The Indian Prime Minister’s Office (PMO) has asked the department of telecommunications (DoT) to find ways to expand mobile banking services to take financial services to the remotest corners of the country. A pilot project to take financial services to the poorest of the rural poor through mobile banking is likely to be launched in 2012 to cover select villages, government officials said.
The move is part of the financial inclusion initiative of the UPA for the upliftment of the poor. The UPA government is keen to ensure that the poor with mobile phone connections can carry out a financial transaction through it, including receipt of wages and payments, even if they do not have a bank account.
The DoT has been asked to set up a committee that will study the authentication requirement necessary for expanding mobile banking services rapidly. The panel will also work on application of know-your-customer (KYC) norms to mobile banking customers in far-flung areas. The committee will also study mobile payment systems in other countries to adopt best practices to spruce up the Indian mobile banking system, the officials said.
The move has major implications for telecom companies as well as banks since it will throw open opportunities for launching new financial services to suit the mobile banking medium and customers who are not affluent. As of now, mobile banking is available only to customers who have a bank account. The government’s plan is to ensure that ownership of a mobile phone connection becomes the only requirement for carrying out financial transactions.
As of now, almost 41% of the country’s adult population does not have a bank account. This, the government feels, is a major roadblock in delivering financial services to the poor, especially in rural areas. In some cases, such as the National Rural Employment Guarantee Scheme, attempts are being made to provide wages through smart cards.
The prime minister feels that mobile phone services in India are growing rapidly and this could be a good vehicle to take financial services to the masses. The number of mobile phone connections in India is estimated to be about 440 million, reaching roughly 38% of the country’s population.
Prime minister Manmohan Singh places a lot of lot emphasis on financial inclusion and mobile banking has now become a key focus of this aspect of UPA’s thinking, the officials said. In view of the political consequences, this social sector initiative is likely get the backing of the political leadership too. The government may treat expansion of mobile banking as a national priority, the officials said. Expanding banking footprint across remote areas will ensure that the rural poor are left at the mercy of moneylenders. Last year the government waived off farm loans in what was seen as a pre-election bonanza after suicide by farmers led to political heat.
Source: ET
![View Sidhartha Bezbora (sidhartha[at]bezbora.com)'s profile on LinkedIn](http://www.linkedin.com/img/webpromo/btn_viewmy_120x33.gif){kind=small}