Banks asked to usher in mobile linked accounts

The move, enabling this strata of society, to own and operate bank accounts, and reach cash benefits to poor, envisages creation of ‘Mobile linked No-Frills Accounts’ by banks, to be operated using mobile phones.

The Inter Ministerial Group (IMG), which went into the issue, has asked banks to  extend basic financial services to ‘unbanked’ on priority and begin implementation by July 31, 2010 and complete full roll-out by December 31, 2011.

It has asked RBI to permit ‘for profit’ corporate entities as well to function as BCs (business correspondents) and relax stipulation that BC or his sub-agent should be within 30 km distance of a sponsoring bank  branch in cases where there is no branch of any bank within said distance.

The IMG has also suggested setting up of various committees by RBI and TRAI for stipulating standards, supervising operations thereby ensuring transparency and fair play in the operations.

Basic transactions permitted over these accounts include cash deposit, cash withdrawal, balance enquiry, transfer of money from one mobile-linked account to another and transfer of money to mobile-linked account from regular bank account.

Dual access

Two ways of service access has been mooted. One, through mobile based PIN system using “mobile banking POS (point of sale), and biometric (fingerprint) based using UID numbers issued by UIDAI basic transactions when UID becomes operational, official sources said.

The model, they said, facilitates persons with mobile phones to deposit and draw cash instantly into or from their ‘mobile-linked no-frills’ bank accounts through BCs having mobile phone in villages.

It also enables any two mobile users to transfer money to each others’ ‘no-frills’ accounts specifying their mobile numbers without any intermediary including BCs.

When fully implemented, it would enable same BC in villages being shared by all banks for supporting basic deposit and withdrawal transactions. The main advantage of mobile banking system sources explained was that funds remain within banking system throughout and intermediary does not have custody of funds even momentarily.