The Government, RBI and many Banks seem to be confuse “Mobile
Banking” with “Mobile Access” to ones Bank Account. The latter requires one
to have a pre-existing bank account in a specific bank branch. In the old days,
one had to physically go to this bank branch to deposit or withdraw money
or to deposit a check. One could and still can issue a check in another
person’s name which she can physically deposit in her bank account. “Mobile Access” (internet access) makes it possible
for the account holder to use a mobile phone (internet connection) to check bank
balances, transfer funds between different accounts in the same bank (eg
saving, checking, credit card) and from ones accounts to another person with an
account in the same bank. Where a system
of “Bank correspondents” exists one can use the services of a correspondent
who visits you to deposit cash or check or withdraw cash from your account
through a physical transfer to/from him cum a digital transaction through his mobile/ internet connection to the correspondent’s account at the
bank.
True
“Mobile Banking” is an entirely
different animal altogether. It is like a super charged prepaid mobile card
in which the balance in your pre-paid card acts effectively as a “mobile wallet” from which you can make and receive payments from any other mobile
phone. As it stands, anyone can pay cash to charge the pre-paid card of any
other person’s mobile phone. However,
the outstanding balance on the pre-paid card cannot be withdrawn or used for
any other purpose than making phone calls. A “mobile payments system” would allow everyone to use the balance on her
mobile pre-paid to make payments to any other person’s mobile for purchase of
any good or service. Mobile companies
have the accounting and software systems to quickly and cheaply convert everyone’s
mobile phone into such a mobile wallet and thus create a "Mobile payments system". In fact with sufficient competition
they may (if allowed) even start offering a small interest rate on your outstanding balance
or offer limited credit facilities for a fee and thus convert it into a true “mobile banking” system. RBI regulations on “payments systems” and
banking however, forbid cell phone companies from offering any such payments or
banking services.
The
idea took root when I first read about how South African government had
started using mobile phones to deliver pensions to retired government servants
in rural and remote areas of the country. A mobile payments and money transfer service
called “MPesa” was launched by SafariCom in Kenya in 2007. Since then I have a
strongly argued for allowing true “mobile
banking” with clear upper limits on deposit & credit balances and
transaction amounts, coupled with less stringent/costly regulations. At that
time less than 50% of Indian’s had bank accounts, though the percentage has
inched up towards 60% (according to official sources, a NGO survey puts it at less than 47%). Most of those without access are either the urban poor,
intimidated by the banking system, or the rural poor & middle class who do
not have the time, or find it too costly, to access bank services. In contrast
an estimated 80% of Indian’s already own mobile phones and the coverage is
projected to approach 100% within the next 5 years. Thus the quickest and cheapest way to make
modern payments and banking systems available to the poor and lower middle
class, is by allowing true “mobile
payments and banking” services.
The stability of
a country’s “payments systems,” and “banking system” are critically important
to the health of the “financial system” and the modern economy. The RBI
therefore has stringent regulations on all payments and credit intermediaries
and particularly on banks through which most of these activities take
place. The RBI however has traditionally
insisted that any other financial intermediary that undertakes these
transactions must meet the same regulatory standards. One has argued that, the by limiting the set
of transactions to a small set of well understood and transparent one and by putting
absolute values (for e.g. maximum balances of Rs 10,000 and aggregate
transaction of Rs. 50,000/annum and credit to the average daily balance) one can limit the systemic risk allowing a
reduction in regulatory requirements such as capital adequacy norms, SLR, CRR
etc).
Even within the
current system, RBIs regulations were much more stringent than in neighboring
Pakistan. With the result that, use of
mobiles for internet transactions has spread much more quickly than in India.
It is hoped by many analysts and observers, that the highly unsatisfactory
state of affairs, will be corrected
through implementation of the relevant recommendations of the Nachiket More
committee on inclusive banking. At best this will give the poor a "mobile payment" systems. We will still however be some way from true, “Mobile Banking.”
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