The World Bank, the organization that supports implementation of sustainable developments to the developing countries, has approved a $7.7 million credit to Government of Maldives to significantly increase the use of banking system transactions using mobile phone.

The $7.7 million credit from the International Development Association, the World Bank's concessionary lending arm, has forty years to maturity with a ten-year grace period.

Mobile phone banking is an effective advancement in the communication industry that facilitates customers to send, receive, or initiate financial transactions including loan disbursements, money transfers, deposits, withdrawals, remittances etc through their mobile phone.

Earlier, the Government of Maldives had submitted a project on the mobile phone banking which will facilitate access to financial services and allows users access to any bank account using any mobile phone operator and cashing through any agent.

The Mobile Phone Banking Project in Maldives is aimed at creating a single currency payment system and also to create an environment that supports successful mobile phone banking systems. The project was developed keeping in mind those people who live and work in the remote areas.

Alastair McKechnie, World Bank Country director for the Maldives, said in his statement that the widely dispersed population in the Maldives makes delivering financial services through traditional branch banking networks very difficult.

McKechnie added,  "But given its highly literate population and high coverage of the mobile phone network, the country has a great potential to use technology to overcome the barriers of geography and low population density to deliver financial services at low cost across the country. This project will in particularly help reduce the vulnerability of people living in remote areas who currently have little access to formal bank outlets."

The Maldives Monetary Authority (MMA) together with the microfinance industry body CGAP (Consultative Group to Assist the Poor) designed a concept and proposal that provided the basis for this Mobile Phone Banking project.

As part of the project, CGAP will offer a parallel funding of $1.5 million to establish a regulatory framework for mobile banking.

"The early experience with mobile banking in places such as Kenya and the Philippines demonstrates how wireless technology might fundamentally change how poor people access financial services," said Elizabeth Littlefield, CEO of CGAP.

Littlefield also emphasized that this bold project by the Government of Maldives gives hope that remote locations need no longer be barriers to accessing convenient, affordable financial services.

Jai C.S is TMCnet is a Contributing Editor.

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