Financial inclusion for refugees in India – a study on the practical access to banks and financial systems

India hosts over 200,000 refugees within its territory. In spite of this, it has not signed the 1951 Refugee Convention (‘Refugee Convention’), nor does it have a law specifically addressing their stay or their rights. India’s current domestic asylum framework is characterised by its lack of formal structure and is largely driven by geo-strategic interests in the region. The absence of a uniform and institutionalised legal framework and consequent lack of legal documentation, along with a general lack of awareness about refugees, has led to them being deprived of access to any financial institution or service in India. Consequently, with no access to banks, refugees have had to primarily depend on the exploitative parallel economy for sustenance, with earnings and savings exclusively in cash. Over the years, this has resulted in refugees being largely excluded from the mainstream economy and livelihood opportunities within it. The need for financial services was most acutely realised in the aftermath of the government’s demonetisation policy (introduced in November 2016), which sought to remove existing 500- and 1,000-rupee notes from circulation, rendering them illegal. As per the government, besides targeting black-money, this was also a step towards achieving complete financial inclusion by transforming India into a cashless economy and ensuring a bank account for each individual. However, for refugees, with their cash savings rendered worthless, no access to banking services and difficulty in acquiring the new currency, the impact of the policy was devastating. Post demonetisation, the government’s designation of ‘Aadhaar’, a 12-digit unique biometric ID issued to persons legally residing in India, as a core tool of its drive for socio-economic and financial inclusion, also had a deep impact on refugees as their eligibility to acquire this document was not clear. Owing to these policies, over the last two years, refugees in India have been completely relegated to the margins with no means to access the formal economy. Against the aforementioned background, M.A.P, India’s first and only refugee law centre, recognised an urgent need to initiate efforts to advocate for the financial inclusion of refugees. To this end, it conceived of a pioneering project in 2017 (the ‘Project’) to analyse the financial landscape in India from a refugee lens and engage with the refugee community and their interlocutors to: (a) identify barriers to inclusion; (b) constructively engage with concerned government authorities and financial institutions to highlight the legal vacuum and systemic gaps that act as roadblocks to refugees’ access to financial services; and (c) identify and test avenues for increasing such access. This paper seeks to document the key findings of the Project and is intended to inform future interventions for financial inclusion of refugees in India.