JOIN USThe concept of branchless banking perhaps is all set to expand in India with the issuance of payments bank licences by the Reserve Bank of India. Vodafone M-Pesa is one of the applicants that has received in-principle nod from RBI to set up a payments bank.
Vodafone’s mobile banking service in Kenya, called M-Pesa, is usually cited as the biggest success story of mobile banking services globally. M-Pesa is a very successful initiative from Vodafone and is live in nine countries, viz.Romania, Kenya, Egypt, Tanzania, Democratic Republic of Congo, Mozambique, South Africa, Lesotho, and also in India. Today over 700 businesses have integrated with M-Pesa to extend various innovative services at lower cost to people in remote areas, including buying solar-powered lighting and mobile phone charging kit by making an initial upfront payment using M-Pesa. This initiative has played a critical role in providing electricity, not just to individuals, but also to small and medium enterprises.
Suresh Sethi, Business Head of M-Pesa, believes that it is difficult to compare the scale of M-Pesa in the country with the one in Kenya.
“Financial inclusion is the need of the hour in a country like India and it has been emphasised enough by government, companies and individuals. However, the success of M-Pesa in India on a scale comparable to Kenya will be a long haul. A lot of this is because people still rely on banks to deposit money, and are not comfortable transferring money over mobile,” Sethi told Deccan Herald.
We are positive with the in-principle payments bank licence. Trust in our mobile platform, similar to the trust in banks, will be a huge enabler in driving further adoption among the migrant population, Sethi added.
So, how exactly is M-Pesa driving towards the financial inclusion agenda?
“With over 90,000 agents and more than 3.5 million customers, we are already the largest business banking correspondent in the country and are providing people in remote areas a convenient way to transfer money and make payments in a safe and secure manner," Sethi says.
“The combination of being a bank plus a mobile company allows us to reach out to the masses. The total number of bank branches is about 1,10,000 in India and we already have 90,000 such branches (agents) operating through our M-Pesa format. Also, we distribute our products through 1.8 million retail outlets across the country and a majority of them, i.e. 60 per cent, are in the rural belt,” Sethi adds.
With its services currently being made use of only for money transfer, utility payments, DTH and prepaid recharge, what are the kinds of services that it plans to offer going forward, now that the licence is already in its kitty?
“We will continue to expand the service to retail consumers and are also looking at leveraging our corporate relationships to align M-Pesa into the cash -management eco-system of corporates. Vodafone has tied up with Walmart India, enabling business members of six Best Price Modern Wholesale stores to make payments using M-Pesa from their mobiles anywhere, anytime,” Sethi says.
Vodafone has also partnered with several government bodies to run pilots for enabling direct transfer of wages/subsidies. These include mobile-based disbursement of government subsidies (MNREGA), disbursement under National Rural Health Mission (NRHM), and a tie-up with Rajasthan Grameen Aajeevika Vikas Parishad (RGAVP), to empower women in Village Organisations (VOs)/ Self-Help Groups. Besides, the in-principle payments bank licence will enable Vodafone to offer a more comprehensive portfolio of banking and financial products and services, accelerating India’s journey into a cashless economy, he adds.
Timeline
2013
Sep 23 : RBI appoints committee on Comprehensive financial services for small businesses and low-income households under the chairmanship of Nachiket Mor, member on the Central Board of Directors, RBI
2014
Jan 7 : The committee submits its report to the RBI. One of the key recommendations was to introduce payments banks to cater to the lower income groups and small businesses.
July 17: RBI issues draft norms for small finance banks, payments banks
Nov 27: RBI issues final norms for payments banks
2015
Feb 3: In its bi-monthly monetary policy statement, RBI says it has received 41 applications for payments banks
Feb 4: RBI releases names of applicants of payments banks
Aug 19 : RBI grants in- principle nod for 11 payments banks. The approval will be valid for 18 months
2017
Feb 19 : RBI would consider granting a licence to 11 applicants for commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949