0		Could, mobile, your, bank?

India does not rank very well when it comes to financial inclusion. Financial inclusion is that facility where every citizen’s banking needs are met. The reasons for this are many folds. One obvious reason is the bank’s reach. Many private banks do not have the will to establish branches in rural areas. Only way out for the rural areas is the PSU’s, co-operative banks and the traditional moneylenders. SKS Finance is a micro finance company, which is trying to bridge the banking gap. Even it is having tough time. Its reach is limited by resources and is only operating in few states. This is going the tradition route. Let us see if we can explore an alternate route.

RBI has released guidelines for mobile banking effective immediately. This is the first step towards providing banking for the unbanked. The limit per transaction is 2500 and 5000 per day.

The mobile density is around 11% in Tier 2 and Tier 3 cities. The total rural subscriptions are around 90 million. Government’s target is to make it to 200 million by 2012. With that kind of reach mobile looks like the obvious answer to the rural banking and millions of unbanked. Some see that the mobile penetration itself is low. If you compare this with the banking penetration the results would be surprising. Even if the existing mobile subscribers were targeted India would be better off on the financial inclusion charts.

There are few things, which come in the way. The first one would be language. With 18 officially spoken languages and many more dialects it would be difficult to implement one size fits all solution. The other thing is the handset itself. It would not be wise to implement solutions targeted for GPRS and WAP enabled phones when most of India is still unconnected. The solution should cater to all the existing mobile phones.

SMS could come as a rescue. Banking via SMS is the cost-effective solution. If implemented this could bridge the banking divide. You can even withdraw cash from an ATM without a bank account. Security is an obvious concern.

The banking solutions if implemented on a mass scale could be cost-effective. It would be a fraction of the cost people pay for the traditional moneylenders towards interest. It could even be less than sending a money order. This would just not be limited for the rural penetration. This would help us all.