How ATMs can come to the rescue of the unbanked

To increase the reach of financial services in the country, the Reserve Bank of India  recently approved a payment system that will let people even without bank accounts withdraw from automated teller machines, said Governor Raghuram Rajan on Wednesday, at the inaugural session of the three-day Nasscom Leadership Forum in Mumbai.

This would be helpful especially for people receiving remittances.

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The depositor can authorise another person without an account to withdraw cash from his or her account through an ATM.

The intermediary bank processes the payment and sends a code via mobile to the recipient, who uses that code at the bank’s ATM to withdraw the money.

India has a large population dependant on remittances and most of them do not have formal access to financial services.

Rajan, speaking on the role of technology in the financial services sector, said the automation of transactions via technology would reduce costs.

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Providing access to unbanked areas in the country has been high on the agenda of RBI, as almost 40 per cent of the population doesn’t have a bank account.

Rajan also spoke on how technology could be tapped to analyse and monitor saving and spending patterns of customers to help banks build a data bank.

This will enable banks in tracking credit history.

Rajan said social media could be enlisted to identify fraud and help in better regulation and asked executives in the technology sector to come up with solutions for that.