Mobile Banking: A Tool of Financial Inclusion for India

20 Pages Posted: 10 Sep 2010

See all articles by Martina Rani Kopala

Martina Rani Kopala

Vignana Jyothi Institute of Management

Date Written: September 9, 2010


Financial inclusion denotes delivery of financial services at an affordable cost to the vast sections of the disadvantaged and low-income groups. People in developing countries have less options for transferring money and accessing banking services, because there is less deployed formal banking structure: fewer branches and ATMs generally co-located to relieve branches, low internet penetration and easy access to fast and immediate sources of loans but at high cost. So a branchless banking channel using mobile phones could be far more preferable to poor people than the available options like travelling to and queuing at distant branches, forgoing their daily wages. Only about one-third of people living in developing countries have any form of financial savings with formal institutions. It is proven fact that it lowers the cost of delivery to banks in building and maintaining a delivery channel and availability of funds to customers of accessing services. Hence, the developing countries around the world concentrate more on implementing the mobile banking access to the unbanked mobile users, as a tool of financial inclusion, which is known as Transformational mobile banking. Hence the success of mobile banking in micro finance depends upon the mass customer adoption, utility of mobile service for cash-in and cash-out transactions, interoperability of providers, a country’s defined proportionate regulation and the ability of service providers to meet the regulatory challenges.

Keywords: M-Banking, Financial Inclusion,Transaction cost, Transformation, Proportionate Regulation

JEL Classification: 030

Suggested Citation

Kopala, Martina Rani, Mobile Banking: A Tool of Financial Inclusion for India (September 9, 2010). Available at SSRN: or

Martina Rani Kopala (Contact Author)

Vignana Jyothi Institute of Management ( email )


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