The Reserve Bank of India (RBI) has done away with the daily cap of Rs50,000 on fund transfers using mobile phones, allowing banks to determine their own limits based on their risk perception and board approval.
This move is in line with the central bank’s agenda of pushing financial inclusion and is set to benefit a 900-million mobile phone user base in the country.
Under the system, a bank customer can transfer funds from his account to another using even a low-end phone through a pre-loaded software in the phone.
Most of these transactions are currently person-to-person transfers, largely used for remittance purposes as this proves to be a cheaper medium than standard services in the market.
In 2010-11, the number of transactions through mobile channels grew 300% to 9.6 million from 2.32 million in 2009-10. The value grew to Rs780 crore in 2010-11 as against Rs190 crore in the previous year.
The next move, experts say, should be to popularise payments to merchants and stores through mobile fund transfers.
Market players are excited by the move.
“We believe that RBI is one of the most forward looking financial regulators around. This move will definitely empower the masses and encourage them to go mobile with their banking transactions,” said Neel Chaudhary, vice-president and chief marketing officer, Obopay India, a mobile solutions provider, which offers two mobile banking products with cell phone major Nokia.
The two products are offered in association with Union Bank of India and Yes Bank.Other players in the market include Beam, Loop Mobile’s service with ZipCash and Airtel Money.
“Keeping in line with the developments in mobile technology, increasing sophistication of mobile access devices, increase in options for remote connectivity and mobile application security, the distinction between various channels is becoming blurred,” the central bank said.
“Banks are increasingly extending mobile financial facilities to their customers. As on date, the Reserve Bank has approved 52 banks for extending the service,” it said on its website on Friday.
In its guidelines in October 2008, the RBI had placed a lot of monetary restrictions on daily transactions through the mobile medium, as according to it “the mobile technology at that time was relatively new”.
The restrictions were relaxed in December 2009 on a request from banks.
The RBI has not prescribed any limit on account-to-account fund transfers through other channels such as internet banking.
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