Financial Inclusion- News and Views - May 2014


May 2014


In the Second Quarter Review of Monetary Policy 2013-14, the RBI Governor, Dr. Rajan, had announced plans for a pilot to study the technological and operational feasibility of allowing cash pay-out (remittance) from select non-bank Pre-paid Payment Instrument (PPI) issuers using bio-metric authentication. This pilot is currently underway and while its results will determine the next steps by the RBI, this move is in line with the global trend of tapping into the strengths of non-banks for improving access to financial services. This month’s newsletter takes up two lead stories to focus on the advantages and challenges in using mobile wallets for inclusion: a) Amit Maheshwari and Vartika Shukla of MicroSave look at the advantages of using mobile wallets to make payments to government workers in rural areas, and b) Nishant Kumar of MicroSave puts down the factors that encourage faster uptake of mobile money as well as those that retard adoption to this new mode of payment. The two pieces together make the point that the road to a less-cash economy is not without its challenges. However, even as current preferences dictate cash-out to be an imperative now, over time those who are paid over mobile are more likely to use the same mode for further payments. Strengthening all links in the chain – agents, acceptance points etc. - would be crucial, so that the potential of mobile wallets in bringing the unbanked within the digital payments network is maximised.


Lead Stories


Why Mobile Wallets Might Work for ASHA – And Many Others

In this blog post, Amit Maheshwari and Vartika Shukla begin by narrating the difficulties faced by a health worker in rural Bihar in accessing her bank account. They note that while mobile wallets can be a solution for many like her, there are issues to overcome here as well. There are regulatory constraints on who can offer savings services, for instance. Also many CICO agents encourage faster, more lucrative over-the-counter transactions, rather than the much longer-term, customer-growth potential that mobile wallet business represents. They conclude that government payments can be easily coordinated through mobile wallets, bringing significant savings to the exchequer as well as to the beneficiaries. While it is true that cash-out is an imperative now as people will not get over the preference for cash immediately, all those who are paid over mobile are more likely to use the same mode for further payments. In the long run, therefore, creating a conducive environment for mobile wallets will help the transition to a less-cash economy.

Mobile Money – What Lurks Behind All the Numbers

Nishant Kumar takes a hard look at the mobile money landscape. On one hand, he opines that adoption of mobile money can be rapid as telcos, unlike the banks, find these low net worth customers attractive and are only too happy to add payment services to their core business services like airtime top-up, whenever the law permits. Further, telcos have the capability for mass marketing that can raise awareness of digital payments, conveying simple, compelling propositions to an initially less than eager public. More importantly, those paid over mobile, especially via a full-frills bank account, are much more likely to continue using the mobile for payments. On the other hand, he notes that the strong preference for cash makes costs and logistics a challenge for telcos. Thus, there have to be strong incentives to move people away from cash and towards digital payments. For such an eco-system to work smoothly, there is need for more m-payees (merchants, institutions and individuals willing to receive non-cash payment), more live demos to build trust in this new mode of payment, no charges (at least initially), simple transaction platforms etc. He concludes that even though users may not demand mobile payments yet, this new mode should be encouraged. Digital payments form the first step towards universal financial inclusion, making all investments in this space worth their while in the long run.

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

Report of the GIRO Advisory Group

Reserve Bank of India, April 23, 2014

Scaling up of the Business Correspondent (BC) Model – Issues in Cash Management

Reserve Bank of India, April 22, 2014

Report of the Group on Enabling PKI in Payment System Applications

Reserve Bank of India, April 22, 2014

Issuance and Operation of Pre-paid Payment Instruments in India – Consolidated Revised Policy Guidelines

Reserve Bank of India, March 28, 2014

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


Vodafone India to implement making NREGA payments through its M-Pesa service

IFC, partners focus on e-payment systems for India’s low-income households

'M-Pesa' launched in Kerala

Mobile operators dial migrants to power money transfer

How Aadhaar, India Post can transform India's finance

'Differentiated bank idea premature': State Bank of India report

Why not a ‘Post Bank of India’?

Communication – The Achilles Heel of Direct Benefit Transfers – Part I

Much remains to be done on financial inclusion: RBI Deputy Governor KC Chakrabarty

Bandhan gets a bank licence: Can it survive as a bank & yet be true to its original spirit?

Banking on confusing signals

Why is financial inclusion in India not improving? New Numbers, New Approaches


Seasonal, unsteady income drives economic vulnerability in Brazil

M-Shwari in Kenya: How is it really being used?

The State of Mobile Insurance – what are the key factors currently driving success?

The State of Mobile Money Ecosystem – How does building an ecosystem impact profitability and help create an efficient and affordable way to facilitate payments on a large scale?

How to improve agent performance with incentives

The State of Mobile Money Revenues – is there really any money in mobile money?

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

Financial Inclusion and Development: Recent Impact Evidence

Robert Cull, Tilman Ehrbeck and Nina Holle, CGAP, April 29, 2014

Alternative Financial Education Approach to Design Effective Financial Education/Capability Programmes

Akhand Tiwari, Akhilesh Singh, Nishant Kumar and Nitish Narain, MicroSave, April 17, 2014

China: A New Paradigm in Branchless Banking

Leesa Shrader and Eric Duflos, CGAP, April 11, 2014

Enabling Mobile Money Policies in the Democratic Republic Of Congo

GSMA, MMU, April 10, 2014



Regulatory Trends for Financial Inclusion: Lessons from Brazil

Policy Brief January, 2014

Serving the inclusion goal profitably

Policy Brief November, 2013

In the media

Innovation in payment banking

Financial Express, 18 April 2014

Column: Don't junk Aadhaar

Financial Express, 10 April 2014


Remittances - an unmet need of the poor

Fixing the Aadhaar-DBT link

Views on the Recommendations of the Mor Committee on Inclusion


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. 30th April 2014


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