by another account holder who
has been subjected to full customer due diligence procedures, and whose account with the bank is at least six
months old and shows satisfactory transactions or as long as the potential client presents any other proof of iden-tity
that meets the bank’s standards. In the Philippines, a certificate issued by the head of a village is accepted as
an identification proof for potential customers in rural areas.
• Equitable treatment. All customers, irrespec-tive
of income, deserve to be treated with equal
respect.
• Disclosure. All relevant information to con-sumers
must be fully disclosed, including fees,
interest rates, and any other charges.
• Redress. Mechanisms to voice complaints
should be available to consumers.
• Financial Education. Consumer education is
needed to level the information balance be-tween
consumers and providers.
• Credit counseling. Credit counseling services
are useful for clients facing overindebtedness
problems.
• Privacy. Personal financial information should
be private.
More broadly, including financial literacy and capa-bility
as well as financial consumer protection, Box
7 provides a number of available resources.
A significant barrier to financial inclusion can be
the application of financial integrity–related require-ments
in an inappropriate way. Anti-money laun-dering
and combating the financing of terrorism
(AML/CFT) requirements may hinder financial in-clusion
if, for instance, AML/CFT obligations require
identification documents that some segments of the
population do not have. Financial inclusion can pro-mote
financial integrity by bringing more customers
and transactions from cash into monitored formal
financial services. Countries can advance financial
inclusion by allowing for flexible and proportional
AML/CFT regulation that effectively monitors finan-cial
integrity without interfering on financial inclu-sion
targets.

With respect to know your customer (KYC) require-ments,
the Financial Action Task Force Guidance
on Anti-Money Laundering and Terrorist Financing
Measures and Financial Inclusion recommends
countries apply a progressive approach to meeting
KYC and customer due diligence (CDD) require-ments.
This approach allows for differentiated CDD
measures according to the profile of the potential
customer. Under this approach, undocumented
customers may be able to access very basic and
limited financial services. As customers are able
to provide further identification, access to broader
services is allowed. Box 9 provides several country
examples.
As highlighted by the Financial Action Task Force
(FATF), financial integrity and financial inclusion
can complement each other more in policies than
in practice. A discussion on the links between fi-nancial
integrity and financial inclusion is provided
in “FATF Guidance on Anti-Money Laundering and
Terrorist Financing Measures and Financial Inclu-sion,”
produced by the Financial Action Task Force
with the World Bank and the Asia/Pacific Group on
Money Laundering, and “Global Standard-Setting
Bodies and Financial Inclusion for the Poor: Toward
Proportionate Standards and Guidance,” prepared
on behalf of the G20’s GPFI.
Financial Infrastructure Development
Financial infrastructure underpins safe and efficient
transactions and lowers the costs and risks to fi-nancial
service providers. Critical components of
financial infrastructure include the secured transac-tions
framework, credit reporting system, and pay-ments
system, as outlined below and in Table 8.
Creditor protection through modern secured-lend-ing
legal regimes is associated with higher ratios of
private sector credit to GDP. Moral hazard and ad-verse
selection can be reduced if collateral frame-works
are improved. Increasing the protection
of creditors and debtor’s rights and enforcement
mechanisms can lead to a considerable increase in
private sector credit to GDP and lowers the level of
nonperforming loans.23 Effective collateral regimes
contribute to financial inclusion by reducing the
risks and losses of lenders.
BOX 9. PROPORTIONAL RISK ASSESSMENTS: COUNTRY EXAMPLES
Canada: only remittance transfers of CA$1,000 or above require customer identification and verification.
Lesotho: low-risk customers are classified as those whose monthly gross turnover is less than US$736. These
customers need only one ID to open an account.
Malaysia: the Malaysia Bank accepts birth certificates and passports for Malaysian citizens, whereas for nonciti-zens,
refugee cards, student cards, work permits, and letters from college are accepted.
Mexico: authorities have identified risks for financial services to low-income populations based on an assess-ment
of product characteristics and potential vulnerabilities. Based on that assessment, the AML/CFT regulations
were modified to establish three levels of account activity (all low-transactional accounts) and corresponding AML
safeguards. For level 1, the maximum monthly deposit total is US$280 (750 Udis and an additional noncumulative
balance of 1,000 Udis), US$1,114 (3,000 Udis) for level 2, and US$3,715 (10,000 Udis) for level 3.
23 International Finance Corporation (IFC). 2011. “Financial Inclusion Data. Assessing the Landscape and Country-level Target
Approaches.” Discussion Paper on behalf of the Global Partnership for Financial Inclusion (GPFI). IFC, Washington, DC.

Credit reporting addresses a fundamental problem
of credit markets – asymmetric information be-tween
borrowers and lenders, which may lead to
adverse selection, credit rationing, and moral haz-ard
problems. Regulators and financial market par-ticipants
are therefore increasingly recognizing the
value of credit reporting systems for improved cred-it
risk and overall credit portfolio management, to
enhance financial supervision and financial sector
stability, and as a tool to enhance access to credit.24
Payments systems provide the technical infrastruc-ture,
legal framework, and financial settlement
mechanisms for financial transactions between
market participants, including individuals, banks,
companies, brokers, retailers, and others. They
ensure that parties can settle transactions quickly,
cheaply, securely, and with acceptable risk. Real-time
gross settlement systems facilitate the safe
and efficient settlement of large-value payments,
and payments among financial institutions in gen-eral.
Retail payments infrastructure – in particular
automated clearinghouses – facilitates the process-ing
of retail payment instruments. Interoperability is
needed between the various technical platforms
supporting the operation of the same payment in-strument.
Payment card switches are important for
interoperability of payment card transactions in a
country. Interfaces between external and internal
infrastructures to increase automation and reduce
operational risks also need attention.
TABLE 8. FINANCIAL INFRASTRUCTURE OPTIONS (EXAMPLES)
Secured Transactions:
„„ Movable collateral registry, insolvency regime
Payments Systems:
„„ Real-time gross settlement systems to facilitate the safe and efficient settlement of retail payment systems
„„ Retail payments infrastructure, including card switches and other automated clearinghouses
„„ Interoperability of technical platforms supporting payments instruments
Credit Reporting Systems:
„„ Credit bureau as a component of a modern credit system
„„ Credit registry to support banking supervision, can provide limited credit reporting services to banks
until credit bureau(s) developed
„„ SME rating agency
Unique Identities
„„ Biometric IDs
24 For further information, see World Bank, 2011. “General Principles for Credit Reporting.” World Bank, Washington, DC.

