18-06-2012, 02:49 PM
M-Banking fostering tool of Financial Inclusion in India
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Financial inclusion is the process of ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost. Financial inclusion has become one of the most critical aspects in the context of inclusive growth and development. Initiatives for financial inclusion have come from financial regulators, governments, and the banking industry. The banking sector has taken a lead role in promoting financial inclusion, where the role of mobile banking (m-banking) is a road ahead tool of financial inclusion. The study emphasizes the two services of mobile banking like, mobile remittance and mobile payments which helps reducing financial inclusion substantially. The focus has been to understand the perspective on mobile banking is an alternative channel of financial services.
INTRODUCTION:
Financial Inclusion:
Financial Inclusion defines as the accessibility of appropriate financial services in order to manage money effectively, regardless of income levels or social status
The Center for Financial Inclusion (CFI) offers a comprehensive vision of the components needed to make full financial inclusion a reality:
“Full financial inclusion is a state in which all people who can use them have access to a suite of quality financial services, provided at affordable prices, in a convenient manner, and with dignity for the clients. Financial services are delivered by a range of providers, most of them private, and reach everyone who can use them, including disabled, poor, and rural populations”.
Mobile banking (m-Banking) –
A new way to reduce financial exclusion. new technology shapes business models as lower transaction costs allow different parts of a business to be rearranged, leading, for example, to “unbundling” of functions that used to be organizationally integrated into a traditional form of business, say a bank.
Mobile technology is evolving very fast by any historical standard. In the process it is creating considerable uncertainty about the appropriate regulatory response to this newly emerging service.
The Role of Mobile banking in Financial Inclusion –
The use of mobile phones to make financial transactions. Mobile money or branchless banking schemes are sprouting across the world.
Indian banks will have to leapfrog into adopting mobile phones and point of sale (PoS) terminals as the primary media of banking services if they are to reap dividends from a large unbanked population through the use of technology, bankers said.
Use of cell phones will help banks penetrate into the hinterland with a negligible investment and be a win-win situation for both banks and customers
It is said that
“The difference between ATM (automated teller machine) and mobile is there are 400 million mobile population whereas the banking population is much less and there’s a tremendous scope for banks to adopt this channel because, unlike other technologies, this is one channel the customer is comfortable with,”- Sanjay Sharma, managing director and chief executive officer at IDBI Intech Ltd, a banking technology company
A. Krishna Kumar, deputy managing director, information technology, at State Bank of India, the largest bank in the country, said financial inclusion may not happen “fast enough” but banks are on the road to achieving their targets.
Feature:
Mobile banking is the way in which it facilitates the development of relations of trust where previously there was no basis for it. In particular, mobile banking provides an instantaneous and traceable record of transactions that were otherwise anonymous and unverifiable through cash. For example, mobile banking permits the keeping of records and accounts on payments that contribute over a period to the total cost of a delivery of a service.
Regular savings for education and health services become possible in a way previously difficult or expensive to monitor.
Mobile financial services:
• High penetration of mobile subscribers.
• Mobile top-up services, domestic remittances and bill payments can be made very conveniently over a mobile phone.
• Growing demand, and an existing thriving ecosystem, for mobile services like ring tone downloads, Bollywood music, update for cricket matches, etcetera. Thus the uptake for another service, especially financial services, should be positive.
• Drive to be a part of the financial system for those people who currently do not have a bank account. The cost of cash handling, storage and transfer is very high in the informal sector.