With a goal to provide financial inclusion through mobile phones, Telecom Regulatory Authority of India (TRAI) has released a consultation paper, seeking comments on use of unstructured supplementary service data (USSD)-based mobile banking services.

USSD is a technology used by telecom players to send alerts to their users. It can be used for pre-paid call-back service, location-based content services, and menu-based information services.

TRAI says the fact that a large number of mobile subscribers in rural areas do not have access to banking facilities presents an opportunity for leveraging the mobile telephone to achieve the goal of financial inclusion.

“USSD appears to be one of the most promising modes for mobile banking for financial inclusion. In order to identify and address the various issues related to USSD-based mobile banking for financial inclusion, the authority has issued the consultation paper,” TRAI said in a statement.

Unlike short message service (SMS) messages, USSD messages create a real-time connection during a USSD session.

The connection remains open, allowing a two-way exchange of a sequence of data. This makes USSD more responsive than services that use SMS.

TRAI says significantly large regions and populations in the country are still un-banked.

As per the Census 2011, only 54.4 per cent of rural households had access to banking services.

“From the standpoint of equity, it is essential that financial services are provided at an affordable cost to those who are presently excluded from the formal financial system,” it added.

The authority has sought comments if USSD is one of the most appropriate modes for mobile banking, and it is appropriate to fix a ceiling of Rs.1.50 per USSD session.

The stakeholders are required to send their comments by October 4 and counter comments by October 11.

Some banks in the country, such as State Bank of India (SBI) and ICICI Bank, have already launched USSD-based mobile banking services.

However, the authority says the use of USSD-based mobile banking by these banks is at present limited to the provision of value-added banking services to their existing customers.

“These mobile banking solutions are not designed to meet the objective of providing banking services to the unbanked/ under—banked population,” TRAI says.

In order to provide banking services to un-banked population, TRAI suggests creation of a common platform to connect banks and mobile operators, through which all interested banks can provide USSD-based mobile banking services to their customers.


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