Public Initiatives and Market Interventions
Policy and regulatory reforms and financial infra-structure
development can have delayed impacts.
In the meantime, market failures and rigidities can
persist, including those related to information and
perceptions, and can slow down financial inclusion
improvements. Therefore, a valid role exists for
time- and scope-limited public sector initiatives and
interventions, including to stimulate a faster private
sector response.
Government payments can be utilized to drive
transaction volume, improve the viability of low-income
business models, and bring new custom-ers
into the formal financial sector. These payments
cover a wide range of economic sectors and activi-ties,
and in most cases, the overall amount of such
flows is significant. Given their magnitude, improve-ments
that lead to higher levels of efficiency, safety,
and transparency can have a significant impact in
the economy as a whole. Moreover, due to their
scale and nature, government payments programs
can also be leveraged to become an effective tool
in the pursuit of other public policy objectives, like
improving access to modern financial products for
certain population segments.
TABLE 9: OPTIONS FOR PUBLIC INITIATIVES AND INTERVENTIONS
OPTIONS NOTABLE EXAMPLES
State Banks or Funds (examples have emerged that have addressed the
widespread governance, institutional, and performance weaknesses, and market
distortion potential, of state banks to some extent)
Canada, Chile, Morocco (Credit
Populaire), Peru (Agrobanco)
Partial Credit Guarantee Schemes (typically a less market-distorting intervention
than state banks)
Chile (FOGAPE), India, West Bank/
Gaza, and many others
Apex facilities to support microfinance or SME finance India, Turkey, southeast Europe
Responsible Finance: financial awareness campaigns (with civil society, private
sector), financial education, consumer protection frameworks, disclosure, and
transparency
Peru, South Africa, United Kingdom
SME Finance-specific:
„„ Trading platforms
„„ Management training (Business Edge)
Chile (Chile Compra), Mexico
(NAFIN)
Government to Person Payments, Conditional Cash Transfers (linked to bank
accounts, as electronic transfers)
Brazil, Colombia, India, Mexico
Central Bank Services (e.g., settlement services in “central bank money”) to
private payment and settlement systems to increase their safety and efficiency
(longer-term role)
Brazil, India, South Africa

Government payment programs benefit a signifi-cant
portion of the population below the poverty line
in developing countries. For example, the Bolsa Fa-milia
social safety net transfers program reaches
about 30% of Brazilians living below the poverty
line. Pensions and other social benefits disbursed
through bank accounts or other nonbank prepaid
accounts may be the first introduction to such mod-ern
payment instruments for an important share of
a country’s population. Many micro and small en-terprises
also receive payments from the govern-ment
as part of contracts involving the provision of
services and goods.
While many governments have made impressive
progress in moving government payments to elec-tronic
means, there is a wide disparity. According to
the World Bank Global Payment Systems Survey
2010, only 27 percent and 25 percent of cash trans-fers/
social benefits are processed electronically in
lower-middle- and low-income countries, respec-tively.
The World Bank has developed “General
Guidelines for the Development of Government
Payments Programs” that provide a framework for
reforms in this area.
The public sector is also a significant buyer of ser-vices
and goods from SMEs, with common exam-ples
being repair and maintenance contracts, office
supplies, catering supplies, and transport services.
Governments also provide indirect payments in the
form of benefits, salaries, or pensions to house-holds
of SME entrepreneurs. SMEs have the po-tential
to use invoices and supply contracts with
both the public and private sectors to secure ac-cess
to financing. For example, they might increase
access via factoring or employ the contract as col-lateral
for a loan. The government can introduce
mechanisms to facilitate this access to finance.
For example, Mexico’s NAFIN platform for factor-ing
and value chain finance includes government
invoices and contracts with SMEs, thus allowing
SME providers to the public sector to also benefit
from this financing platform. In Chile, the electronic
system for government purchases known as “Chile
Compra” successfully addressed the objective of
facilitating access for domestic small companies to
government purchase opportunities. The share of
MSMEs in the total volume of purchases increased
from 49 percent in 2007 to 55 percent in 2010. The
share of SMEs in government purchases is almost
double the figure for the whole economy.25
BOX 10. GOVERNMENT TO
PERSON (G2P) PAYMENTS
In 2008, India’s National Rural Employment Guar-antee
Act (NREGA) made more than 45 million
payments to poor people living in rural areas.
People can receive their G2P payment from post
office saving accounts, bank accounts, and village
officials. In Andhra Pradesh, a fourth, more tech-nologically
advanced, alternative exists: receiving
payment through electronic prepaid accounts that
are accessed via smartcards issued by two tech-nology
firms. So far, the vast majority of accounts
remain dormant. Nevertheless, banks expect that
over time new customers joining G2P programs
will generate additional revenue to them.
25 “SME Finance Policy Guide.” Paper on Behalf of the Global Partnership for Financial Inclusion. IFC, Washington, DC.
.

Global Principles and Standards for Financial
Infrastructure26 provide reference points for reg-ulators
and governments in designing and imple-menting
reforms. These include:
• The CPSS-IOSCO Principles for Financial
Market Infrastructures. This report contains
new and more demanding international stan-dards
for payments, clearing, and settlement
systems. The new standards (called “principles”)
are designed to ensure that the essential infra-structure
supporting global financial markets is
even more robust and thus even better placed to
withstand financial shocks than at present. The
report contains a single, comprehensive set of
24 principles designed to apply to all systemi-cally
important payment systems, central securi-ties
depositories, securities settlement systems,
central counterparties, and trade repositories
(collectively “financial market infrastructures”).
• CPSS-World Bank General Principles for In-ternational
Remittance Services. Published
in January 2007, these principles have since
been endorsed by the G8, the G20, and the
Financial Stability Forum. The principles cover
areas such as transparency, consumer protec-tion,
payment system infrastructure, legal and
regulatory environment, market structure and
competition, and governance and risk manage-ment.
The report also identifies what the role
of the remittance service providers and authori-ties
should be to achieve the public policy ob-jective
of a safe and efficient market for remit-tance
services.
• World Bank General Principles for Credit
Reporting Systems. This report describes
the nature of credit reporting elements that
are crucial for understanding credit reporting
and ensuring that credit reporting systems are
safe, efficient, and reliable. It intends to pro-vide
an international agreed framework in the
form of international standards for credit re-porting
systems’ policy and oversight. These
principles are not intended for use as a blue-print
for the design or operation of any specific
system, but rather suggest the key character-istics
that should be satisfied by different sys-tems
and the infrastructure used to support
them to achieve a stated common purpose,
namely expanded access and coverage, fair
conditions, and safe and efficient service for
borrowers and lenders.
• General Guidelines for Government Pay-ment
Programs. A comprehensive set of
guidelines that can assist governments and
other stakeholders in developing and operat-ing
safe and efficient government payment pro-grams.
The 10 general guidelines contained in
this report fall under four broad topics: i) safety,
efficiency, and transparency; ii) legal and reg-ulatory
environment; iii) availability of a pay-ment
system infrastructure; and iv) leveraging
on government payment programs for other
developmental objectives. The general guide-lines
have been developed by the World Bank
in consultation with the International Advisory
Group for Government Payments.
26 All the principles and standards discussed in this section are available at www.worldbank.org/paymentsystems.

