People will be able to withdraw cash and transfer funds using their mobile phones in rural areas with the government approving the framework for introduction of such facilities by the banks.

Banks have been advised to start mobile banking services in rural areas by July 31, and complete the roll by the end of next year.

"With the acceptance of the report of inter-ministerial group by the committee of secretaries banks are being advised to implement the IMG framework on priority basis to extend basic financial services to the unbanked population," said a communications ministry release today.

After the implementation of the scheme, people in far flung areas would be able to operate no-frills mobile-linked account to withdraw cash, deposit money, balance enquiry, transfer of money from one to another. This will also facilitate transfer of funds of various government schemes like NREGS, to a mobile linked account.

The move follows a report by IMG which suggested creation of 'mobile linked no-frills accounts" by the banks, which can be operated using mobile phones.

The IMG was chaired by the secretary, DIT and had representatives from departments of financial services, posts, rural development, Planning Commission, UID Authority, TRAI, RBI, department of telecom and the home ministry.

The report of the IMG assumes significance considering the growing number of mobile subscribers among the rural population and the disadvantaged sections.

With mobile subscribers in rural areas far outstripping bank account holders, a large section of rural population now has access to mobile telephony but not to financial services.

The model enables persons with mobile phones to deposit and draw cash instantly into or from their mobile-linked no-frills bank accounts through a business correspondent having a mobile phone in the village.

A significant feature of the proposed framework is that funds remain within the banking system throughout and the intermediary does not have custody of the funds even momentarily.

Keeping this in view as also the imperative of rapid scaling at a national level to reach out financial services, the IMG has recommended that RBI permit "for-profit" corporate entities to function as BCs.