ATMs soon to give cash without bank account

Reserve Bank of India (RBI) Governor Raghuram Rajan today announced that very soon people without a bank account in India would be able to use an automated teller machine (ATM) to withdraw cash using mobile technology. "We have recently approved the in-principle setting up of a payment system which will facilitate the funds transfer from bank account holders to those without accounts through ATMs," Rajan said while speaking at the NASSCOM India Leadership Forum on financial inclusion and technology. "Essentially, the sender can have the money withdrawn from his account through an ATM transaction. The intermediary processes the payment, and sends a code to the recipient on his mobile that allows him to withdraw the money from any nearby bank's ATM. The system will take care of necessary safeguards of customer identification, transaction validation, velocity checks etc. We need more such innovative products," Rajan added. 

The RBI governor remarked that cashing out is important for remittances because in India many people still have no access to formal banking services. "The key to cheap and universal payments and remittances will be if we can find a safe way to allow funds to be freely transferred between bank accounts and mobile wallets, as well as cashed out of mobile wallets, through a much larger and ubiquitous network of business correspondents," he said. It is learned that the Nachiket Mor Committee has suggested the creation of Payment Banks as the first step to achieve this novel goal. Other suggestions include interoperable business correspondents who can serve people in remote locations, and the usage of NBFCs as banking correspondents. "We will examine all this," Rajan said.