Financial inclusion and mobile governance efforts in India to get further boost with TRAI's initiative to fix tariffs for mobile banking services

January 27, 2011, New Delhi. Telecom Regulatory Authority of India (TRAI) has taken up the initiative to fix tariffs for banking and other financial services on mobile phones to ensure that the rural masses can afford the m-banking services. This will also give boost to the government's efforts in delivering m-Governance services.

This initiative of TRAI came immediately after the two major banks announced their tie ups with the Telecom Operators. As the first major development after the new policy on financial inclusion was notified based upon the recomendations of the IMG group, the country's two leading Telecom Operators announced separate tie-ups with the largest banks in India to provide financial services on mobile phones. Bharti Airtel , the country's largest mobile phone company by both customers and revenues had formed a 49:51 joint venture with State Bank of India to provide mobile-banking and other financial services, and Vodafone Essar Ltd , announced a similar deal, by entering into a Joint Venture  with ICICI Bank , India's largest private sector bank. It is expected that other Banks and Telecom Operators will also join hands soon for offering financial services to the inbanked rural masses of India.

At present, market forces determine telecom tariffs in India, with very little intervention from TRAIi or the government. The regulator is of the opinion that 'the proposed framework for delivery of basic financial services is intended to promote financial inclusion,and mobile governance (m-Governnce) that includes transfer of funds under various government schemes and programmes targeted to poor people', which calls for regulating tariffs for such services.

"Tariff regulation would be crucial if adoption of mobile bankingand mobile governance  is to be encouraged especially among therural segments of the population. In such a situation cost effectiveness of delivery of basic financial services and public services through mobile phones becomes an important consideration. Every effort should be made to keep the provisioning of the services affordable for the target beneficiaries," the regulator said when launching a consultation process to gauge the industry's reaction to this proposal.