Financial Inclusion- News and Views - August 2014


August 2014


As emerging economies grapple with the need for speed in achieving their financial inclusion objectives, there are various models evolving across countries. In India, while the RBI has moved ahead on differentiated banking by recently releasing draft guidelines on licensing Payments Banks, Deputy Governor H R Khan has noted the intent to keep the payments space also open to non-banks, “With the cloud over Aadhar based unique identity being cleared, the pilots sponsored by the Reserve Bank for remittance related cash-outs using pre-paid instruments are expected to gather momentum and could turn out to be a major initiative in financial inclusion without the necessity of having bank accounts.” With the RBI keeping a balance between innovation and risk, experiences in regulation and industry operations from other countries give interesting learnings for India to choose from. This month’s newsletter has two lead stories to highlight such innovative experiences: a) The changes in Paraguay where new mobile money regulation has some unique provisions e.g. balances on accounts that have been inactive for 90-days or more must be automatically transferred to a savings account at a formal financial institution and b) The experiences of bKash in Bangladesh, a bank subsidiary that has become the fastest growing mobile money service provider in the world last year.


Lead Stories


Financial Inclusion in Paraguay: New Mobile Money Regulation

In this blog post Miraya Almazan highlights the main points in the regulatory changes in Paraguay enabling mobile money. Under Resolution 6, mobile operators in Paraguay can become licensed e-money issuers, or Entidades de Medios de Pagos Electrónicos (EMPEs). EMPEs are subject to international best practices that mitigate risk and protect consumer funds e.g. a trust account equal in value to the amount of money issued electronically must be set up, and EMPEs are not allowed to intermediate funds. All transactions must be online, in real-time, and maximum caps are set on mobile money account balances. There are also some very unique provisions that have not been tested elsewhere yet e.g. balances on accounts that have been inactive for 90-days or more must be automatically transferred to a savings account at a formal financial institution. Further, if the mobile money account holder does not already have a bank account, the EMPE must facilitate seamless account opening for that customer at a partner bank. Unlike Brazil, the regulation here mandates account-to-account interoperability, though it leaves open the commercial and technical specifications for the industry to define.

bKash Bangladesh: A Fast Start for Mobile Financial Services

Contrary to all expectations, the fastest growing mobile money service provider in 2013 was not a telco, but a bank subsidiary- bKash in Bangladesh. Further, bKash did not have an existing customer base to which it added mobile financial services, it acquired each client on its own. This CGAP brief puts together the factors behind bKash’s success: 1) A specialized organization built to deliver mobile financial services: Although other banks in Bangladesh offer mobile financial services, BRAC Bank is the only one to set up a special-purpose company for this purpose. This allows the firm to focus on mobile financial services alone, rather than as an adjunct to other bank business. 2) A shared vision for scale among a diverse investor group: The need for scale has driven all strategies, making changes appropriately with experience. 3) An enabling and flexible regulatory environment: Apart from the regulation that allowed banks to set up special-purpose companies for mobile financial services, the bank and telecom regulators have worked together to push all telcos to give access to unstructured supplementary service data (USSD) channel, thus enabling bKash to enter into revenue-sharing agreements with the four largest telcos, gaining access to 98% of the country’s mobile subscribers.

Section I: Policy – the latest from India’s policymakers

Rural Finance: Issues & Challenges

Shri Harun R Khan, Deputy Governor, RBI, July 24, 2014

Role of Financial Sector in the Growth of the Southern Region – A Question of Balancing

Shri R. Gandhi, Deputy Governor, RBI, July 14, 2014


RBI releases Draft Guidelines for Licensing of Payments Banks and Small Banks

Section II: News and Views Digest – the latest from India and abroad


FM Seeks Mobile Banking Route to Financial Inclusion

Have money, have bank

The NDA’s ambitious financial inclusion plan

Unhelpful telecom companies may trip payment banks

Financial Inclusion Mission to be big I-Day announcement

Payment banks to be new revenue stream for telcos

Fresh financial inclusion plan to get logo, tagline boost

India’s Payment Banks: What’s not in there

Do we need more banks to push financial inclusion?

RBI sets Rs.100 cr floor capital for payments, small banks

Can India Achieve Financial Inclusion within the Next Few Years?

Why India Post shouldn’t miss the chance to be a payments bank

This is not financial inclusion, Mr Modi

The Implications of India’s 2014 Budget for Financial Inclusion


Transforming Payments through mPOS: Perspectives from Indonesia

Mobicash’s successful entry strategy in Pakistan: Leveraging best practices and improving operational efficiency

Financial Inclusion in Cambodia is Trending Digital

Financial Inclusion in Paraguay: New Mobile Money Regulation

Analyzing the Business Case for Youth Savings

Is Tanzania Ready for Interoperability in Mobile Money?

Is Kenya Ready for an MVNO?

Network Effects: the Entrepreneur, the Investor, and the Poor in Bangladesh

New Discussion Paper on Smartphones & Mobile Money: The Next Generation of Digital Financial Inclusion

Buying Insurance – With Your Groceries – in Brazil, Colombia

Mapping Financial Inclusion with FSP Maps and MIX FINclusionLab

Section III: Research – surveys and studies on expanding access to financial services

bKash Bangladesh: A Fast Start for Mobile Financial Services

Greg Chen and Stephen Rasmussen, CGAP, July 29, 2014

The Business Case for Youth Savings: A Framework

Tanaya Kilara, Barbara Magnoni and Emily Zimmerman, CGAP, July 17, 2014



Direct Benefits Transfers for Inclusion

Policy Brief July, 2014

Financial Inclusion- Two priorities for India's New Government

Policy Brief June, 2014

Regulatory Trends for Financial Inclusion: Lessons from Brazil

Policy Brief January, 2014

In the media

Column: Fix Aadhaar, don't junk it

Financial Express, 27 June 2014

Getting financial inclusion back on track

Mint, 20 June 2014

Column: UPA's Aadhaar miss

Financial Express, 3 May 2014

Innovation in payment banking

Mint, 18 April 2014


Policy changes for inclusion

More positive moves from the RBI

RBI relaxes KYC address proof

Getting DBT right


Editor: Sumita Kale can be contacted at

The Indicus Centre for Financial Inclusion was launched in 2011 to distil and disseminate information on accelerating the poor’s access to high-quality financial services. The Centre is supported by the Bill & Melinda Gates Foundation.

© Indicus Centre for Financial Inclusion. All rights reserved. 31st July 2014


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