The Indian apex bank, the RBI argued that the context in India was different from that of other countries which had launched successful mobile money services (for example M-Pesa in Kenya), and therefore developed a prescriptive regulatory framework for India (Gupta & Tahilyani, 2013). In particular, they were of the opinion that other countries: a) had services which focused only on remittances, and not a complete set of mobile banking tools such as bank accounts, fixed deposits, recurring deposits and insurance, which the RBI wanted deployed in India, b) had relatively poor banking infrastructure compared to India, c) had a national identification number which could be used to facilitate transactions, which India did not have at the time, and d) had network operators with a monopoly position (or an effective monopoly position), which made it easier for them to achieve scale (Lal & Sachdev, 2015).
This led the RBI to develop a regulatory regime which:
a) only allowed banks to operate mobile money services,
b) created a specific model for agent networks, which allowed banks to utilize special non-profit entities, Business Correspondents (BCs) and Customer Service Points (CSPs). BCs were allowed to act as agents of banks only for the purpose of acquiring unbanked customers. Thus, BCs are essentially an intermediary between the bank and the customers. More precisely, BCs are intermediaries that offer financial services on behalf of banks to customers who, either by virtue of their place of residence (far from a bank branch) or their circumstances (small savings, illiteracy, poor identification documents), are difficult to serve. CSPs are the mobile money agents that serve as contact points for end users, co...
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...r only one bank. At first, it focused on recruiting airtime distributors to become master agents by converting the retailers they managed into agents. However, that proved difficult, as the commissions were not competitive compared to airtime sales, the retailers did not have enough liquidity, and they were worried that digital finance might displace their airtime sales business. Currently, Alpha has served 3 million customers with over 30 million transactions with a value of over US$1.2 billion. It has partnered with 3000 agents and 4 banks for mobile banking and money transfer services.
Alpha is an example of a supreme garage innovation! If you thought the rate of change was fast thanks to the garage innovators of Silicon Valley, wait until the garages of Delhi, Mumbai and Bangalore get fully up to speed. I sure hope we’re ready – Thomas Friedman (Dhanraj, 2014).
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