Paper

Harnessing M-Banking Potential by Banks in Rural India: Learning From International Experiences

Using mobile banks to extend financial access
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This paper highlights the need for banks in rural India to harness the potential of mobile banking (m-banking) to enhance customer satisfaction and increase financial access. It gives an overview of government and RBI measures in this direction, and presents best practices in mobile rural banking and microfinance from countries around the world.

International experiences reveal that m-banking acts as a branchless channel, facilitating financial access and enabling high volumes of low-value transactions in rural areas of developing countries. In response to policy initiatives from Government of India and RBI encouraging mobile banking, banks have started adopting solutions such as biometric smart cards, and point of sale and mobile banks. Significant benefits from m-banking include better customer service, access to new customer segments and cost reduction.

The paper recommends several strategic measures for developing mobile banking in rural India. These include:

  • Mobile branches to assist customers in remote areas;
  • Training SHGs to repay loans through m-banking;
  • Strategic planning by bank branches to cover all households in allotted villages;
  • Mobile banking initiatives by private banks and MFIs;
  • Developing and marketing new mobile financial products to meet customer needs.