Rajiv Mohapatra outlines the steps that in-house counsel should take to set up mobile banking services

Despite the expansion of the banking network in India over the past four decades, a sizeable proportion of households (41.3%) do not have a bank account. People living in rural areas, in particular, are still unbanked or under-banked. At the same time 351.1 million of the country’s 873.4 million mobile connections are in rural areas. The large number of mobile subscribers in rural areas who do not have access to banking facilities presents an opportunity for banks and telecom companies to use mobile phone penetration to further the goal of financial inclusion.

Mobile banking has made banking products and services affordable and immediately accessible to customers and is cost-effective as it saves the cost of providing physical access (bricks and mortar). Thus it becomes a viable economic proposition for banks to handle small value transactions made by low-income citizens.

Mobile banking services

Mobile banking and financial services surmount cost and access constraints by using low-cost mobile phones to provide various financial services and employing local retailers as agents to broaden access.

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Rajiv Mohapatra is head of legal at Mobile Commerce Solutions, a Vodafone India group company.