Corresponding Stage: Private Sector Actions
VII. Private Sector Actions
The financial sector delivers financial products and
services, and therefore should be involved in the
strategy design and target-setting stages, as well
as in the monitoring and coordinating structure –
such as a National Platform for Financial Inclusion.
If financial institutions have shared ownership of
targets and actions – for example, through a charter
– then they are more likely to see their achievement
as being in their own interest rather than as an im-position,
which is key to changing market behaviors
over the long term and to sustainable outcomes.
The implicit threat of regulation may of course help
ensure that financial institutions respond seriously
and go beyond their initial comfort zone in rethink-ing
their business models.
Key Messages:
n The financial sector response determines whether
financial inclusion targets are met through financial
institutions introducing new services, adapting existing
products and processes, and rolling out new delivery
mechanisms.
n Viable business models are still being developed,
and an enabling environment is needed that allows
innovation and the entrance of non-traditional actors,
while ensuring that financial stability, consumer
protection, and financial integrity are maintained as
priorities.
The development of viable business models for
serving low-income clients and MSMEs with a wide
range of financial services is still ongoing, despite
the notable potential and growth of models such as
mobile phone banking and electronic money, link-ing
bank accounts to government payments and
benefits, index-based insurance, and financially
accessible or “basic” bank accounts. Accessible fi-nancial
accounts (including low-income savings ac-counts)
and innovative retail payments are outlined
here as two leading approaches on which other fi-nancial
services can be built. However, this Frame-work
is not intended to prescribe or second-guess
the financial sector’s response to meeting financial
inclusion commitments, so these are presented as
examples only. The challenge for regulators and
policymakers (as outlined in the preceding section)
is to provide sufficient space for innovation and the
piloting of new products and delivery mechanisms,
while not compromising the focus on financial sta-bility,
consumer protection, and financial integrity.
Accessible Financial Accounts
Accounts with financial institutions such as banks
or cooperatives that offer a means of storing funds
(deposits) and accessing/sending funds (pay-ments)
are central to beneficial financial inclusion.
Low-cost “no-frills” or basic accounts can have less

burdensome opening requirements (for example,
simplified KYC requirements) and may not offer
credit or overdraft facilities at least at first. Accessi-ble
financial accounts are now present in countries
such as Brazil, India, Indonesia, Kenya, Malaysia,
Mexico, South Africa, and the United Kingdom. In
India, the reserve bank encouraged banks to cre-ate
no-frills accounts in 2005, and by June 2010, 35
million such accounts had been opened.
The positive impact on financial inclusion of the
Mzansi accounts in South Africa, a result of its Fi-nancial
Sector Charter, is outlined in Box 11. The
initial Financial Sector Charter target for new bank
accounts for the major four banks was 2.27 million
by end-2008, which was met and has since been
far exceeded. However, the cost per transaction for
this type of account can still be high for very low-value
payments, deposits, and withdrawals. Fur-ther
innovations to lower delivery and access costs
may be needed, which may imply the use of tech-nology,
agents, or alternative providers. According
to the Bank Association of South Africa, the total
number of Mzansi accounts held by the major four
South African banks declined by 19 percent during
the first half of 2011, related to the closure of dor-mant
accounts and to banks developing alternative
products targeted at the lower end of the market.
BOX 11. ACCOUNTS: MZANSI ACCOUNTS
The Mzansi Account was an initiative
launched in 2004 through South Af-rica’s
Financial Sector Charter to bring
basic saving accounts to all South Af-ricans.
The major South African banks
worked collectively to develop an ac-count
that met potential clients’ needs,
such as affordability and availability.
Four years after it was launched, more
than 6 million Mzansi accounts had
been opened, a significant number in a
country with an adult population of ap-proximately
32 million. At least one in
ten South African adults has an Mzansi
account, and one in six banked people
are active Mzansi customers. The engagement of banks in developing and implementing this new product has
been essential.
For example, Mzansi account holders can make use of any of the participating banks’ ATMs at no additional cost
– effectively creating a network of more than 10,000 ATMs across the country and extending the banking platform
to the greater community. This is augmented by point of sale functionality available at retailers. Overall, Mzansi
accounts have significantly increased access to savings accounts in South Africa, and as a result, close to 80
percent of the population is now within reach of transactional banking savings. However, access to an account
may be only a first step toward financial inclusion, and more work is needed to reach the entire path. Some banks
are also now attracting clients into less rigid basic bank account products.
Source: Bankable Frontier Associates (2009).
2004 2005 2006 2007 2008
Current Mzansi, 'First Banked' 0.0% 0.6% 3.7% 6.2% 7.1%
Current Mzansi, 'Already banked' 0.0% 1.2% 2.5% 3.4% 4.0%
Currently banked, but no Mzansi
account 45.5% 44.8% 44.7% 50.7% 52.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Percentage of Total
Adult Population
Mzansi Contribution for Percentage 'Banked'
Source: Bankable Frontier Associates (2009), data from FinScope 2004-2008

