"We have recently approved the in-principle setting up of a payment system which will facilitate funds transfer from bank account holders to those without accounts through ATMs," he said, delivering the DR Gadgil lecture here.
Rajan said the move is driven by the lack of having a formal bank account by millions of our countrymen and also explained how the mechanism will work.
The sender can have money withdrawn from his/her account through ATM machines, he said.
"The intermediary processes the payment, and sends a code to the recipient on his mobile that allows him to withdraw the money from any nearby bank's ATM," he said.
Rajan asserted that systems will take care of all the issues around security including safeguards of customer identification, transaction validation and velocity checks.
Calling this as one of the benefits of the modern technology, Rajan conceded that mobile companies are already providing such services and laid emphasis on the need for more such innovative products.