Treasury Secretary Timothy Geithner said on Wednesday that governments must work to bring more people into the banking system as part of efforts to improve the balance of economic growth.
Geithner met with a group of Indian financial entrepreneurs and local representatives of major U.S. banks at the University of Mumbai to discuss new technologies and business models to deliver banking services to new populations.
India has been remarkably effective at extending the reach of the financial sector to people living without access to traditional forms of banking, Geithner said in a prepared statement.
Our task is to ensure our governments continue to support and encourage advances in expanding financial inclusion -- a key part of achieving more balanced and inclusive economic growth.
Geithner, who is in India for economic partnership talks with Indian officials, has pushed an agenda of rebalancing growth in developing economies away from exports toward domestic consumption.
Coupled with greater U.S. savings and more flexible currencies, including China's yuan, he has said this will help reduce global trade and debt imbalances. Getting more people into the banking system will help the poor build assets and lift their ability to spend, helping to fuel more domestic growth.
On Tuesday, Geithner visited a storefront in a village on Delhi's outskirts that offers mobile banking services to customers using mobile phone text messages.
Several participants in his meeting on Wednesday were involved in the launch of more than two dozen mobile phone-based or card-based branchless banking pilots over the last five years. The U.S. Treasury said these programs have attracted more than 10 million previously unbanked customers.
The innovations also could have some lessons for the United States, which has some 17 million people without formal bank accounts. Many of these people were victims of predatory lending practices by largely unregulated financial firms in the run up to the financial crisis.
The U.S. Congress is currently debating a financial reform bill that would set up a separate consumer financial protection agency that would police practices by firms such as payday lenders and mortgage firms.
(Reporting by David Lawder; Editing by Ranjit Gangadharan)