Donors and governments are increasingly promot-ing
saving products for low-income people. How-ever
the business case for these products is not yet
widely proven. The Bill & Melinda Gates Foundation
and World Savings Bank Institute are supporting 10
banks to introduce low-value savings accounts, the
features of which may be more widely replicable.
Eight of those banks are savings banks. Postal
networks and savings banks are increasingly be-ing
recognized as important potential providers of
savings and other financial services to low-income
consumers, as are cooperatives in those countries
where they are present at scale.
Innovative Retail Payments
Recent technological developments are leading to
the emergence of new retail payment instruments.
In general terms, innovative payment products in-volve
the customer maintaining a pre-funded ac-count
with an institution (not necessarily a banking
or financial institution) and drawing down this pre-funded
account to make payments. The payment
instruction to draw down the pre-paid funds could
be initiated online, via mobile phone, or via specific
payment cards issued for this purpose.27
In the past decade, perhaps the most widely cited
delivery channel innovation is the use of mobile
phones as a mechanism to initiate and receive pay-ments.
Banks started leveraging the widespread
use of mobile phones by extending traditional bank-ing
and payment services to mobile phones. To a
large extent, mobile phones were treated just as
an additional transaction channel. Mobile Money,
on the other hand, is a confluence of e-money, a
mobile phone in which e-money can be stored and
subsequently transferred, and business correspon-dents/
agents as the delivery channels. Mobile Mon-ey
has the potential to help bring about a dramatic
increase in the reach of electronic payment services
to broader segments of the population. This poten-tial
can be fulfilled through: i) greater competition
by bringing in additional players, including nontradi-tional
ones, to the provision of payment services; ii)
creating a new business model based on variable
costs recoverable through affordable fees (as com-pared
with traditional payment products which may
have higher fixed costs); and iii) creating channels
that are more familiar and convenient to first-time
users of payment products. Recent experiences
have proven to some extent that this possibility is
real but, at the same time, have made it clear that
there are still some significant challenges to fully
realizing this potential, including the need for basic
payments system infrastructure arrangements. As
users become familiar with Mobile Money and de-velop
trust in the product, access to other products
like deposits, investment, and insurance could be
offered.28
The 2010 World Bank survey on innovations in re-tail
payments provides valuable insights, based on
responses from 101 central banks, as outlined in
Box 13.
BOX 12. SAVINGS ACCOUNTS IN
KENYA
A field experiment conducted in rural Kenya found
that having access to a savings account led to sub-stantial
increases in business investment. The ex-periment
allowed a randomly selected sample of
self-employed earners to open interest-free savings
accounts in a village bank. Usage of these accounts
among women was high. Moreover, women saving
in their accounts were more likely to invest in their
business and to increase their expenditure, despite
high withdrawal fees.
Source: Dupas and Robinson (2009).
27 E-money products are one type of innovative payment product. E-money is a record of funds or value available to a consumer,
stored on a payment device such as chip prepaid cards, mobile phones, or computer systems. At the time of transaction, the stored
value is read/accessed through an appropriate infrastructure and the value transferred accordingly.
28 Cirasino, Massimo. 2011. “Payment Systems Worldwide: A Snapshot. Outcomes of the Global Payment Systems Survey 2010.”
Financial Infrastructure Series Payment Systems Policy and Research, World Bank, Washington, DC.

29Tarazi, Michael, and Paul Breloff. 2010. “Nonbank E-Money Issuers: Regulatory Approaches to Protecting Customer Funds.” Focus
Note 63, CGAP, Washington, DC.
Some countries have tried telecom-led operat-ing
models, in addition to bank-led models. In the
case of M-Pesa, a telecom company is the issuer
of the product and handles activities, including be-ing
responsible for customer funds. For telecom-led
models (as well as for other models where a
nonbank entity is the legal provider of the service),
a range of potential issues need to be addressed.
Guidelines for regulating nonbank e-money issu-ers
typically include provisions for “fund safeguard-ing”
to ensure availability of funds when customers
redeem the stored value, as well as provisions for
“fund isolation,” which ensure that such funds are
not subject to claims by issuer creditors and are
not “intermediable.”29 Additional aspects to take
into account include the respective remits of the
financial and telecom regulators, the application of
financial regulations to a nonfinancial service pro-vider,
the remit under which telecom companies
fall for consumer protection, access to the pay-ments
system, and the potential for adding other
financial services such as savings.
BOX 13. INNOVATIONS IN RETAIL PAYMENTS: GLOBAL PAYMENTS
SYSTEMS SURVEY
„„ Usage of innovative payment products is increasing, but still much lower than traditional retail payment products. Only
11 countries reported that innovative payment products transactions represent more than 5 percent of total retail payment
transactions. However, 70 countries reported increasing usage of innovative payment products, with 19 countries reporting
that use of innovative payment products usage is increasing faster than that of traditional payment products.
„„ While nonbanking players have an important role in the provision of innovative retail payment products/mechanisms,
banks remain a significant player in this field. In 73 percent of the innovative retail payment mechanisms reported in the
survey, banking entities were actively involved in the provision of the services. However, collaboration among various types
of entities is widespread with more than one-third of the products involving joint provision of products/services, almost
all of which involve a bank and telecom company. For more than 61 percent of the cases, the underlying account is a
bank account, with an additional 17 percent being in a nontraditional bank account. More than 38 percent of the products
reported by the central banks use the services of agents, and in about two-thirds of the cases, agents are nonbanking
entities such as retailers.
„„ Customer funds are protected in about 60 percent of the cases. The survey sought responses on the customer
protection mechanism used for the innovative products. For about one-third of the products, customer funds are protected
by deposit insurance, while in about one-fourth of the products, customer funds are fully backed by deposits. However,
about one-fifth of the products lack any protection mechanism.
„„ The majority of the innovative products/mechanisms have very limited interoperability. Less than 20 percent of the
products were reported to be fully or partially interoperable. About 25 percent of the products/mechanisms have some form
of interface with traditional payment products.
„„ Merchant payments, utility bill payments, and person-to-person transfers were the most common transaction types
supported by the innovative payment mechanisms. Less than 10 percent of the products supported government to person
payments.
„„ The traditional clearing and settlement infrastructure is in general not used. More than 50 percent of the innovative
products reported in the survey were settled on the books of the issuer. Less than 40 percent of the products settle the
same day.
Source: Outcomes of the Global Payment Systems Survey (2010).

Corresponding Stages: Strategy-Building and Revision, Public Sector Actions,
Private Sector Actions
VIII. Implementation Support Framework
A financial inclusion strategy can be underpinned
with data, analysis, global knowledge, technical
assistance, and financing. Countries may wish to
request a tailored package of support for country-led
financial inclusion actions, whether they are
standalone action plans or components of broader
financial sector development strategies. Donors
can coordinate a tailored and sequenced package
of support to fit national financial inclusion strate-gies
and can work within financial inclusion coordi-nation
mechanisms such as the national platforms
recommended in this Framework. The capacity
of supervisors to cope with an expanded remit in
terms of functions and also the volume and range
of financial services provided may also need to be
similarly expanded through funding support and
training.
Development partners such as the World Bank,
regional development banks, donors, the IFC,
CGAP, the UN, and the Alliance for Financial Inclu-sion30
provide a range of complementary forms of
assistance. Figure 3 sets out the roles these and
other institutions can play in support of country fi-nancial
inclusion actions. Increased support may
be needed for utilizing financial inclusion and in-frastructure
diagnostics and data to inform policy
and legal reforms, strengthening the capacity of
the private sector and civil society to participate in
financial target-setting and in design (through con-sultation)
of reforms; capacity-building for low-in-come
country regulators and policymakers; techni-cal
tools for real-time impact assessment that can
feed into policy implementation; and testing and
rolling out viable business models for low-income
and MSME clients.
Key Messages:
n The Peer to Peer program facilitated by the Alliance
for Financial Inclusion network of financial regulators,
the global capacity of the World Bank to support
policymakers and regulators and of the IFC to support
financial institutions, and the respective strengths and
capacity of regional development banks, CGAP, and
other development partners can be harnessed by
countries making financial inclusion commitments as
they see fit.
n A package of support for financial inclusion can be
designed in parallel with financial inclusion strategies,
in order to ensure sequenced and effective support to
country-led financial inclusion strategy implementation,
and in response to country demands and priorities.
30 AFI was asked by the G20 in 2010 to strengthen the peer learning platform for financial inclusion policy making and to monitor and
support country commitments under the Maya Declaration.

