Mobile banking norms on RBI website by June 15

Soon RBI will be issuing regulatory guidelines for mobile payment systems. According to the RBI annual Credit Policy statement the drafted guidelines will be placed on RBI Web site by June 15. After these guidelines the customers will be able to use mobile phone easily and safely to carry out entire banking transactions.

Senior bank officials said the guidelines have been formulated mainly to provide safety and for interoperability issues in using mobile phones for conducting normal banking services.

According to the central bank sources discussion is going on with banks, service providers and industry bodies for the purpose of framing the guidelines. “The focus of the guideline would be on devising an inter-operable system. It is important that banks and various service providers talk to each other so that transactions flow seamlessly between different payment solutions,” said Mr Nitin Chittal, Assistant Vice-President, Alternate Banking Channels, Axis Bank. Inter-operability would require a standardized messaging format between the various service providers and banks, Mr Chittal said.

Senior bank officials are of view that the guidelines will help in ensuring software-related safety and proper risk management in order to encourage more customers to use the mobile platform.

Stressing on the need to use mobile phones for conducting various transactions, the RBI said, “The mobile channel facilitates small value payments to merchants, utility service providers and the like and money transfers at a low cost.”

As per the data available as on December 2007 there were about 231 million mobile phone connections in the country. The rapid expansion of this mode of communication has brought up a new payment delivery channel for banks. Many countries have already adopted this mode of delivery to expand the reach of the banking facility to cover remote parts, the RBI said.

Several banks have tied up with mobile phone operators and service providers to carry out transactions on mobile phones and more banks are to follow. While some banks are offering simple account-related queries on mobile phones and some have gone a step further and stored the debit and credit cards on mobile phone to enable various transactions.

ICICI Bank has already tied up with Airtel and mChek to load a virtual credit card on a mobile phone to carry on complete banking transactions as well as for making payments. “We conducted a pilot in Delhi and received close to a thousand responses. Mobile phones can be safer as compared to physical cards as they are pin protected, thereby minimizing the risk of misuse,” said Mr Sachin Khandelwal, General Manager, Head-Cards Product Group, ICICI Bank.

Axis Bank is also carrying out a similar pilot project with Atom Technologies to store a debit card on the mobile phone.