The Reserve Bank of India (RBI) announced it will develop a regulatory and oversight framework for mobile banking, and made clear its concern over the safety of transactions through mobile phones.

“The large scale spread of mobile telephony has opened up new vistas for banking in the form of mobile banking and the potential in this new sphere is enormous; adequate steps to ensure safety and security in a mobile based computing / communicating environment have to, however, be made.”

The statement was included in RBI’s Financial Sector Technology Vision: 2008-2010 released late last week. RBI expects mobile-based services to assume an ever greater portion of banking transactions in general and payment services in particular.

Left unclear is whether such regulations would be developed in tandem with any changes to the use of business correspondents, or third parties doing cash-in and cash-out that provide the connection to the cash economy in which poor people live. At present, a limited set of entities can act as business correspondents, including section 25 companies, cooperatives and the post office, but not any for-profit outfits. Consumer protection features highly in RBI’s thinking: RBI wants to ensure agents will not take advantage of low-income clients. But some providers say their best agents in rural communities would be merchants, due to the liquidity they have in their till.

Can mobile banking take off in India with adequate consumer protections but enough flexibility to make the business model work for providers?

Source: Technology

Gyaan-Bazee
The latest figures released by the Telecom Authority of India (TRAI) show the number of Indians who have a mobile phone crossed 200 million in August.