RBI released final operative guidelines for mobile banking

The Reserve Bank of India has finally released its final operative guidelines for mobile banking. Soon the small-ticket payments and remittances by using mobile phones will become a reality.

In its guidelines the central bank has taken a decision to keep the limit on the ticket-size for mobile banking at Rs 2,500 per transaction, and Rs 5,000 per day. The apex bank has allowed the banks to put in place a monthly transaction limit, depending on the bank’s risk perception of the customer

As per guidelines the lenders such as State Bank of India and Axis Bank will be able to launch mobile banking services but the central bank has decided the services will be restricted only to holders of debit and credit cards. In India the card user base is around 80 million, with 55 million debit card users and 25 million credit card users.

But this decision of RBI has come as a blow to players who had planned to use mobile banking to reach out to the under banked in rural India. A number of microfinance institutions and mobile payment operators such as mChek, PayMate and Obopay have tied up with banks to offer mobile-based financial inclusion products in the surroundings. The banks have been allowed to use the services of banking correspondents for extending this facility to consumers.

Through mobile-payment platform only Indian rupee-based domestic services can be carried out and the use of mobile-banking for cross-border transactions has been strictly forbidden. Only the Banks which have opened branches, have license and supervised in India have been allowed to offer such services. Further, only banks which have implemented the core banking platform will be allowed to offer mobile banking.

Simultaneously, the RBI has recommended that all mobile banking transactions will be validated through a two-factor authentication system, thereby conforming to the latest security and encryption standards. The RBI has also added that the long-term goal of the mobile-payment framework in India will help in the transfer of funds from and account in one bank to any other account in any bank on a real-time basis, irrespective of the mobile network the customer has subscribed to.

The guidelines also propose that banks should not compromise on their know-your-customer and anti-money laundering guidelines. It will be essential for the banks to file suspicious transaction reports (STRs) to the Financial Intelligence Unit for all mobile banking transactions, as in the case of regular banking transactions.

It has also been proposed that banks should clearly mention the risks to the customer and also get them to sign a contract before the service is adopted. Banks have also been suggested to make their mobile-banking services available across all phone networks.

As per the records of telecom regulator Trai the number of mobile phone connections in the country was at about 296 million at the end of July this year and it is growing at about 8-9 million per month. Banks are looking at more possibilities of using mobile phones as an alternative channel of delivery of banking services. Some banks have even started offering information-based services like balance enquiry, stop payment instruction of cheques, transaction enquiry, location of the nearest ATM or branch, etc. RBI told that in few banks services like acceptance of transfer of funds, instruction for credit to beneficiaries of same or another bank in favor of pre-registered beneficiaries have started.