Universal Financial Inclusion through Electronic Payments
Laveesh Bhandari, Sumita Kale
This paper argues that universal access to electronic transactions is critical for ensuring financial inclusion. The RBI has through its recent actions created a highly progressive regulatory regime that would enable both innovation and entry of new providers of financial and e-transaction services. Moreover, the ideal mode or ‘pipe’ through which such services can be provided – the mobile phone – is already widely accessible for the underprivileged. However, constraints in the mobile VAS sector are preventing further movement in this space. An enabling environment requires the Mobile Service Providers to be more accepting of competition and transparency, barring which regulatory action in the MVAS will become critical to ensure greater financial inclusion. Just as the RBI has created an enabling environment in the financial regulation space, TRAI and the mobile industry need to create an enabling environment in the electronic communication space. Only when this is achieved can we hope for further cost efficient innovations in the micro-credit space that will finally ensure universal financial inclusion.
