Mobile Telephony and Financial Inclusion

This post contributed by R.S. Sandesh.

The Prime Minister’s Office in India has recently announced an interest in expanding mobile banking services to the most remote corners of the country. The government, through this novel idea, wants to cover citizens who do not have a bank account through mobile banking. It is likely that they will launch a pilot for this concept in 2012.

The announcement is timely and relevant considering that that in India 44 million people are connected through mobile phones; 14.4 million new mobile phone connections were added in India in July 2009 alone. This expansion in mobile telephony has been fuelled by one of the cheapest call tariffs in the world. Recently, a private GSM service provider launched 1 paisa/ second pulse. The competition is further going to reduce the cost of mobile telephony.

Governments and private corporations acknowledge the role of mobile telephony in providing services to the unattended sectors of society. This is a positive development, and will lead to more innovations. In June 2009, after a successful pilot in Maharastra, India, Nokia launched its Life Tools service, which provides valuable information on three themes – agriculture, education and entertainment. Organizations like Eko are developing low-cost infrastructure that allows financial institutions to reach out to unserved rural and low-income sectors.