Mobile banking could help millions of Indians without access to financial services, according to industry experts. It has the potential of transforming peoples’ livelihoods in rural and other marginalized areas of India. However a few still bottlenecks exist, such as illiteracy, lack of awareness, apprehension and limited or no banking infrastructure in rural areas.
Around 775 million people in India own mobile phones, with 19 million new subscribers adding to that number monthly. According to Gartner technology research specialists, one tenth of the world’s phones are sold in India. In contrast, almost 50% of India’s adult population does not have a bank account. The mobile platform presents the easiest and fastest channel of bringing the millions of unbanked Indians into the country’s mainstream banking system; therefore, the potential for mobile banking uptake is quite huge.
Even though there is room for growth, take-up of mobile banking in India has been somewhat slow. Only 0.5% of the total 5% registered mobile-banking users are regular users of the platform, according to industry estimates. Currently, about 680,000 transactions worth nearly $13.6 million (INR 610 million) are processed per month via mobile phones.
Mobile banking could help develop the fortunes of India’s rural and urban poor by bringing them into greater financial inclusivity and granting them access to different financial products and services that they could use to uplift themselves and boost the country’s economy and growth.
Much still needs to be done to encourage wide mobile banking uptake in India by way of educating the population on the usage and benefits of mobile banking, and addressing their security concerns.
The Indian government is taking pro-active measures to increase mobile banking. Currently, 39 banks have been licensed by the Reserve Bank of India to offer mobile banking services. The maximum mobile transaction value has also been raised to $1,100 (INR 50,000), which represents a tenfold increase.
Key Statistics – India’s Economy (source: CIA World Factbook)
- GDP: approximately $4.06 trillion in 2010, ranking 5th in the world; in 2009, GDP was approximately $3.679 trillion
- GDP Growth: $3.679 trillion in 2009 to $4.06 trillion in 2010; real gross domestic product (GDP) expanded by 6.8% in 2009 and 10.4% in 2010, ranking the country 5 in GDP growth rate terms in the world
- Public Debt: 57.3% of the national GDP in 2009; reduced to 55.9% of the national GDP in 2010, ranking the country 45 in the world
- Inflation: 11.7% in 2010, an increase from 10.9% in 2009, ranking 201 in the world
- Leading Industries: textiles, chemicals, food processing, steel, transportation equipment, software
- Economic Challenges: widespread poverty, limited employment opportunities, inadequate social and physical infrastructure, high rural-urban migration and insufficient access to quality education
- Employment & Labor: national unemployment rate was 10.8% in 2010, up from 10.7% in 2009; labor force constituted 478.3 million people in 2010, with occupational breakdown at 16.1% for agriculture, 28.6% for Industry and 55.3% for services
- Industry Stats: almost 800 million people have access to mobile phones and service; overall teledensity is more than 60%, with urban teledensity at close to 100% and rural teledensity at 20% and growing