A committee of secretaries headed by the cabinet secretary has approved the recommendations of the inter-ministerial group (IMG) for creation of a framework for using mobiles phones for financial inclusion. The government on Friday said banks have been advised to implement the IMG framework on a priority basis to extend basic financial services to the unbanked population. Individual banks will start implementing by July 31, 2010 and complete the rollout by December 2011.
The IMG framework based on mobile phones and biometric-based authentication will form the core micro-payment platform for transfer of benefits under various government schemes, micro-payment services and financial inclusion for the target groups of social sector programmes. Here is how it works.
The framework envisages creation of Mobile linked No-Frills Accounts by banks, which can be operated using mobile phones. The basic transactions permissible over these accounts will include cash deposit, cash withdrawal, balance enquiry, transfer of money from one mobile-linked account to another and transfer of money to a mobile-linked account from a regular bank account. It will also facilitate transfer of funds of schemes like NREGS, etc to the mobile-linked no-frills account. The framework will be compatible with the proposed Unique ID system. The framework would be operated through two means: a mobile-based PIN system using ?Mobile Banking POS?; a biometric system using UID numbers issued by UIDAI.
The model will enable rural people with mobiles to deposit and draw cash instantly into or from their mobile-linked no-frills accounts through business correspondents having cellphones. Also, the model enables two mobile users, to transfer money to each others? ?no-frills? accounts specifying only their mobile numbers without the necessity of any intermediary including BCs.