Banks primarily perform two key functions related to mobile payments: firstly, they do the KYC (Know Your Customer) verification, so that a money trail can be identified, if needed. Secondly, they hold the customers money. R. Chandrashekhar, Secretary, Department of IT, at the IAMAI symposium on Financial Inclusion through Mobile Phones, was fairly critical of banks, saying that services like payments for the NREGA are extremely difficult through the conventional banking system. "Banks weren't equipped to handle large amounts of payments in small denominations, and of the 25 million no-frills bank accounts that were opened, only 2.7 million were active. Payment disbursements were also difficult for post-offices to handle, and the opportunity is there in mobile telephony, where implicit transactions are already taking place through prepaid." However, Chandrashekar said that a radical change of approach is needed: "The change will not happen unless the linkage with the need to have a formal bank account is dispensed with. Without that, the quantum jump (in financial inclusion) is difficult, if not impossible. There are huge issues with un-trackable transactions, so the interesting possiblity is with the UID Authority. The ID Authority does intend to provide a range of identification related services, a lot of which will be provided on the mobile. It is possible to link the three - Mobile, Payments and the ID, without linking it to a bank account." "My view is that unless we move quickly," he added, "the kind of synergy which we want to establish between mobile, ID and…
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