Camilo Tellez GSMA Mobile Money for the unbanked

This week, the Deputy Governor of the Reserve Bank of India, Mr. K C Chakrabarty announced that RBI was granting the first license for a semi closed mobile wallet to Bharti Airtel. The news comes just weeks after RBI announced at its annual monetary policy briefing, that it had created a roadmap to increase financial inclusion by covering all villages by 2015. So what does this mean for the development of mobile money services in the second most populous country in the world? From the commercial side, it is still too early to tell what kind of deployment proposition Bharti is evaluating – their subscriber base is approximately 136 million, but what resonates from this decision, is that this effectively paves the way for other MNOs in this highly competitive market to apply for these types of licenses.

This mobile wallet will allow subscribers to load money- a maximum of 5000 INR or approximately 110USD into an account held by Bharti Airtel, which will enable them to make mobile payments at retail outlets, comparable to a pre-loaded debit card. However, due its closed nature, customers will not be able to redeem the e-money value back into cash, which proves to be a major obstacle for more sophisticated services, such as savings which could actually have a positive impact on financial inclusion.

For decades, India’s government has made the establishment of an inclusive financial sector a key priority; alas the success has been limited. Improvements have been made in agent and bank correspondent regulation, in addition to an increase in the number of access points, but overall formal financial service penetration remains low. Nevertheless, RBI’s decision is a step in the right direction, albeit a modest one in the eyes of the fast-paced mobile money industry. Experts hope that RBI’s incremental approach is a first step towards democratizing mobile financial services, which in a country with 650 million mobile subscribers has the potential to unlock the financial system to a vast number of individuals who need it.