The Reserve Bank of India (RBI) has given a go-ahead to a pilot project to check the technical and operational feasibility of allowing cash pay-out from prepaid payment instruments such as mobile cash of non-banking entities
This was announced by RBI Governor
Raghuram Rajan in the second quarter review of monetary policy on Tuesday.
The object of the programme is to facilitate remittance of funds by people not having bank accounts.
At present, non-bank prepaid payment service providers are not allowed to offer cash-out facility due to security concerns.
The pilot project will be launched by Unique Identification Authority of India (UIDAI) in association with two-three prepaid payment service providers. The banking regulator expects the pilot to go live before end-March 2014.
The objective of the project is to establish a system of Aadhar-based biometric authentication of beneficiaries of mobile cash transfer. It will be an extension of the e-KYC service recently launched by the UIDAI, which enables electronic verification of identity and address proof of a person.
Rajesh Bansal, assistant director general, UIDAI, told MONEY TODAY
that the RBI had concerns with regard to prepaid payment instruments being used for money laundering purpose and therefore, it had not allowed cash-out facility on such instruments offered by non-bank entities. "However, it is now exploring the idea of Aadhaar number being used for authentication purpose in transaction through instruments such as mobile wallet," he said.
Bansal said all providers of prepaid payment services
such as Airtel, Vodafone, Itz Cash and Oxigen Serrvices would be associated with the pilot.
Pramod Saxena, managing director, Oxigen Services India, said that the move would give a big boost to financial inclusion and would help a large number of people who do not have bank accounts and who transfer money only through informal channels. Saxena said Oxigen Services, which offers prepaid payment solutions through its mobile e-wallet OxiCash.