For those countries prioritizing SME finance, the
GPFI SME Finance Compact (in development)
could support the development of innovative
models and approaches to address the specific
challenges and constraints faced by low-income
countries with regards to SME finance. Annex 3
outlines the proposed areas of focus for an SME
Finance Compact in more detail, which would
include i) establishing an enabling environment
for SMEs’ access to financial services, ii) work-ing
in partnership with selected least developed
countries (LDCs) in sharing experiences and suc-cessful
models, iii) providing capacity-building and
technical assistance to support implementation of
SME finance strategies and policy frameworks, iv)
providing an efficient network platform through the
GPFI website and the Global SME Finance Fo-rum,
and v) promoting actions to foster financial
inclusion, including financial education and con-sumer
protection.
FIGURE 3. SUPPORT FRAMEWORK FOR FINANCIAL INCLUSION COMMITMENTS AND STRATEGIES: PRIORITIES,
MECHANISMS31
31Note: RDBs: Regional Development Banks, including African Development Bank, Asian Development Bank, Inter-American Devel-opment
Bank, European Bank for Reconstruction and Development.

IX. Conclusions
This Reference Framework rests on the following
parameters, which draw from and synthesize the
innovative approaches and lessons learned from a
range of G20 and non-G20 countries:
n Country-level financial inclusion actions typi-cally
include the following components, which
can overlap and are not necessarily sequential:
i) stock-taking: data and diagnostics; ii) targets
and objectives; iii) strategy-building or revision;
iv) public sector actions: policies, regulation,
and financial infrastructure; v) private sector
actions; and vi) progress-monitoring.
n Each country context varies, including in terms
of availability of data and diagnostics, institu-tional
capacity to implement reforms, financial
market structure, level of financial infrastruc-ture,
and political priorities. The reference ma-terial,
examples, and recommendations set out
in this Framework, are not prescriptive and can
be selectively used as appropriate for each
country context.
n Financial inclusion strategies can include a
focus on priority areas for a country, such as
SME finance, women’s access to finance, rural
finance, or financial education.
n Financial inclusion is interlinked with financial
stability, financial integrity, market conduct, and
the financial capability of consumers. Strate-gies
should be prepared with reference to anal-ysis
and objectives for those areas, whether
the financial inclusion strategy is a standalone
document or part of a broader financial sector
strategy.
Stock-taking: Data and Diagnostics
n Country-level data and diagnostic assess-ments
inform the design and sequencing of
reforms, and can also be valuable to the pri-vate
sector for adapting the design and deliv-ery
of financial services.
n A country can conduct a stock-taking exer-cise
to identify the barriers to financial inclu-sion,
the areas where financial inclusion is
restricted (through survey data and diagnos-tic
assessments), and the existing measures
and policy/regulatory framework in place as
relevant to financial inclusion. Countries can
use that analysis and data to design and im-plement
any further actions to address gaps
and to develop a financial inclusion strategy or
ensure that existing financial inclusion objec-tives
and targets are on track.
n Indicators for financial inclusion can be used
for the national process of target-setting, and
for monitoring progress in achieving improve-ments
in financial inclusion. Core indicators
consistent with the G20 Basic Set of Indicators
prepared by the GPFI Sub-Group on Data and
Measurement are as follows:32
• Formally banked adults: Percentage of
adults with an account at a formal finan-cial
institution
• Adults with credit from regulated institu-tions:
Percentage of adults with at least
one loan outstanding from a financial in-stitution
• Formally banked enterprises: Number or
percentage of SMEs with accounts
32 The first two indicators can be monitored for the population as a whole, and also for women, so that a financial strategy can place
particular emphasis on improving financial inclusion for women and tackling gender-specific barriers.

• Enterprises with an outstanding loan from
a regulated financial institution: Number
or percentage of SMEs with an outstand-ing
loan
• Points of service: Number of branches per
100,000 adults
n Adoption of these indicators would allow for
ownership by each country to set its own tar-gets,
as well as for benchmarking with peer
countries. Secondary indicators and targets can
be developed to further fit country priorities.
Institutional Structure
n Leadership – the first Principle for Innovative
Financial Inclusion – is needed to coordinate
actions and maintain drive and momentum for
reforms. A national platform for financial inclu-sion
can play this role and can also ensure that
progress in reaching targets is monitored,and
changes to strategy content are identified and
implemented to improve effectiveness.
n A dedicated unit in a financial regulator or min-istry
of finance can provide an operational lead
on public sector actions, including regulation,
policies, and financial infrastructure. A broad
range of public sector actors also have roles to
play.
n The financial sector must be centrally involved
in setting financial inclusion targets in order to
ensure that targets are realistic and that the
financial sector takes ownership in achieving
them.
Public Sector Actions: Policies, Regulation, and
Financial Infrastructure
n Policy and regulatory reforms and financial in-frastructure
development, which are based on
diagnostics and data, can enable expansion of
financial inclusion to the benefit of households
and firms.
n Public sector initiatives and market interven-tions
may be justified in limited cases due to
market failures or to incentivize private sector
actions in the interim while reforms and finan-cial
infrastructure are put in place.
Private Sector Actions
n The financial sector response is critical and de-termines
whether financial inclusion targets are
met, through financial institutions introducing
new services, adapting existing products and
processes, or rolling out new delivery mecha-nisms,
among others.
n Viable business models are still being devel-oped,
and an environment is needed that en-ables
innovation and the entrance of nontra-ditional
actors, while ensuring that financial
stability, consumer protection, and financial
integrity are maintained as priorities.
Implementation Support Framework
n A package of support for financial inclusion can
be designed in parallel with financial inclusion
strategies in order to ensure sequenced and
effective support to country-led strategy imple-mentation
in response to country demands and
priorities.
n Capacity-building support may be needed for
countries facing institutional and resource limi-tations
in implementing financial inclusion ac-tions
to meet agreed targets and objectives.

