Mobile banking fails to take off as RBI opposes move
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Mobile banking fails to take off as RBI opposes move

By SiliconIndia   |   Monday, 30 November 2009, 02:34 Hrs   |    5 Comments
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Mobile banking fails to take off as RBI opposes move
New Delhi: Strong opposition from the Reserve Bank of India (RBI) and the Home Ministry has forced the government to drop the idea of a cost effective, convenient and efficient mobile-based model of financial services that allows transfer of funds outside the banking system. The RBI is concerned that regulating the system will be difficult and it would cause uncontrolled credit creation outside the banking system. The Home Ministry is concerned about the misuse of the facility from a security consideration.

According to the preliminary proposal, the RBI and the Telecom Regulatory Authority (TRAI) would have been the designated regulators for the domestic banking market, reports Economic Times. RBI came out with operative guidelines for mobile banking in October 2008, allowing only banks to provide mobile banking services and restricting the role of the telcos to facilitators.

Last August, RBI issued 'mobile wallet' guidelines that allowed a role for phone firms. The central bank has concerns about relaxing the rules. Under the current guidelines, mobile phone users can deposit up to 5,000 with telecom operators that can be used for merchant transactions. But, it does not allow any physical transfer of funds outside the banking system.

The major concern raised by RBI is the challenges in efficiently regulating the system, while Home Ministry expressed concerns about national security.

The inter-ministerial group - with representation from the RBI, ministries of Home Affairs, Finance, Telecommunication, Post and Rural Development, along with the Planning Commission, UIDAI and representatives of the telecom regulator Trai - has already discussed the idea.

The Finance Ministry and Planning Commission have not raised any opposition to the idea mooted by the Telecom Ministry on grounds that it would help in bringing about greater financial inclusion. 60 percent of the country's 1.2 billion population has no bank accounts. The number of mobile phone subscribers has crossed 500 million recently and data available with the inter-ministerial group suggests that 40 percent of them do not have a bank account.

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Reader's comments(5)
1: No It is not at all bad for us, RBI is only concern about the regulation of this facility. We should have the infrastructure to support this type of security concerned transactions. I will vote RBI for its Concern. We dont want our people be stranded for their queries like anything for their daily basis.
Posted by:Sashikanta - 30 Nov, 2009
2: This is very bad. Many countries have already started their plans to take the implementation strategy of mobile payment.

But india is still in 2G and thinking lot of security.

India should plan for a clear roadmap for the implementation of mobile payment solution.
Posted by:Hardik - 29 Nov, 2009
3: security consideration. sometimes they are worried, and sometimes they dont think only.
Posted by:hamida - 29 Nov, 2009
4:
Putting a cap would reduce this threat.
abhinav bhatnagar Replied to: hamida - 29 Nov, 2009
5:
There are some trusted and proven companies who offers security solutions on mobile for safe and secured banking transactions on mobile like VeriSign,etc

RBI should partner with those companies to implement these solutions.
Guest Replied to: abhinav bhatnagar - 01 Dec, 2009