Exclusively Banked Universal Money Management by Phone.
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 envisaged as a service that is handle by special purpose exclusive bank in the country to accelerate ‘Financial Inclusion’ all especially in lower economic strata and an effective tool for supporting their Micro Finance needs across the country.
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, benefits 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 provide comfort and improved life style for everyone; young and old, from ultra rich to the extreme poor 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 on various means of transport as being currently provided by banks as ‘Mobile Banking’.
‘Money through Mobile’ (mTm) system is transparent to regular Banks and 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 that available to all mTm users and mTm service providers.
2. Virtual money is better handled by Virtual banking system.
Most banks, both Public and Private have its limitations to take care of the needs of the huge un-banked population in the lower social and economic strata. Naturally, huge volume of low value accounts eventually would lead most banks to collapse due to severe HR constraints and gross customer dissatisfaction for no fault of the banks.
It is therefore, the system as proposed herein can be termed and treated as an autonomous “Virtual BANK” exclusively set up to handle all sorts of Money Management Using Phones across the networks all over the country with minimum human interface. Call it a ‘MTM Bank’ or whatever.
In fact MTM technology system that handle all sorts of money transactions using phones by itself can function as an exclusive virtual bank incorporated with required supporting banking mechanism in it to handle its clients’ needs transparently without much human intervention at its day to day operation level.
3. Universal nature of mTm system:
The system proposed in essence is universal in nature as it can provide service across disparate Telecom systems, both Mobile as well as Land line, currently serviced by various Telecom service providers and also for those who not own a phone, across the country without involvement of any Bank or INTERNET.
Accordingly, the proposal herein has taken into consideration of the constraints and limitations regarding absence of conducive eco-system such as non availability of regular power supply and non-reach of telecom network in rural and remote areas.
3.1. Money through Mobile (mTm) will not disrupt Banking Industry.
There is this biggest myth that Exclusively banked Pay-by-Phone systems and services will be disruptive to Banking industry. From the foregoing it can be seen that the fact is actually other way around.
4. No need to wait for digitisation:
The idea is to roll out the project, beginning form places where the minimum needed eco system is readily available and then expand to other areas.
There is nothing known as ‘perfect’ in planning. It is pragmatic to use contemporary Technology, systems, products and services to start always with an eye on the future. People in the lower economic and social strata are available every where more so in current urban areas. Without waiting for digitization of entire country, plans of Financial Inclusion of people in the lower social and economic strata, shall be taken up in Urban areas, its suburbs, towns and villages where minimum 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 could also to be covered with improvised systems with short term solutions and products as explained below.
5. Use Satellite clinks for connectivity of mTm systems in remote areas.
Government should make use of already achieved high density telephone coverage to implement the system in the Urban, suburban and rural areas where ever telephone connectivity is already there. In in remote places where there is no telecom facility mTm services can be provided with mTm Franchisee outlets using MTM Set top boxes or Specially designed TABLETS with connectivity to mTm system through Satellite links. For those who have no phones, service can be provided through public call phone systems in Post offices, Panchayat and village offices etc.
6. With Aadhaar in place, DBT using mTm will be the biggest game changer: mTm can enable Direct Benefit Transfer of payments under various Government’s various welfare schemes without middle way systems and agencies.
With Aadhaar linked with mTm system, it is possible to provide mTm service and DBT to mTm account of people who do not own a phone through mTm Franchisees, Public call phones provided in Post offices, Panchayat offices etc.
However, mTm Service can be provided without waiting for Aadhaar.
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 made available to everyone to commence the service. Aadhaar is after all an Unique Universal ID that can be provided from a reserved numbering pool 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 as a pre-condition to implement Direct Benefit transfer DBT & Direct Cash Transfer of benefits, MNREGA payments and payment in lieu of subsidies to beneficiaries.
7. Money Management using phone has great potential to infuse liquidity.
mTm can boost up nation’s economy. It is time Government / RBI take necessary steps to mobilize, regulate and tap this great potential to revive Indian economy. 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.
8. mTm has potential of large employment generation.
What need to be done, is to create exclusive virtual bank as shown in the schematic above, to handle all forms of money management using phones and to regulate, mobilize and exploit its great potential for the benefit of the people.
There are about 650,000 village in the country. mTm service would be able to provide jobs on an average of 2o persons in every village as mTm Franchisee and mTm authorised agents, that is about 1.3 Crores of jobs.
There are 150,000 Post offices of which 89% are in rural areas. Department of posts can be given banking license and entrusted with setting up of exclusive virtual mTm bank with BSNL. The huge surplus human resource in Department of Telecom, Department of Posts, 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.
9. All forms of Money Management using phones 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 adverse impact on economy due to various reasons as mentioned below.
Unless regulated, virtual money businesses can gobble up real money.
The fast mushrooming Virtual Money businesses can gobble up real money disrupting nation’s 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.
The way out is that ownership of Virtual money shall rest with Government. The Virtual money needed for such business shall be generated by RBI in the form of encoded and encrypted and pre-authenticated ‘data strips’ with distinctive UR code for each denomination that can be used only with RBI’s authentication in its every transaction. Every mTm user is given unique code and authentication to use virtual money at the time of registration. The system is such that every virtual money transaction undergoes an authentication process in the mTm system.
All prepaid or post paid money coupons etc needed for mTm system shall be generated and issued by RBI by against equivalent amount of physical cash from the mTm service provider. These data coupons shall be fail proof and tamper proof with no scope of creation of counterfeit. Such a system shall have records and statistics and other information of entire virtual money transactions in the country.
Therefore, government should take immediate steps to bring in exclusively 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 virtual banking system associated with the mTm service provider that is set up as a 3rd party system by the consortium of Telecom Service providers. Continued >>>
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Abraham Paul. P.
Owner and CEO Future Communication Networks (FCOMNET) / Ex. VP (TS) SIEMENS ICN, / G.M & SMT-TBG, BPL Mobile India, / TES (I) DOT India.