Mobile Phones Key to Financial Inclusion in the Future!
Mobile Phones Key to Financial Inclusion in the Future!
The Deputy Governor of theReserve Bank of India, Mr. K C Chakrabarty recently announced that RBI was granting the license for a semi closedmobile wallet to various service providers. The news came just weeks after RBI announced at its annual monetary policy briefing, that it had created a roadmap to increase financial inclusion by covering all villages by 2015. So what does this mean for the development ofmobile moneyservices in the second most populous country in the world?
For decades now, India's government has made the establishment of an inclusive financial sector, a key priority; but the success has only been limited. Improvements have been made, but overall formal financial service penetration remains low. Financial inclusion exercises have been trying to evoke the much needed enthusiasm among the multitudes of unbanked citizens of the country, but mobile commerce could just be the game changer that can bring formal and easy banking within their reach.
There is no doubt that a mobile phone is a superior medium to reach the large masses of unbanked and it is beneficial to both the banking fraternity - which can cover significantly more customers than it could by setting up physical branches - and to the unbanked, who are unlikely to otherwise have a formal bank account.
Also it wouldn't surprise us if the unbanked population would embrace M commerce more than those who have existing bank accounts, because for the latter M-commerce would be just another option to their already existing transaction options like net banking, credit cards or cheque payments, unlike the unbanked, who have no such luxury.It is therefore the 41% unbanked populace, who will give traction to the M commerce movement.
Under RBI guidelines, the semi-closed wallet service allows any mobile user to pay for various services and products. This mobile wallet will allow subscribers to load money-a maximum of 5000 INR, which will enable them to make mobile payments at retail outlets, comparable toa pre-loaded cash card.
Recently it was reported that, ItzCash is India's largest non- bank semi-closed prepaid payment instrument issuer and also the first to introduce and facilitate m- commerce and e-commerce in India had received the license. ItzCash, which currently facilitates about 60,000 SMS transactions per day for various merchant services, will be benefitted enormously due to this initiative. This new initiative by RBI is expected to increase these transactions by at least 100% per cent. ItzCash has huge bouquet of services, and Mobile wallet for m-payments will become one of the many innovative services provided by ItzCash in the future. The initiative will definitely provide the much required boost to the various service providers as much as the general populace of the country.
With this facility, companies like ItzCash Card will be able to provide prepaid cash transaction services to all mobile users, inclusive of the huge unbanked populace.
This clearance by RBI as mentioned before will give a major boost to the government's aggressive initiative towards bringing banking and financial services to remote areas as part of its inclusive growth programme.
Looking at the future, it is only a matter of time before users are able to pay for physical goods and services using tap and pay, or remit money to any other person anywhere in the world knowing only their mobile number. M-wallet-based peer-to-peer transfers, international remittances and more efficient rural banking are projected to be the highlights of the M commerce era that is now gaining acceptance across different countries.
RBI's decision is a step in the right direction, although a modest one in the eyes of the fast-paced mobile money industry. RBI's eventual incremental approach is a first step towards democratizing mobile financial services, which in a country with 650 million mobile subscribers has the potential to unlock the financial system to a vast number of individuals who need it.
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