ANNEX 1. FINANCIAL INCLUSION STRATEGIES/ FRAMEWORKS
Country Data Targets Strategy:
Agreement on
financial inclusion
goals
Policy and Regulatory Reforms:
Public sector removes
regulatory barriers
Financial Sector Response:
New financial services and delivery
mechanisms
Monitoring progress:
Public sector
monitors progress
on goals
Brazil n Financial
Inclusion Report
(RIF)
n To expand basic financial
services to all municipalities
n National
Partnership for
Financial Inclusion
n Regulations that broadened
the range of services offered by
correspondents
n Correspondent banking model
n Simplified current and savings accounts
n Financial services via cell phones
n Call centers for consumer protection
n Progress monitored
by the Financial
Inclusion Unit (Banco
Central do Brasil)
Canada n General Survey
on Consumers’
Financial
Awareness,
Attitudes, and
Behavior
n To increase the
knowledge, skills, and
confidence of Canadians to
make responsible financial
decisions
n Canadian
Banking Code
n National Strategy
on Financial
Literacy
n Legislation on Access to Basic
Banking Services
n Low cost bank accounts
n Free encashment of government checks
(even for non-customers)
n Financial literacy web portal
n National school resource for teachers and
financial education providers called “The City”
n Financial Consumer
Agency of Canada
n Canada’s Task
Force on Financial
Literacy
India n All India Debt
and Investment
survey (undertaken
every 10 years)
n National Sample
Survey
n RBI and other
survey data from
research institutes
n Target of the NRFIP - To
provide financial services,
including credit, to at least
50 percent of financially
excluded households
in the country by 2012
through rural or semi-urban
branches of commercial
banks and through
Regional Rural Banks
(RRBs). The remaining
households have to be
covered by 2015.
n 12th Five Year
Plan
n Statement of
Intents signed
between Ministry of
Finance and Public
Sector Banks
n Financial
Inclusion Plans
submitted to RBI
n National Rural
Financial Inclusion
Plan (NRFIP)
n Financial
Inclusion
Committee
constituted by the
government
n Regulatory freedom to open
rural and semi-urban bank
branches and linking these
initiatives with the opening of
branches in other areas
n Guidelines issued for banking
correspondent and banking
facilitator model for microfinance
n Simplification of procedures
for access to finance (e.g. KYC
guidelines, no due certificates
from other banks, etc.)
n Microfinance circular
n Numerous circulars pertaining
to rural and cooperative banking
and to priority sector lending for all
commercial banks
n Basic bank accounts, no-frill bank accounts
n Banking agents
n India’s extensive post office network is being
used to further the inclusion agenda
n Experimentation with a number of delivery
models, financing mechanisms, products and
technologies: low-cost ATM, biometric cards,
mobile phones, etc.
n Banks launching mobile van banking facilities
in small villages
n Partnership model that allows banks to
leverage MFIs’ loan origination capability
n Reserve Bank of
India’s guidance on
Financial Inclusion,
specific commission:
Khan Commission
Indonesia n Access to
Finance Household
Survey of Migrant
Workers
n To diversify and expand
the financial services
offered to households
n National Strategy
for Financial
Inclusion
n Development of BI’s Sharia
banking policies
n Credit Guarantee Policy
Regulations
n Expansion of ATM network
n State-owned pawning company to give loans
against movable assets
n Indonesian post office operating in mobile
service vehicles and with village agents
n Responsibility of the
Vice President’s Office

FINANCIAL INCLUSION STRATEGIES/ FRAMEWORKS (CONT.)
Country Data Targets Strategy:
Agreement
on financial
inclusion goals
Policy and Regulatory
Reforms: Public sector
removes regulatory barriers
Financial sector response:
New financial services and
delivery mechanisms
Monitoring progress:
Public sector
monitors progress
on goals
Kenya n National Financial
Access Survey (FinAccess)
n To raise savings and investment
ratios from 14% to 25–30% of GDP
n Deepen penetration of financial
services, especially to rural areas
n Double formal financial inclusion
to reach 50%
n Comprehensive
Financial Sector
Reform and
Development
(CFSRD) strategy
n Financial
Access
Partnership
n Enactment of the
Microfinance Act and
Regulations
n Banking Act
n Credit Information Sharing
n Enactment of Proceeds
of Crime and Anti-Money
Laundering Act
n Regulatory framework for
SACCOs
n Public sector signaled space
for innovation (not regulating
mobile banking before the
model is tested)
n Regulators encourage
competition through compilation
and dissemination
n Mobile banking (M-Pesa) - new
mobile phone based money
transfer products
n Post offices and banking agents
n Credit information sharing
n Government payments (G2P)
program
n Emergence of specialized
providers (e.g., PayNet - national
system of ATMs) to a wide range
of banks and other financial
institutions
n Central Bank of
Kenya
Mexico n RIF supply-side dataset
n National Household
Survey of Financial
Services Usage
n National Survey of
Financial Services
Competitiveness, Access
and Usage
n Financial Abilities
Measurement to Improve
Products Quality
n MxFLS/ENViH
n To improve data collection: have
measurements of all financial
inclusion components
n To expand access to financial
services
n Develop financial literacy and
capability in Mexico
n National
Development Plan
2007–2012
n 2008–2012
Financing for
Development
National Program
n Reforms of the banking laws
enabled nonfinancial entities
to provide financial services
in rural areas, and permitted
creation of specialized niche
banks
n New Transparency Law
n Cooperatives and Saving
Funds regulation and
supervision
n Banking agents (correspondent
banking)
n System for electronic interbank
payments
n Central banks of U.S. and
Mexico aligned payment systems
to facilitate remittances
n Mobile payments
n Simplified accounts
n Niche banks
n Pre-paid debit cards
n Progress monitored
by Access to Finance
Unit (CNBV) and
Financial Inclusion
Council through
surveys data and the
Financial Inclusion
Reports
n Oversight of
consumer protection
via CONDUSEF

