Soon, Indian citizens without a bank account would be able to withdraw cash from an ATM (automated teller machine) with the help of mobile technology, RBI Governor Raghuram Rajan announced on Wednesday.
“Recently…we approved setting up of a payment system which will facilitate funds transfers from bank account holders to those without accounts through ATMs. The interesting proposal essentially is that the sender can go to an ATM with a participating bank and ask the money to be withdrawn from his account. The intermediary then processes the payment and sends a code via mobile to the recipient. The recipient takes that code to the nearest ATM of that participating bank, punches in the code and withdraws the money,” Rajan said at a Nassocom event.
Currently, only bank account holders are allowed to withdraw cash from an ATM.
According to the RBI chief, “Cashing out is very important for remittances because we have a large recipient population in the country most of whom do not have formal access to financial services. They do not have a bank account.
“The point is that this system is efficient, fast and reaches people who are unreached at this point and takes care of necessary safeguards such as customer identification, transaction validation, velocity checks etc. We need more such innovative products. I am glad to say that mobile companies are in the process of providing them,” Rajan added.
RBI also said the payments bank, one of the institutional proposals in the Nachiket Mor committee, will be looked at. However, at this point there is no decision (made) to move forward.
“We will look at it in great detail including what is the value it brings, the viability as well as whether it brings arbitrage opportunities vis-à-vis the scheduled commercial banks. After looking at all that we will start thinking about whether we should move forward and if so under what circumstances.