It seems as if the impasse between banks and telecom operators around mobile banking is ending. Axis Bank has signed a Memorandum of Understanding with telecom operator Idea Cellular, by virtue of which, Idea will serve as a Business Correspondent for the bank, and use its telecom network to enable branchless banking, and enable mobile payments and remittances. This follows a notification from the RBI on September 28th 2010 (which we had missed), which allows Banks to sign up “companies registered under the Indian Companies Act, 1956, excluding Non Banking Financial Companies (NBFCs)” as Business Correspondents. This effectively allows Banks to tie up with telecom operators for the service.
Idea and Axis bank will run a pilot project to enable mobile remittance between Mumbai’s Dharavi – one of the largest slums in the world – and Allahabad in Uttar Pradesh. Customers will be able to transfer money:
– from an Axis Bank account to another Axis Bank account, and the remittance by an Axis Bank account holder to a mobile user, who doesn’t have a bank account.
– More interestingly, it uses Empays Payment Systems’ IMT service to allow a receiver to withdraw money from any ATM machine. Read: How IMT Works
Following the pilot, Axis Bank and Idea Cellular intend to launch banking services across India, leveraging Idea Cellular’s retail reach. Idea and Axis Bank will also explore extending the association to include other banking products and services such as savings, credit, micro insurance, micro SIP and micro pensions in a phased manner.