Collaborative efforts between telecom companies and the banking and financial sector alone will leverage mobile penetration in rural areas for financial inclusion, said S R Rao, additional secretary at the information technology department (DIT).

“Most people in this country -  in fact over 70 % of the citizens - have no access to banking services. They don't have bank accounts, so they can't take loans, deposit money, make cash transfers and a lot of other things that the urban or peri-urban bank customer gets from the bank,”  Rao said in a discussion at the national conference on e-governance here on Friday.

“Contrast this with the 500 million plus mobile connections in the country,” he said, “the two need to collaborate and devise a mechanism for inter-operability."

With the government shifting its focus on to mobile technology for governance delivery, organisers of the conference had put financial inclusion through mobile technology on the agenda for discussion.

"People in rural areas usually hold accounts - if they have one - in cooperative banks, rural banks and post offices, which don't have core-bankng facilities. This is a limitation for financial inclusion despite substantial mobile connectivity in these areas," said C. K. Mathew, Rajasthan's finance secretary.

Sachin Khandelwal, a senior general manager with ICICI bank said that while SMS and telebanking had significantly cut transaction costs, the near total absence of formal banking in the rural areas was a lmiting factor for financial inclusion. "However, more banks are interested in the rural market for banking services today than ever before," he added.

Rajiv Sehgal of Airtel pointed out that the government's concerns of security and privacy in mobile banking had been addressed by the service providers.