FINANCIAL INCLUSION STRATEGIES/ FRAMEWORKS (CONT.)
Country
Data
Targets
Strategy: Agreement on financial inclusion goals
Policy and Regulatory Reforms: Public sector removes regulatory barriers
Financial sector response:
New financial services and delivery mechanisms
Monitoring progress: Public sector monitors progress on goals
Peru
n Financial surveys to measure financial literacy, access and use of financial services
n Set of financial inclusion indicators of access, use, and geographical inequality distribution
n To raise the level of knowledge about financial services, especially among low income households
n Planned
n Financial System Act and Insurance
n Consumer Protection regulation
n Banking agents
n Financial literacy programs: Programa de Asesoria a Docentes (PAD), Virtual Classroom website
n Progressed monitored by the Committee on Financial Inclusion (SBS) based on the indicators of financial inclusion collected
n Financial Touch-Point Access (planned) will be an indicator used to provide information on the relationship between financial inclusion and economical well-being
South Africa
n FinScope Data Survey (annual and national representative household survey of financial services usage)
n Financial Diaries project (year- long intensive household research process with 166 poor households)
n Based on FinScope Data, the following targets were imposed:
n By 2008, 80% of LSM 1-5 (population with average monthly household income of less than 121 pounds) should have:
n access to transaction products and services
n access to bank savings products and services
n effective access to life insurance industry products and services
n 1 % of LSM 1-5 should have access to formal collective investment saving products and services
n 6% of LSM 1-5 should have access to short-term risk insurance products and services
n Financial Sector Charter comprised by government, business, labor, and community representatives
n Financial Advisory and Intermediary Services Act
n Dedicated Banks Bill
n The National Credit Act (2005) and Regulation (2006) to tackle predatory lending and consumer abuses
n Legislative changes to enable cooperatives, savings and loan banks to expand access
n Competition enquiry regarding retail banking and national payment systems
n Proposed micro-insurance discussion paper and focus on insurance industry re: disclosure and unfair charges
n Banking sector has introduced an easy-to-use and affordable basic bank account (Mzansi)
n Cell phone banking
n Increase the fraction of social transfers that are paid through bank accounts
n Financial Sector Charter- Reviews in 2009 and 2015 to assess achievements and document impact of financial sector transformation
n FinMark provides market research data and analyses of impact of legislative changes on access
United Kingdom
n Family Resources Survey
n Halve the number of unbanked adults in the United Kingdom
n Financial Inclusion Taskforce
n Modern regulatory framework for credit unions to expand small-sum credit
n Electronic money regulation
n Reforms to the regulatory framework for financial services to include the establishment of a new Financial Conduct Authority
n Basic bank products that can be accessed at local post offices
n Government-funded activities such as the Growth Fund for third sector lenders, financial inclusion champions initiative, debt advice
n Projects and pilots to crack down on illegal moneylenders
n Government changed the way it made G2P payments
n Mobile banking
n Progress monitored by the Financial Inclusion Taskforce through Financial Inclusion Indicators
FINANCIAL INCLUSION STRATEGIES – REFERENCE FRAMEWORK
50

Annex 2. International Financial Inclusion
Indicators
Several initiatives are now improving the compara-bility
of financial inclusion indicators across coun-tries.
Four of these are profiled here.
1. IMF Financial Access Survey (FAS)
Since 2004, the global data collected by the IMF
are used to develop the following worldwide indica-tors
of access and usage:
Access Indicators:
n Number of commercial bank branches per
1,000 km2
n Number of commercial bank branches per
100,000 adults
n Number of ATMs per 1,000 km2
n Number of ATMs per 100,000 adults
Usage Indicators:
n Number of borrowers from commercial banks
per 1,000 adults33
n Outstanding loans from commercial banks
(% of GDP)
n Number of depositors with commercial banks
per 1,000 adults34
n Outstanding deposits with commercial banks
(% of GDP)
2. AFI Core Set of Financial Inclusion Indicators
The AFI Financial Inclusion Data Working Group
(FIDWG) formulated a core set of financial inclu-sion
indicators of access and usage of formal fi-nancial
services by households that, importantly,
will be consistent across countries. It is expected
that participating countries commit to measure and
share their indicators to allow comparisons with
other economies. This effort to advance financial
inclusion indicators in a standardized framework
is designed to ensure country ownership and to
be the starting point for more indicators that al-low
setting realistic and evidence-based targets.
The core set of indicators consists of the follow-ing
indicators of access to and usage of financial
products and services:
Access indicators:
n Number of access points per 10,000 adults
at a national level and segmented by type and
by relevant administrative units
n Percentage of administrative units with at
least one access point
n Percentage of total population living in ad-ministrative
units with at least one access point
Usage indicators
n Percentage of adults with at least one type of
33,34 These indicators are available for only 13 countries. Most countries do not collect this information.

regulated deposit account (in countries where
these data are not available, use as proxy the
number of deposit accounts per 10,000 adults)
n Percentage of adults with at least one type
of regulated credit account (in countries where
this data is not available, use as proxy the num-ber
of loan accounts per 10,000 adults)
FIDWG expects countries to collect the core set of
indicators on a regular base. Data on access are
collected from financial institutions, whereas data
on usage are collected from nationally representa-tive
demand-side surveys, if available, or from the
supply-side data if not. A pilot test of the core set
was conducted in 2011 in 12 countries,35 and feed-back
from this exercise will further refine this set
of indicators. Based on feedback from AFI member
countries, the AFI’s core set may continue to ex-pand
in the next years. The sub-group is also evalu-ating
whether to include additional indicators such
as access to regulated insurance products, savings
and investment accounts, and indicators concern-ing
SMEs. Moreover, special attention is given to
the design of indicators for more complex dimen-sions
of financial inclusion, such as indicators on
quality of financial services, and financial literacy;
barriers to access; access and usage for informal
and nonbank providers; enabling environments; dif-ferentiation
of active users; and access to finance
by women-owned SMEs, agricultural SMEs, and
informal businesses. The challenge with these po-tential
indicators is to ensure comparability across
countries.
A gap that the AFI core set of financial indicators can
help to fill in the future is data from their members
on regulation concerning financial inclusion. This
will facilitate comparisons among countries related
to their regulatory frameworks, such as countries
with regulation-enabling banking agents, mobile
banking, no-frills accounts, and additional regula-tion
that some countries have been implementing.
One of the key implications of implementing this set
of indicators is that their adoption could help guide
countries just beginning to measure domestic fi-nancial
inclusion.
3. Global Findex Core Indicators
The core global Findex indicators are expected to
provide valuable information from the demand-side
perspective that will allow benchmarking progress
with other countries, track progress over time, iden-tify
priorities, and provide a baseline for research in
financial inclusion topics.
Findex Usage Indicators
Use of Bank Accounts
n % of adults with an account at a formal
institution
n Purpose of accounts (personal or business)
n Frequency of transactions (deposits and
withdrawals)
n Mode of access (ATM, branch, etc.)
Savings
n % of adults who saved within the past 12
months using a formal financial institution
n % of adults who saved within the past 12
months using an informal savings club or a
person outside the family
n % of adults who otherwise saved (e.g., in
their home) within the past 12 months
Borrowing
n % of adults who borrowed within the past 12
months from a formal financial institution
n % of adults who borrowed within the past 12
35 The current list of countries piloting the AFI indicators is: Brazil, Burundi, Guatemala, Kenya, Malaysia, Mexico, Peru, the Philip-pines,
South Africa, Thailand, Uganda, and Zambia.

