The eight countries in South Asia reflect a highly diverse landscape for financial inclusion each with a unique modern history of financial systems development. It is also a region undergoing significant changes and in some cases turbulence. The iconic story of microcredit that began in Bangladesh forty years ago continues to thrive as a force across South Asia, but the last few years have been turbulent. India home to one of the fastest growing microfinance industries, with strong investor interest, met with a political crisis arising out of one state. The expansion of microfinance has ground to a halt and the industry is gradually re-collecting itself. Bangladesh microfinance remains large, but it also has felt the sting of political forces played out in the battle for control of Grameen Bank between Professor Yunus and the government. The challenge today in South Asia is changing. No longer is size the sole focus: microfinance is turning attention towards more responsible delivery, new products and approaches which put the client back at the center.
Beyond traditional microfinance, the availability of technology in the far reaches of South Asia is beginning to promote a new wave of branchless banking. Pakistan has been the fastest adopter with several microfinance banks, mobile operators and more recently large commercial banks pursuing the business aggressively. In India, Bangladesh, Sri Lanka, Nepal, Afghanistan and the Maldives there are new efforts in branchless banking. This includes improved clarity in regulations from the central banks and significant investment by multiple providers. But questions and challenges remain. The new business models have not yet been figured out and the availability of products remains limited. Still there is a sense of change and new possibilities as branchless banking gains momentum and it will likely alter the landscape for financial inclusion in South Asia in the years ahead.