Planning Commission against telecom operators setting up banking companies

India's Planning Commission is not in favour of allowing telecom operators to float banking companies as it could lead to financial problems.

"We actually have a different view...we are not in favour of (telecom companies becoming financial companies)," Planning Commission deputy chairman Montek Singh Ahluwalia said at a CII function in the annual WEF meet in Davos.

In India, he added, "We are very much in favour of transactions being done by banks at the end of the day...banks take account of what is happening...we do not want financial crisis".

The government, however, has been trying to set up a framework to allow people to undertake basic operations through cell phones, but that would not allow telecom companies to become banks themselves.

An inter-ministerial group has recently submitted a report to Telecom Regulatory Authority of India (TRAI) recommending that people in remote areas be allowed to open accounts linked to their cellphones and withdraw money up to Rs5,000 a day.

India has around 65 crore mobile phone subscribers, with a number of them in unbanked areas.

Many banks are providing mobile banking facility in the country. The country's largest lender State Bank of India tied up with Airtel to provide banking facility through the use of mobile phone. Besides, ICICI Bank also tied up with Vodafone to offer similar services across the country.