FE Editorial : Anatomy of m-banking

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The Financial Express: Jun 23 2010, 21:23 IST

Soon after mobile penetration started evolving into a big success story in India, policymakers voiced recognition of the fact that mobile telephony could become an important medium for achieving financial inclusion in the country. But many a regulatory hiccup has kept this movement from gathering momentum. Prospects of such hiccups getting smoothened gathered weight this week, with Trai and RBI reaching an understanding over how mobile banking would be regulated in India. Interconnection issues will be dealt with by Trai, while RBI will watch over banking aspects. At a time when Ulips are caught in a regulatory crossfire between Sebi and Irda, telecom operators would be grateful that they won’t suffer similar travails. Notwithstanding this neat regulatory division, problems remain with the way in which the bank-led model has been preferred to the one led by mobile operators. Global success stories of mobile banking delivering financial inclusion across under-banked populations have derived, after all, from the latter model rather than the former. RBI considers the bank-led model safer. And it is indeed the case that if mobile banking is to truly take off, security measures will need to be stepped up and consumer data will need to be provided greater protection than is available at present. The bottom line, however, is the extent of our ambitions. Even the RBI governor has conceded that the mobile operator-led model helps accelerate financial inclusion.

An inter-ministerial group set up to establish a framework for delivering financial services via mobiles put things more strongly: “The

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