Ever since the Reserve Bank of India (RBI) first released associated guidelines in 2008, mobile banking has been touted as the future of broad-based financial services in India. It was an elegant solution that married one of the country’s achievements—booming mobile phone penetration—with one of its major shortcomings—a vast financial hinterland of consumers without access to banking services, popularly known as the“financially excluded”.
It is widely believed that there are at least 800 million mobile phone users in India, and around 450 million “unbanked”.
But so far mobile banking continues to thrive largely in the realm of possibility. The buzz, pilot projects, research reports and numerous joint venture announcements have so far done little to extend financial services to those who desire financial inclusion.
Earlier this week RBI announced that it was removing the cap of Rs50,000 per customer per day for mobile transactions. Banks are now free to limit mobile banking bandwidth to customers based on their own assessments of risk. Once again while this might seem like a step forward, it is clearly not targeted at those who remain outside the current banking system by virtue of distance or net worth.
While RBI says that 9.6 million transactions were made through mobile banking last year, other reports indicate that offtake is still very slow. (RBI numbers, which indicate an average transaction value of around Rs800, may include hundreds of thousands of mobile phone recharges.)
There are several hurdles to widespread mobile banking usage in India. Besides issues of security, there are also issues with platform and standardization. Many of these could be solved if banks collaborate more closely with technology providers. But RBI continues to be wary of allowing telcos dabble in banking. A joint venture between the State Bank of India and Airtel fell through this week after RBI felt this was a back-door entry into banking without licences. The banks can’t roll out technology. The telcos can’t roll out banks. Who will roll out mobile banking?
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