Push mobile banking to reach remote areas: Pranab- Business News

Spread mobile banking further: FM

Mukherjee's budget had proposed bringing 60,000 villages under the ambit of banking. He said financial institutions should work towards the same.

  • Sagardighi (West Bengal),  October 5, 2010  
  • |  
  • UPDATED   12:50 IST

Finance Minister Pranab Mukherjee on Monday called upon banks and financial institutions to lay emphasis on mobile banking as a means of increasing penetration in un-banked areas and hinterlands.

He said there are areas in the country where banks are not able to open brick and mortar branches. Such localities could be fertile ground to expand banking through mobiles, the minister opined.

"In such a scenario, banks should rely more on mobile banking, helping them reach the goal of financial inclusion," Mukherjee said.

The 2010-11 budget has proposed bringing 60,000 villages, which have a population of 2,000 and above, under the ambit of banking and financial services by March 2012.

The government and the Reserve Bank of India have been pushing banks to work towards this objective, and mobile banking is expected to play a crucial role in this ambitious scheme.

According to the latest study by Boston Consultancy Group, bankers in India are optimistic about reaching out to un-banked sections of the society through mobile phones.

The survey covered 13 public-sector banks, seven private-sector lenders and four foreign-origin banks.

While 57 per cent of the respondents from public-sector banking space expressed their "high optimism" about efficacy of mobile banking, 43 per cent were "optimistic" about it.

Besides, with the increase in penetration of mobile telephony, cellular operators have been demanding that RBI allow them to introduce mobile-banking services in a big way.

In October 2008, the central bank had issued final mobile-banking guidelines and capped daily fund transfer at Rs 5,000 and purchases at Rs 10,000.

However, it had desisted from issuing mobile banking licences to telcos, as it was apprehensive of them being misused by nefarious elements. Furthermore, it wanted the initiative to be driven by banks and not telcos.

Finally, on September 15 this year, Bharti Airtel was issued a licence by RBI to launch mobile-banking services, but without cash withdrawal or redemption facilities.

Mukherjee on Monday urged banks to follow the lead of State Bank of India and Corporation Bank who have already entered mobile banking.