Universal Un-banked or Exclusively banked Money Management by Phone, to enable ‘Financial Inclusion’ of people in the lower strata across the country.
Author: P. Abraham Paul. http://wp.me/p1ZsI2-4g
Introduction: Universal money management using phone, a path breaking state of the art idea to enable all sorts of day to day money transactions through phones is a non-banking product that will accelerate ‘Financial Inclusion’ of people in lower economic strata across the country and will become an effective tool for supporting their Micro Finance needs in addition to facility to communicate.
Money through Mobile (MTM), is just an acronym used herein that explain in short the idea, features, products, services, the technology involved, the business aspects and the need and advantages it can provide to society as a whole with a vision that in nearest future converged Mobile and Fixed devices will become simple tools that would enable comfortable life style for everyone; young and old, from ultra rich to the extreme poorest in the country.
1. Money through Mobile (MTM) is different from Mobile Banking.
Money through Mobile (MTM) system as proposed herein is not to be confused with mobility in Banking service or service of e-banking using Mobile phones as being currently provided by banks as ‘Mobile Banking’.
‘Money through Mobile’ (MTM) system is transparent to regular Banking industry.
All transactions in MTM service, involving Banks, Post Offices and other Financial institutions; will be in the same position and functional level, using same technology, product and features, at par with what are available to all MTM users.
2. Money through Mobile (MTM) will not disrupt Banking Industry.
There is this biggest myth that Un-banked Pay-by-Phone service will be disruptive to Banking industry. From the foregoing it can be seen that the fact is actually other way around.
In fact MTM will be an exclusive banking system by itself with required supporting mechanism in place to handle its clients needs transparently without much human intervention at day to day operation level. Therefore, the set up can be termed and treated as an autonomous ‘BANK’ exclusively set up to handle all sorts of Money Management Using Phones. Call it ‘MTM Bank’ or ‘Aadhaar Bank’ or whatever. I have been writing about this to RBI & NPCI for many years now.
3. Universal nature of the system:
The system proposed in essence is of Universal in nature as it can provide service across disparate Telecom systems, Mobile as well as Land line phones and also for people who are not owning phone across the country without involvement of banks or Internet.
Meaningless to wait for digitization of rural areas to provide service that can done without the need of digital connectivity and INTERNE access. As there never can be a ‘Perfect’ solution in any planning strategy, it is prudent to go ahead making best use of contemporary systems, products and solutions to the possible extent wherever eco systems readily available to start with, instead of waiting for years for digitization happen in every village and remote places. Accordingly, the proposal has taken into constraints and limitations regarding non availability of conducive eco-system such as non availability of regular power supply and non-reach of telecom network in vast areas of rural and remote areas.
4. Roll out the project, beginning form places where such support system is readily available.
Financial inclusion of people in the lower social and economic strata, across the country that include in urban areas, its suburbs, towns and villages need to start with places where required infrastructure, power supply and telecom facilities are readily available, and then move towards remote areas as the needed eco system and the environment are made ready.
Till such time these areas are also to be covered with improvised systems with short term solutions and products as explained below.
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To view the power point presentation on this: Click on the caption below Inclusive finance with Money through Mobile (mTm)_300913
Please read the detailed article and power point presentation in the above link wherein I have explained in detail how this could be realized without difficulty.
5. Government should make use of the already achieved high density telephone coverage to implement the system as proposed in this paper, in the Urban and suburban rural areas where ever telephone connectivity is already there and in remote places where is no telecom facility with MTM Franchisee outlets that can provide services using MTM set top boxes or Specially designed TABLETS with connectivity to MTM system using Satellite links.
MTM system linked with Aadhaar, it is possible to provide MTM service to people who do not own a phone through MTM Franchisees, Public call phones provided in Post offices, Panchayat offices etc.
However, making Aadhaar a pre-requisite for ensuring ‘Financial Inclusion of poor’ will be like putting the cart before the horse. It is impractical and meaningless to wait for years to become Aadhaar to be made available to commence the service. Aadhaar is after all an Unique Universal ID that can be provided at the implementation stage and later upgraded as a biometric tool instead of waiting years to ensure Aadhaar given to all beneficiaries across the country before implementation of DBT & DCT in liue of subsidiaries to beneficiaries.
With Aadhaar in place, DBT using MTM will be the biggest game changer:
MTM can enable Direct Benefit Transfer in lieu of PDS and payments under various Government welfare schemes. DBT can help to scrap most of the subsidies that will be a big step towards reviving of economy.
6. Money Management using phone has great potential to infuse liquidity.
India will have a billion phones (Mobile plus Landlines) soon.
With an average of Rs. 10,000/-month the virtual money transaction will be about
Rs. 12,0,000 billion which is above seven times the 2013-14 Union budgetary provision.
7. It is time Government / RBI take necessary steps to mobilize, regulate and tap this great potential to revive Indian economy.
What need to be done is to create a virtual bank to handle all forms of money management using phones to regulate and mobilize it and exploit its great potential for the benefit of the people and the country. There are 150,000 Post offices of which 89% in rural areas. Department of posts can be given banking license and entrusted with to set up virtual mTm bank with BSNL There huge surplus human resource in BSNL/MTNL could be used as mTm franchisees, authorised agents, technical O&M and logistics of mTm system across the country that can save BSNL from liquidation.
8. Un-banked Mobile Money Management must be regulated.
Setting up of disparate Money management systems, product and services by various parties without any regulatory arrangement will not deliver desirable results especially for financial inclusion and empowerment of people in the lower strata across the country.
Over and above, the various methods and procedure involved are likely to have its impact on economy. For example printing and supplying money coupons by various money management service providers can end up as a parallel economy that can interfere with countries economy.
This aspect shall be thought of and actions to avoid such situation to be taken by Government without delay. One method is to that all money coupons needed for the mTm system shall be printed and given out by RBI by getting equivalent amount of cash from the mTm service provider. There coupons shall be fail proof and tamper proof and creation of counterfeit coupon shall be kept under strict watch.
Therefore, government should take immediate steps to bring un-banked money management service under regulatory controls through National Payments Corporation of India (NPCI) under the ambit of RBI.
If the government desire to keep it under the control of RBI, a solution to resolve the impasse between Government and telecom Service providers is to have an exclusive banking system associated with the MTM service provider that is set up as a 3rd party system by the consortium of Telecom Service providers.
Please see more on how MTM system and Network, the technology and features etc in the link http://wp.me/p1ZsI2-d
ITI the PSU languishing for years now can be asked to produce cheap basic model GSM mobile phones that can be given to BPL people to avail mTm facility.
For more information on the topic or for my blogs & articles in full, please contact by e-mail email@example.com or tweet @PA_Paul. Phone +914712446644 M: 9446322644
Abraham Paul. P.
M.D. Future Communication Networks (FCOMNET) / Ex. VP (TS) SIEMENS ICN, / G.M & SMT-TBG, BPL Mobile India, / TES (I) DOT India.