Despite the government's digital inclusion push, only 22% recipients of migrant remittances have access to banks within 1 km, according to a report by the Centre for Digital Financial Inclusion (CDFI).
However, despite access issues, banks still are a trusted channel than any other mode to save and make remittances by the migrant workforce. 62% of such workforce use banks to remit money while 48% prefer friends and family members, the report said.
98% of remittances made through banking channels were direct deposits to recipient accounts. 70% of migrants with higher education prefer to remit money through banks, the report added.
More than half of the transactions that were above Rs 5,000 were done through banks, whereas, smaller remittances below Rs 3,000 were mostly sent through individuals.
When it comes to using mobile payments, only 6% of the migrants use this mode to send money home while just 9% of the recipients use mobile phones for receiving money. Despite 34% migrants being aware of the post office option, only about 6% actually use post office for money orders and instant money orders. Moreover, only 28% of migrant workers use smartphones while 71% use feature phones.
In respect to gender-wise segregation of saving preferences of migrants, 44% of males prefer to save money at home whereas 57% of females choose to save at home. While, 46% males choose to save money in banks, 36% females pick banks as the desired haven to park their cash.
The report further states that male migrants dominate female migrants in 'More than Rs 9,000' income bracket across occupations. 55% of males earn more than Rs 9,000 while only 35% of female workers get the same income.
Meanwhile, on the recipient side, cash out time is a major challenge. 45% people face longer queues at banks as compared to 38% in the case of post offices.
61% of recipients do not use ATMs to withdraw money. This leads to the inference that the awareness of digital payment instruments is low amongst recipients as well.
As few as 33% are aware of the government's push for cashless transactions. According to the report, the awareness rates for various means of digital transactions such as apps namely Paytm (24%), BHIM (12%), Airtel (11%), M-Pesa (5%), Google Pay (2%) and oxygen (1%) is abysmal.
Although a substantial migrant population and a vibrant digital payments ecosystem presents a great opportunity for digital remittances, the report's findings leave a lot to be desired on the part of the banks and the government to take appropriate steps to incentivise migrant workforce to accept digital as a way of life.