People without a bank account in India would soon be able to withdraw cash from an automated teller machine (ATM) with the use of mobile technology, Researve Bank of India Governor Raghuram Rajan announced on Wednesday.
At present, only bank account holders can withdraw cash from an ATM.
“We have recently approved the in-principle setting up of a payment system which will facilitate the funds transfer from bank account holders to those without accounts through ATMs,” Rajan said while speaking at the NASSCOM India Leadership Forum on financial inclusion and technology.
“Essentially, the sender can have the money withdrawn from his account through an ATM transaction. The intermediary processes the payment, and sends a code to the recipient on his mobile that allows him to withdraw the money from any nearby bank’s ATM. The system will take care of necessary safeguards of customer identification, transaction validation, velocity checks etc.,” Rajan said.
“We need more such innovative products,” he added.
The RBI governor said cashing out is important for remittances, because the country has a large recipient population, most of whom do not have access to formal banking services.
“The key to cheap and universal payments and remittances will be if we can find a safe way to allow funds to be freely transferred between bank accounts and mobile wallets, as well as cashed out of mobile wallets, through a much larger and ubiquitous network of business correspondents,” he said.
The Nachiket Mor Committee suggests the creation of Payment Banks as a step towards this goal. Other suggestions include interoperable business correspondents who will get the scale economies to serve in remote locations, and the usage of NBFCs as banking correspondents.
“We will examine all this,” Rajan said.