Consultation paper released on mobile banking services

Telecom Regulatory Authority of India (TRAI) has released a consultation paper on ‘USSD-based Mobile Banking Services for Financial Inclusion.

With large regions and populations still unbanked/under-banked in the country, it is essential that financial services are provided at an affordable cost to those who are excluded from formal financial system.

As per census 2011, only 54.4 percent of rural households had access to banking services. With large number of mobile subscribers in rural areas having no access to banking facilities, it presents an opportunity for leveraging mobile telephone to achieve the financial inclusion.

The rural- urban divide is also glaring. While India’s rural population is 83.3 crore, there are only 37,953 branches of scheduled commercial banks functional in these rural areas as on march 31, 2013. On the other hand, the urban population of 37.7 crore is served by 64,390 branches. A bank branch in rural India serves about 22,000 persons whereas a branch in urban India serves about 6,000 persons in urban India.

Mobile telephony could be the answer to the problem. There are 87.34 crore mobile connections in the country of which 35.11 crore are in the rural areas. Unstructured Supplementary Service Data (USSD) appears to be one of the most promising modes for mobile banking for financial inclusion.
The consultation paper talks about whether USSD is the most appropriate mode for mobile banking for financial inclusion, cost of USSD session for mobile banking should be fixed at Rs 1.50 per session and is there a need to to have the records for USSD transactions for mobile banking even for prepaid subscribers.

TRAI has asked comments on the issues raised in the consultation paper by all stakeholders by October 4, 2013 and counter comments by October 11, 2013.

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