On the sidelines of the Nasscom Leadership forum, RBI Governor Raghuram Rajan on Wednesday announced the approval of the payment system that shall enable people maintaining no bank accounts and receiving remittances to withdraw funds from Automated Teller Machines or ATMs. The approval by the Reserve Bank of India marks the central banks commitment to promote as well as penetrate financial services among all sections in the country.

The current provision allows only individuals maintaining a bank account to withdraw funds using a ATM machine. However, as a substantial portion in India is dependent on remittances it has been proposed to make the facility available for non-bank account holders. The mobile technology shall enable the facility and on authorization by the depositor, individual without a bank account shall be in a position to withdraw funds from the transferee's account after the intermediary bank processes the transaction and recipient is in receipt of a code that is to be keyed in for fund withdrawal.

On the safety front of the proposed payment system Raghuram Rajan was quoted in one of the media reports saying "The system will take care of necessary safeguards of customer identification, transaction validation, velocity checks etc."

Raghuram Rajan was also commenting "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".

The RBI governor said cashing out is important for remittances, because the country has a large recipient population, most of whom do not have 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.

Through the issue, Rajan stressed on the deployment of technology into the financial sector and how automation of various services shall reduce cost. Further, to monitor and track credit history, Rajan spoke about the role technology can play in maintaining an individuals data concerning saving and expenses.

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