Govt plans mobile phone route to reach basic financial services

Govt plans mobile phone route to reach basic financial services

Inter Ministerial group meets on Thursday to chalk the roadmap

According to Department of Information Technology (DIT) sources with country’s rural population and disadvantageous sections taking to mobile in a big way, a “delivery mechanism that enables provision of basic financial services on individual’s mobile,” be seriously explored.

It was observed that though a large section of rural population has access to mobile telephony, they do not have a similar facility to financial services through banks. With rural mobile subscriber base expected to leapfrog in the near future, reaching out to “unbanked” population of the country through mobiles could be the way forward for financial inclusion.  It is planned to leverage the existing infrastructure established and operationalised by telecom service providers across the country for airtime payments for this major national mission purpose.

Service issues
Besides evolving a framework for delivering financial services over mobiles, the Centre, sources said, is addressing issues such as types of transactions that could be allowed; quantum of financial limits; types of guarantee to be offered by airtime vendors; eligibility of agencies involved; role, responsibility and accountability of telecom service providers; regulatory issues to ensure accountability, auditability and traceability of money transfers; safety of deposits among others.
Addressing these gamut of issues, an Inter Ministerial Group, under Chairmanship of DIT Secretary, has agreed that initial basic goals of financial delivery would include ability to deposit money in an account, transfer from one subscriber to another and cash-in and cash-out deposits at convenient locations.

The IMG also debated on Know Your Customer norms, authentication mechanisms, customer protection, money laundering, while noting that mobile operators can provide financial services delivery mechanism along with an intermediary to remote and rural areas. Sources said the IMG also noted that Unique ID infrastructure, once in place, would be key element in basic financial service delivery model. The IMG is scheduled to meet on December 24, 2009, to delineate the role of each key players as also intermediaries to roll out the programme on priority basis.
The IMG is expected to come up with broad framework in the next two months. The idea is to make use of the technology opportunity, model to arrive at and get clarity to enable people without bank account do necessary financial transaction. IMG comprises of representatives from Department of Financial Services, Posts, Rural Development, Planning Commission, Unique Identification Authority of India, TRAI, RBI, DoT and Home Ministry.