months from informal sources (including family
and friends)
n % of adults with an outstanding loan to pur-chase
a home or an apartment
Payments
n % of adults who used a formal account to
receive wages or government payments within
the past 12 months
n % of adults who used a mobile phone to pay
bills or send or receive money within the past
12 months
n % of adults who used a formal account to re-ceive
or send money to family members living
elsewhere within the past 12 months
Insurance
n % of adults who personally purchased pri-vate
health insurance
n % of adults who work in farming, forestry, or
fishing and personally paid for crop, rainfall, or
livestock insurance
In addition, the Findex data will provide flexibility for
a country to tailor its indicators by key covariates,
such as age, income level, or gender.
4. FinScope Indicators
FinScope indicators are produced with data col-lected
by FinScope. These demand-side indicators
have helped design policies and track progress in
covered countries.
Usage indicators
n % of adult population using financial prod-ucts
and services/mechanisms (formal or
informal)
n % of adult population formally served (using
formal financial products)
n % of population banked (using commercial
bank products)
n % of population served by other formal (non-bank)
institutions
n % of population informally served (using
informal products or mechanisms)
n % of population excluded/unserved (not using
any formal or informal product or mechanisms)

ANNEX 3. SME Finance Compact
The SME Finance subgroup of the GPFI focused
its work on identifying the best policies, practices,
and business models for lowering the barrier to
SME access to capital. The outcome of this work is
a set of reports: “Scaling-Up SME Access to Finan-cial
Services in the Developing World,” “SME Fi-nance
Policy Guide,” “Strengthening Access to Fi-nance
for Women SMEs in Developing Countries,”
and “Scaling Up Access to Finance for Agricultural
SMEs,” which document the recommendations that
countries committed to improving access to finance
for their small businesses can implement. The fo-cus
now turns to how to convert this extensive
knowledge base into action.
The GPFI Report submitted to the G20 Lead-ers
at the Cannes Summit in 2011 states that “…
the ‘SME Finance Compact’ is a novel platform
to engage with developing countries. The Com-pact
should reflect the commitment of a core list of
these countries to lead the effort in developing and
implementing their own national enabling policy
framework for SME Finance within their financial
inclusion agenda and, with the support of the GPFI
and partnership with the G20, develop innovative
models and approaches to address the specific
challenges and constraints faced by low income
countries with regards to SME finance.”
Objective
The SME Finance Compact aims to provide a way
to move from principles and recommendations to
actions that make a difference in developing coun-tries.
The Compact will be a vehicle for the G20,
through the GPFI, to partner with a limited number
of developing countries to lead the effort in devel-oping
and implementing SME finance strategies
focusing on the enabling environment for SME fi-nance.
Through their leadership and reform prog-ress
these countries can encourage other countries
and contribute to a peer learning process. Guiding
principles are:
Voluntary Membership: The commitment of
all partner countries and GPFI stakeholders,
including possible funding and technical as-sistance
commitment, is voluntary and will be
based on free dedication.
Country Driven: The implementation process
should be driven by the selected partner country
that decided to launch a national action plan and
to seek support from the GPFI.
Content Will Focus on Enabling Environ-ment:
The SME Finance Compact will focus on
measures to improve the enabling environment
for SME finance.
Content
I. Establishing an enabling environment for
SMEs’ access to financial services
n Improve national policy framework along the rec-ommendations
of the “Scaling-Up SME Access to
Financial Services in the Developing World” report36
and based on country case examples that enhance
access to finance for SMEs and an appropriate
methodology to assess impact of SME finance poli-cies
(by taking further into account the challenges
of developing countries, in particular LDCs).
36 The SME Finance Stocktaking Report: “Scaling Up SME Financing in the Developing World,” identified SME finance policies and
best practices based on 164 case studies and made recommendations in these areas.

55
37 IFC. 2011. “SME Finance Policy Guide.” Paper on Behalf of the Global Partnership for Financial Inclusion. IFC, Washington, DC.
n Recognize the importance of women entrepre-neurs’
access to capital by incorporating into the
country-specific national policy framework the pol-icy
recommendations and best practices identified
in the report, “Strengthening Access to Finance for
Women-Owned SMEs in Developing Countries.”
n Acknowledge the important role of access to fi-nance
for agricultural SMEs in order to enhance
food security by building on the GPFI policy recom-mendations
laid out in the report, “Scaling Up Ac-cess
to Finance for Agricultural SMEs.”
n Formulation of country-specific recommendations
for a policy framework for a feasible and implemen-tation
oriented program of SME development un-der
three optional areas: (1) legislation, regulation,
supervision; (2) financial market infrastructure; and
(3) public intervention and support mechanisms.37
II. Working in partnership with selected LDCs in
sharing experience and successful models
n As a business development support mechanism,
the SME Finance Compact will promote knowl-edge
sharing through peer-to-peer learning and
as a platform for sharing experience in defining
the country-based specifications and challenges in
their financial inclusive practice. The Global SME
Finance Forum, launched in April 2012, will be a
supporting virtual platform for this purpose.
III. Providing capacity-building and technical
assistance to support implementation of SME
finance strategies and policy frameworks
n The aim is to increase knowledge and experience
through capacity-building, training, knowledge and
information sharing, and, potentially, financing. To
formulate an integrated approach for closing the
gap for SME finance, the SME Finance Compact
partners plan to provide capacity-building for solu-tions
to manage their key challenges and optimize
dedicated resources within an understanding of
promoting high growth in SME development.
IV. Providing an efficient network platform
through the GPFI website and the Global SME
Finance Forum
n Developing countries that choose to develop an
action plan with the support of the GPFI and the
SME Finance Forum may produce an early outline
of their priorities for a national SME finance action
plan. As input for this national SME finance action
plan, the SME Finance Sub-Group has developed
a standardized menu drawn from the GPFI SME
Finance Policy Guide. On this basis, it will be easier
to find suitable partners within GPFI for supporting
the development of a more comprehensive and en-hanced
individual action plan.
V. Promoting actions to foster financial inclu-sion,
including financial education and con-sumer
protection
n Along with encouraging greater participation
in the financial sector, it is important to also en-courage
countries to adopt rules, institutions, and
norms of transparency that can protect new/less-experienced
financial actors, including SMEs.
n Mexico has made it a priority to focus on finan-cial
literacy and consumer protection for its presi-dency
of the G20. Increasing knowledge about fi-nancial
literacy and consumer protection for all the
facilitators in a country will increase the access to
finance for SMEs by enabling them to share risks
and costs by allocating of management resources
to seek funds.

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