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Thursday, May 6, 2010

Govt go-ahead for mobile banking

Govt go-ahead for mobile banking

New Delhi: Mobile banking is set to be a reality now. A committee of secretaries, under the chairmanship of cabinet secretary K M Chandrasekhar, has given a go-ahead to the proposal by accepting the report of the inter-ministerial group (IMG).

With wireless subscriber numbers in India crossing the 575 million mark and growing by 18-19 million every month, the government wants to empower the masses as far as financial service delivery is concerned.

The IMG was constituted in November 2009, with top representatives from the Department of Information Technology (DIT), Ministry of Finance, Department of Posts, Department of Telecom, Ministry of Rural Development, Planning Commission, Home Ministry and Reserve Bank of India. The group had finalised its report last month.

“With mobile subscribers in rural areas far outstripping bank account holders, a large section of rural population now has access to mobile telephony but not to financial services,” according to a statement by the IMG.

A system that enables provision of basic financial services through an individual’s mobile could be a major step in the direction of reaching out to the unbanked sections of the country, it added.
According to the IMG report, the members reached an agreement on the basic goals for delivery of financial services using mobile phones.

The IMG framework “envisages creation of mobile linked no-frills accounts” by banks, which will have various transaction limits. The basic financial transactions on these accounts, including cash deposit, cash withdrawal, peer to peer transfer and balance inquiry, can be executed through a mobile based PIN system.

RBI guidelines on outsourcing of financial services by banks permit banks to outsource data processing and back office related activities. “The sharing of IT infrastructure for account maintenance for scaling up operations as envisaged above would be in line with such permissible outsourcing arrangements and should also facilitate inter-bank settlement. However, this would be subject to the banks adhering to extant outsourcing guidelines and the RBI guidelines on customer data confidentiality,” according to the IMG report.

Around 51.4% of the nearly 89.3 million farmer households do not have access to any credit either from institutional or non institutional sources, as per the National Sample Survey.

The survey has shown that only 27% of farm households are indebted to formal sources. Also, only 13% are availing loans from the banks in the income bracket of less than Rs 50,000. Not only that, a large percentage of rural population does not have a deposit account.


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