Vodafone brings M-PESA to India with HDFC

Vodafone and HDFC Bank have tied up to offer mobile banking services to the rural masses. The pilot for these services has been started in ten villages in the Sikar district of Rajasthan.
Speaking to Telecom Yatra, Rahul N Bhagat, country head of retail liabilities, marketing and direct banking channels, HDFC, said, “We have launched a pilot mobile money transfer service called M-PESA in ten villages of Rajasthan.”
He explained, “The service allows subscribers to make payments, money transfers, deposits and withdrawals. As of now, HDFC has appointed 54 business correspondents (BCs) in these villages, leveraging manpower on Vodafone’s retail network.”
BCs are retail agents of banks and provide services in remote areas, where setting up a branch is not cost effective. These retailers are authorised to collect small-value deposits, give small loans and offer products such as micro-insurance and mutual funds to the elderly, poor, disabled, and those with poor access to a bank.
M-PESA is already successful in Kenya, and is now also available in Tanzania, Afghanistan and South Africa. It is a branchless banking service designed to enable users to do basic banking transactions without the need for a bank branch. The service is being run by IBM Global Services on behalf of Vodafone in all these countries.
M-PESA customers can deposit and withdraw money from a network of BCs, including retail outlets, kirana stores etc which act as banking agents.
Commenting on the challenges involved, Bhagat says, “BC route is all about faith and goodwill that people have on BC’s therefore our entire reputation is at risk, as this network is difficult to administer. If anything goes wrong, the bank will be held liable.”
The new RBI guidelines, which were announced recently, have allowed for profit companies to become BCs for banks. Bhagat believes that this is a positive move and will help increase the reach of banks into the remotest areas of the country.
RBI has allowed companies that have a large retail presence, excluding non-banking financial companies, to act as BCs. Till now, only non profit companies and individuals could work as BCs.
Earlier, there were some roadblocks in Vodafone’s attempt to launch its M-PESA in India as the operator did not have a tie-up with any bank. RBI states that no telecom operator can offer financial services in the country without forming an association with a licensed bank.
India’s leading operator Airtel had also launched a money transfer service with Western Union and State Bank of India, while Reliance Communications had partnered with ICICI Bank for a similar service.