New Delhi, Apr 17 (IANS): The Indian government has allowed banks to deliver basic financial services to the unbanked population of the country using mobile phones.

The banks may start the operation by July 31 and complete the rollout by December 2011, an official statement here said Friday.

The government took the decision after a committee of secretaries headed by the cabinet secretary met on April 1 and approved an inter-ministerial group (IMG) framework on delivering financial services, the statement said.

"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. A system based on the IMG framework that enables provision of basic financial services through the individual's mobile could be a major step in the direction of reaching out to the unbanked sections of the country," it said.

"It will also play a key role in the government's ability to reach cash benefits to the poor under various government welfare schemes," the statement said.

The IMG framework envisages creation of 'mobile linked no-frills accounts' by the banks which can be operated using mobile phones.

The basic transactions permissible over these accounts will include cash deposit, cash withdrawal, balance enquiry, transfer of money from one mobile-linked account to another and transfer of money to a mobile-linked account from a regular bank account.